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Panel Hears Complaints About The Maryland Business Climate

Panel Hears Complaints About The Maryland Business Climate

By: Bryan P. Sears, Daily Record May 27, 2014

HAGERSTOWN — An official for one of the largest employers here said his company remains in the state because of a large investment in its Washington County plant and not because Maryland is friendly to businesses.

“Volvo is here not by choice but by legacy,” said Wade Watson, vice president of group truck operations for Volvo Group Hagerstown.

Tax and other incentives offered by other states as well as Maryland’s status as a union-friendly state make it difficult for businesses to make the decision to remain, he said. Volvo has remained “primarily because we have a significant investment” in the plant, Watson told the members of the Maryland Economic Development and Business Climate Commission.

But some legislators on the Maryland Economic Development and Business Climate Commission were equally frank with Watson and other business leaders and said expectations for change were unrealistic given the political climate of the state.

Del Dereck E. Davis, chairman of the House Economic Matters Committee, said calls for Maryland to join 24 others states as a right-to-work state were unrealistic.

“The political reality is that will never happen in Maryland,” Davis said. “We’ll never be a Virginia. We’ll never be Texas. If we continue the discussion on that line, we’re wasting everyone’s time.”

The commission met for the second time since being created earlier this year by House Speaker Michael E. Busch and Sen. President Thomas V. Mike Miller. Both promised that any recommendations issued by the commission would not be left to gather dust on a shelf.

But Watson and Davis both said they were skeptical, at least initially, about what could be accomplished.

The meeting in Hagerstown is just blocks from a downtown area struggling to revitalize itself. An arts district and the University System of Maryland, Hagerstown building sit side-by-side with vacant or underutilized store fronts that were once a main street core.

Locals point to a nearby jewelry store that once sold Rolexes and other items but which is now closed for business. The building is now home to federally subsidized apartments.

The county has an unemployment rate of 6.3 percent — nearly a full point higher than the state average for April.

But there is hope for revitalization.

“We believe Hagerstown is in a process of revitalization, said Mark Halsey, executive director of the University System of Maryland, Hagerstown. “That revitalization is not a fixed point in time. We’re looking to the commission for help.”

Some of that hope may lie, according to some, in finding a way to help return manufacturing — even the 21st Century variety — to this traditionally farming and blue-collar community.

“Areas like Washington County want to more fully participate in the success of Maryland,” said Brien J. Poffenberger, president of the Hagerstown-Washington County Chamber of Commerce and incoming president and chief executive officer of the Maryland Chamber of Commerce.

The Volvo plant, which includes nearly 34 acres of buildings, was established in 1961 by Mack Truck. The company is the sixth-largest employer in Washington County, a rural western Maryland county of more than 149,000 people. Nearly one-third of those residents live in Hagerstown, where the plant is located.

Volvo’s truck group in Maryland is one of the few remaining manufacturers. In recent years a number of companies have pulled out to move to other states where tax incentives or right to work policies were in place.

Adding to increasing costs of business was “punitive enforcement of regulations” that didn’t take into account other things the company has done, such as putting in place more environmentally friendly practices, and a difficult-to-navigate bureaucracy for finding tax credits. Volvo receives about $1 million in credits against an estimated $100 million in annual payroll.

“No one is banging on the door saying, ‘Volvo, we don’t want you to leave,’” Watson said. “When we see that activity to get a new restaurant or small business and we’re bleeding, it’s frustrating to try and figure out how do we get people to pay attention to us.”

Watson said in many cases, businesses like Good Humor were leaving the area to relocate to Tennessee, Texas and North Carolina.

“They’re all right-to-work states, and that’s something that has to be confronted,” Watson said.

Watson was not alone in his concerns.

Rich Daughtridge, owner of High Rock Studios, a Hagerstown-based graphic design and website firm, told the commission that Maryland is a hard state to do business in. The company, which includes High Rock Holdings, recently expanded into movie theaters.

“It’s just a more expensive state to do business in because of taxes,” Daughtridge said.

Increasing the minimum wage and other regulatory costs only add to the bill, he said.

Pennsylvania and Virginia are six miles away and beginning to look attractive for expansion, he said.

“You look at the overall environment of what it costs to do business in Maryland,” Daughtridge said. “The case is pretty strong that you’re going to make money in those other states.”

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