- Pennsylvania Among 'Terrible 10' Most Regressive Tax States
- February 4 Non-Partisan Training: HOW TO RUN FOR ELECTION BOARD IN 2013: HOW TO RUN FOR COMMITTEEPERSON IN 2014
- Republican Governors Opt-In to Medicaid Expansion
- The Reports of Unions' Death Are Greatly Exaggerated
- Ask Allyson Schwartz to run for Governor
- Mind the gap: Opting Out of Medicaid Expansion Leaves Low-income Families Behind
- Jan. 14 Workshop:HOW TO RUN FOR ELECTION BOARD IN 2013; HOW TO RUN FOR COMMITTEEPERSON IN 2014
- Seth Williams on Guns, Jasmine Rivera on School Closures @PFC Meetup Wednesday
- PA Revenue Strong Midway Through Year; Tax Cut Could Have Big Impact
- What to Make of the Fiscal Cliff Deal?
Paging through the business section, finding our economic way
Lately, the business section of the Inky seems to be sending a pretty clear message that Philadelphia’s biggest economic asset is its location. Though location alone may not be enough to attract the best employers here: We also need to create a highly skilled and versatile workforce.
The fact that the Inky keeps producing stories about business people who are creating or taking away jobs in the region based on these simple ideas means there are important lessons to learn. The question is whether or not the Nutter administration is heeding them.
First, let me share a few of the articles I’m talking about.
On Tuesday, December 1st, Governor Rendell made a deal with a Greek start-up to open a solar panel factory at the Navy Yard. They will provide 400 jobs and get $49 million in state and city incentives (including stimulus money). But, according to the article:
Panos Ninios…said the company chose the Navy Yard site after reaching out to eight states and visiting 35 locations. He said that that the quality of Philadelphia’s workforce, the proximity to transportation, and the government incentives sealed the deal for the city.
On January 6th, it was reported that “at least 65% of all Chilean fruit to the United States comes through Philadelphia, Gloucester, and Wilmington. The remaining 35 percent goes through Los Angeles.”
Evidently, there are excellent cold storage facilities in South Jersey and southern Chester County that make it easy to store large amounts of fruit for transport. But the article suggests another reason for Philadelphia’s winter fruit dominance, our geographic location and market density:
”We are centrally located to many major markets, with second-day truck delivery to two-thirds of U.S. consumers,” said Robert C. Blackburn, senior deputy executive director of the Philadelphia regional Port Authority.”
And on January 11th, the Inky reported that “chemical companies have slashed 43 percent of their Pennsylvania workforces in the last 10 years.” This includes all but four of the workers at DuPont’s gigantic Gray’s Ferry Ave. complex.
According to Pam Witmer of the PA Chemical Industry Council, there are a variety of reasons for this decline, including mergers, environmental regulations and a high cost to do business in the state. However, according to the article:
Pennsylvania chemical plants have lost geographic competitive advantages as manufacturing in the Northeast has faded. Chemical plants supply other manufactures. Computer, cell phone and other electronics manufacturing has migrated to Asia. So have the chemical plants that supply them.
And for many years chemical plants have been built near sources of raw materials, mostly oil and natural gas. Chemical companies have set up facilities in Texas and along the Gulf Coast, close to U.S. sources of crude oil.
There’s not much we as a city can do to change the global economic conditions that helped us lose chemical jobs. However, if we want to keep the companies that still have some operations going on here, there are things we can do. According to the Inky:
Andrew Liveris, Dow’s chief executive officer and chairman, says specialty chemicals and innovation will drive the company’s growth. He views the former Rohm and Haas labs in the Philadelphia area [including one in Bridesburg] as important to transforming Dow into a specialty chemical company.
So here’s what I take from all that:
- For one, location matters. Being within a two-day drive of 2/3 of the country’s consumers is a really big asset.
The quality of our transportation infrastructure, our rail lines, highways and ports, is crucial. Regardless of where the money might come from to fund specific expansions and innovation, it is largely up to us locals to come up with new ideas to improve the infrastructure.
- But even if you build it, and they do come, in the face of the fast-moving global economy, a well-trained, smart and versatile workforce is also necessary to get business to stay here.
- And then you gotta sell it. Our geographical proximity, transport infrastructure and the qualities of our workforce might will probably need to be spelled out, indeed, marketed. for prospective new employers.
- While taxes and incentives do come up in conversations about economic development in the region, they are clearly not the only economic development tools at our ready. There are other important ways—ways equal in importance to cutting taxes or incentivization strategies—to help the city create high-quality, sustainable jobs.
So again, the question is whether or not the Nutter administration is working on them.
In some cases, the answer is a resounding yes...
The number of Philadelphians applying for federal financial aid has increased significantly in the past year. The Free Library has redefined its mission to include targeting entrepreneurs. A green jobs training program funded by stimulus dollars and developed by the city recently started.
And, according to the Inky way back in November, a new city website has opened up (www.phila.gov/business). which has, according to Sara Merriman, director of policy for the Commerce Department, “now captured all of the city business information, the forms, the permits, the direction you need to go and we’ve put it all in one place.” (The site does not yet accept online payment for taxes or collect online applications for certificates.) This is a small, but practical step that will help make it easier for people to do business here.
But when it comes to aggressively marketing the city as the jumping-off point for shipping and commerce along the East coast, it’s not so clear what the Nutter plan is...
