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Regions Like NEPA Engage in Battle for Big Business

12.19.2018

When he gets up in the morning, Lyneir Richardson gears up for war. “Every day we wake up thinking how do we win the battle, and ultimately win the war,” said the interim president at the Newark Community Economic Development Corp.

 

Most metro areas across the country have economic development groups focused on bringing in new business, and they’re all in some way competing with each other.

 

A number of agents who work for them chuckle at the idea that they’re locked in a cutthroat tug-of-war match, pulling for capital, jobs and attention from a finite pool of new and expanding companies.

 

In a series of interviews last week, most promoted their own communities in a spirit of camaraderie. They all said “a rising sea lifts all boats,” or some variation of the phrase.

 

But like a lineman playfully slapping the backside of the running back who just slipped past him, at the end of the day, regional cheerleaders get paid to tackle each other.

 

Newark recently lost a commercial coffee roaster, SoCafe, to Dunmore when the company, eyeing expansion, decided Lackawanna County was a better place to grow.  

 

READ MORE: Coffee Manufacturer Socafe Relocating from New Jersey to Northeastern PA, Creating 130 New Jobs

 

SoCafe Vice President Joseph Fernandes III tapped the Greater Scranton Chamber of Commerce and a state economic development office to find its spot on East Grove Street behind Riccardo’s Market in Dunmore.

 

“There’s two wars going on,” said Richardson, who’s also executive director at Rutgers University’s Center for Urban Entrepreneurship and Economic Development and an instructor at the school. “The companies are fighting a war for talent, and economic development corporations are waging a war to get companies to create jobs for their communities.”


More companies from New York and New Jersey are moving in on Northeastern Pennsylvania for a smorgasbord of reasons, not the least of which include cheaper real estate, lower taxes and cheaper utilities, which could mean millions of dollars in savings for some corporations!


With millions of square feet of warehouse space available, and a spider’s web of interstates feeding straight to major East Coast cities, John Augustine said he’s not even calling logistics companies. They call him.

 

“We don’t target warehouses. They target us based on our location,” said Augustine, the president of Penn’s Northeast, a regional consortium created to attract employers to the region. “I say over and over, I have 7 million of square feet on my desk, and I do.”

 

Penn’s Northeast spent the year luring new business development out of New York and New Jersey, he said, but when it comes to laying out incentives, he leans more on the region’s assets, not government grease.


Penn’s Northeast recently had case studies complete, focusing on the plastics and food manufacturing sectors by national business consultant The Boyd Group of New Jersey. Boyd determined that total Northeastern Pennsylvania labor costs are 82% to 85% of those in New Jersey and New York.

 

READ MORE: Northeastern Pennsylvania has the Lowest Operating Costs

for Food and Plastics Manufacturing

 

The regions low cost of doing business translates into massive savings for businesses looking to open, relocate or expand in Northeastern Pennsylvania.

 

  • Lease rates in NEPA start around $4.25 to $4.50 per SF and are almost half the cost of what you would pay in New York and New Jersey at $6.75 to $8 per SF.

 

  • Not only are the wages rates significantly lower, the difference in housing costs in Northeastern Pennsylvania are almost 50% cheaper for the same size home than in New York or New Jersey. 

 

  • Northeastern Pennsylvania is centrally located in the northeast with 5 interstates, international airports, rail served sites and is only a two-hour drive from both New York City and Philadelphia.

 

  • The average daily commute is only 20 minutes in Northeastern PA. New Jersey is 31 minutes.

Government incentives have taken a back seat in recent years, and development agents more often use them as a final carrot at the closing table rather than front-loading them as part of their initial pitch.

 

“If we had to rely on economic incentives from Harrisburg, we’d have little to no growth,” said Don Cunningham, president at the Lehigh Valley Economic Development Corp. The agency lures businesses to Lehigh and Northampton counties, and manages to keep a few steps ahead of the northeast in building its logistics and manufacturing sectors.

 

He lamented the gutting of a half-dozen programs the state once employed, including the Machinery and Equipment Loan Fund, which offered low, fixed-interest rates that were once essential to helping manufacturers buy new equipment or upgrade, among other similar self-sustaining loan funds.

 

Harrisburg still has a toolbox, including job creation tax credits, grants for worker training and opportunity zones, which offer tax credits for companies that build in designated areas.

 

However, too much government aid can backfire, said Paul Macknosky, a regional director for the state Department of Community and Economic Development.

 

“If you create an incentive-laden package … what’s going to happen when that time frame’s up?” he said. “They’re going to move.”

 

Augustine points out that some programs, notably the Keystone Opportunity Zone, have had great success. Few companies pull out once that particular incentive expires, he said.

 

Richardson, the Newark development agent, said the same is true in his town.

 

He wants to sell Newark on its intrinsic qualities, not temporary tax breaks or grants. Part of that is recognizing that not all new or growing companies are created equal.

 

If a firm that needs immediate access to a seaport, major markets in the New York City metro and a vast labor pool — assets Northeast Pennsylvania doesn’t have — it might zero in on Newark, he said.

 

On the other hand, if a company needs cheap land and lower costs with relative closeness to big cities, Pennsylvania is open for business.



BY JON O'CONNELL, STAFF WRITER / PUBLISHED: DECEMBER 16, 2018
https://www.citizensvoice.com/news/regions-like-nepa-engage-in-battle-for-big-business-1.2422371'



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