| New
England: Small states with strong high-tech sectors
Plants, Sites and Parks Magazine
January 2003
We might be tired of reading about it and discussing it, but the fact is that
the terrorist attacks on Sept. 11, 2001, took a tremendous toll on all regions
of the United States. Not all the news was bad, however. Some regions, especially
New England, actually gained somewhat from the tragedy that struck New York City. New
England has had its share of challenging economic issues. Already-high property
taxes and the lack of large, available tracks of land on which to expand or build
is a concern for many businesses. And agricultural and manufacturing employment
began a steady decent in January 2001. All but Rhode Island showed an increase
in unemployment rates. Massachusetts' rate was up a full 1.1 percent over last
year, compared with an increase of 1.3 percent nationwide. The labor force in
all New England states have increased. Katherine
Bradbury, vice president and economist for the Federal Reserve Bank of Boston,
says that although unemployment did increase in New England, the region still
is below the national average. "All the New England states are facing fiscal difficulties,"
Bradbury says, "and spending is being cut." Bradbury
adds that high-technology companies have slowed spending and tourism has taken
a hit from Sept. 11. "But there is a basic confidence that this is just a cyclical
slowdown," she says. "We're definitely not getting walloped like we did in the
last recession. There is confidence that we will cycle back out of it." Mike
Mullis, whose site location company of J.M. Mullis Inc., Memphis, Tenn., has reviewed
400 location/site candidates in New England for three major distribution companies,
says, "While the attitude for doing business in New England is relatively strong,
we have found numerous issues regarding qualified large site availability, overall
permitting timing and labor availability." "The New England region has faced keen
competition from lower-cost regions of the country," says John Boyd, president
of The Boyd Company Inc., a location consultant firm in Princeton, N.J. "Our clients
are telling us that costs are ruling the site selection process. But besides lower
operating expenses, companies have determined they can find larger tracts of land
in other areas." Site
location experts agree that with costs ruling the site selection process, New
England companies must not only consider competitive costs in their region and
other regions of the United States, but in the rest of the world as well. "Today
companies must have a world view because there is world trade. Companies are asking
themselves, 'Can we, or do we, really have to pay these high lease costs where
we're at?' New England companies and companies in other regions of the country
are focusing on the true costs of doing business," Boyd says. In
a cost analysis for North American Biomedical Industry Operation, formulated by
The Boyd Company, the goal was to find a location for a hypothetical 75,000-square-foot
research and product development facility employing 100 workers. The report found
that the annual operating costs at the high end were around $11 million to $12
million in areas such as San Jose and San Francisco, but with regions such as
Fairfield County, Conn., Boston and Worcester, Mass., and New Haven, Conn., coming
in at around $9 million to $10 million. In comparison, locations such as Athens,
Ga., and Sioux Falls, S.D., would have this hypothetical company spending between
$7 million and $8 million a year in operating costs. And
now for the good news. "Companies have traditionally done very well in the New
England area," Boyd says. New
England, indeed, has many benefits in its favor. With the presence of such impressive
institutions as Yale, Harvard, Boston College and MIT—just to name a few—New England
offers a highly educated workforce as well as the attraction of higher-education
opportunities for workers and their families. According
to the Massachusetts Governor's office, 33 percent of the workforce of Massachusetts
has a college degree, which is 8 percentage points above the national average. "These
factors make the area an excellent location for high technology industries … software,
computer-related manufacturing and instruments," says Lynn Elaine Browne, executive
vice president and economic advisor for the Federal Reserve Bank of Boston. A
less tangible, but viable reason for New England's appeal is its natural beauty
and history. "The 9/11 situation had such an affect on workers. They do not want
to transfer and travel like they used to. They want to stay in their familiar
communities," Boyd says. Therefore,
corporate human resource managers are using "carrots" to entice potential transferees
to move to beautiful New England. Sept.
11 also has affected New England in that there has been a migration in the last
year of companies relocating from New York City to nearby New England states.
These companies can still maintain a presence in the Northeast without having
to be in the immediate environs of New York City. As a result, New England states
are offering more commuter opportunities into New York City for those weekly or
monthly meetings. | 