More time and energy seems to have been spent on commissions and debate about tax reduction strategy than on a strategic plan to leverage our central location for shipping. And the most important factor in terms of workforce development is a stronger School District of Philadelphia. That’s definitely a weak point for the Nutter administration.
As the Mayor begins to shift into campaign mode, I hope he can figure out ways to build some solid accomplishments on these fronts. Even with another messy budget on the horizon, and an uncertain economic recovery, it is imperative that we do a better job on strategic economic development.
Our path to continued economic stability may be difficult, but it is a path that can be easily charted: Turning out more smart and skilled kids from our public schools, sending a lot more of them to college, finding the growth industries for which it would make the most sense to locate here, and making it easier for businesses already here to innovate will create a new economy in Philadelphia.


140 more layoffs
Another chemical company, Lonza, is moving production away from North America (Conshohocken and Quebec) to China. 140 layoffs were announced at the local plant today.
Globalization is much more important than tax policy
As usual a great post Ray.
To reinforce your point about globalization here is a quote from a researcher named Doug Hoffer:
Hoffer’s anlaysis is contained in a report by Good Jobs First, Growing Pennsylvania’s High-Tech Economy: Choosing Effective Investments . The report focused largely on Pennsylvania and to a lesser degree Pittsburgh emphasizes many of Ray’s points.
--Mark Price
Globalization is huge
but there is not so much that can be done about that at a local level.
What is true, as Ray's post points to, is that landing on one's feet in the new global economy when manufacturing moves overseas is that education - producing an educated workforce - is key to a city or region landing on its feet in a knowledge/services/technology economy. That has to remain key to the local agenda, but especially the state agenda - since the state control's the school district.
Its nice to have a mayor who said he's aimed at reducing the rate of drop-outs in the city by half but the power ultimately rests in Harrisburg, which makes this year's governor's race, very, very important.
As an aside I can't say the whole South Philly High mess and especially Dr. Ackerman's most recent responses to the federal discrimination lawsuit gives me a lot of hope that Ackerman is going to be around to help steer us to the goal for the long run.
Interesting post. Perhaps if
Interesting post. Perhaps if Nutter didn't leave the Commerce Director position vacant for the past 9 months, the City would have a better track record of attracting jobs. I can't understand why such an important position in city government has been unfilled for so long, particularly when the economy is such a concern.
The Administration should also commit some real resources to the City's business attraction efforts--the people charged with this tough task don't have anywhere close to the amount of money or personnel they need to be their most effective.
Tax reform for micro startup enterprise
Philadelphia is not likely to attract the numbers of new jobs that we need. So we should set out to grow our own new businesses. To this end, a special set of rules should be put into place to govern small (micro) enterprises in such a way as to encourage people to set themselves up in business without having to pay a stream of fees and taxes. Once a business is going, then it should catch up to the responsibilities of a full-fledged enterprise. I'll leave it up to the experts to create the details. But, it's really important to establish a route for entry into business that makes sense and gives an entrepreneur a real opportunity to get started. If this is done, watch out... Philadelphia will put itself back on the business map!
I agree with the article, we have a unique physical location and we have lots of potential customers for a Philadelphia brand of business. What's needed is a good set of helpful options, including a respectful tax code. Once these are in place, Philadelphia's helping community of nonprofit organizations will be able to provide the training to get people hustling their wares and services.
Its often not the taxes themseles
Its the paperwork, the wait, the need to hire "expiditers" to get permits, etc. The new website stuff on phila.gov is a god send but I have still yet to hear a single story of someone who enjoys going to the MSB.
Helping turn Philly's Youth into Creative Entrepreneurs
I agree with Stan, that the solutions are going to come from individual innovators and micro-start-ups. The organization I work for is doing a lot with Philly youth, to try to harness their creativity and give them the tools to turn their projects into business opportunities.
Yeah, these are small steps, but I think the more Philadelphians we have with an entrepreneurial mindset, the better off we'll be.
A lot of good can come from encouraging people to capitalize on their hobbies as well: from small-scale artisans and cooks, to designers and people with boring day jobs and creative hobbies. It's frustrating that major news outlets keep focusing on large scale trade, when the things that could make Philly's culture so much more vibrant are everyday people innovating and creating opportunities for economic development, no matter how small.
Emily Yoder
www.empowerment-group.org
http://empowerment-groupdiscussionboard.blogspot.com/
Small is the new beautiful, and a message to "Stan"
I agree with most of Ray's original post in this stream, but I also think an increased focus on small, locally based and controlled businesses is a major key to moving ahead, especially in light of the environmental challenges we face. And we still need this City to be not merely friendly to business interests, but a place that people really want to live. Many business managers, both of small and large businesses, want to locate their shops where they themselves want to be. Workers also will gravitate, to the extent they can, to places that they want to be before and after, as well as during, work.
If we want to be a place where people want to be, we will need to maintain public services and that's going to be challenging. But one way we can find revenue and also help small and startup businesses, is to reform the Gross Receipts Tax to exempt small businesses from it. The Coalition for Essential Services has found that you can do that, couple it with a rollback of the currently very low GRT rate to where it was 10 years ago, and raise over $250 million over the course of the next five years. Best of all, much of the new money would come from out of City businesses that pay a major portion of the tax. That's what we call a win/win/win.
Btw, it seems that I'm going to have an identity problem, now that there's someone blogging here with the tag name "Stan". "Stan", if you could change your moniker to "Stan [insert something here]" it might help one of us avoid inadvertantly embarrassing the other.