I recently met with an executive from NCR, the company that once called itself the National Cash Register Co. and is now among the world’s leading producers of ATMs and self-service kiosks.
NCR was headquartered in Dayton, Ohio, for more than 100 years. Then in 2009 it moved to Duluth, Ga., half an hour by car from Atlanta, taking a thousand jobs away.
Why did it move?
First, the company saw benefits from the availability of an educated work force in a vibrant city that houses many other high-technology companies. Second, cost pressures from globalization and increased competition intensified during the economic downturn. Third, it relocated from a unionized environment to a right-to-work state, which allowed for the cutting of labor costs, especially benefits. Interestingly, in this move the company moved some operations that had been outsourced to Mexico back to the U.S.
This is not the only story of a company moving to a place that embraces growth and productivity. The direction is often assumed to be from the Rust Belt to the Southern states, but this is not necessarily always true. In Stephen Moore’s Jan. 4 column, the Wall Street Journal wrote about the same state of Ohio, among others, luring businesses away from California. The business geography is not set once and for all. Rather, it changes with the incentives that states offer, the cost of doing business, and the availability of an educated labor force, among other factors.
What can we do in Maine to entice businesses to relocate here?
First, we need to do more to promote the advantages of our state. Though we cannot boast of a nationally known high-tech cluster or a magnet city for entrepreneurs, Maine has a lot to offer.
Our most important asset is the Maine people. I have been traveling extensively around the country the last few months, and a constant theme in my conversations is that people from Maine are hard-working and honest, often well-educated and accomplished, and can be counted upon.
Mainers earn the respect of others by hard work, often rising from rags to riches within a generation. The Maine work ethic can be a major draw for companies to relocate here and should be a part of a state branding effort. In today’s knowledge economy, people are the most important factor.
Second, Maine is known for a high quality of life, free of industrial pollution and hellish commutes. We should emphasize Maine’s active lifestyle, bolstered by tradition and the beautiful landscape, from the long ocean shore and islands to the wooded mountains to the abundant lakes. Also, Maine is generally a safe and family-friendly place. Quality of life is always an important factor for companies to set up operations here because it improves the likelihood of a satisfied work force and reduces attrition.
And third, of course, improving the business climate sends the right message to companies and entrepreneurs. The last few months have already brought a significant improvement: As MaineBiz reported on May 2, Maine is already the best in the nation for stimulating new business investment. A report from the Council on State Taxation and Ernst & Young rated Maine at the top for imposing the smallest effective tax burden on new business investment, marking a welcome change from the past.
States compete hard for companies for new investment because of the jobs, tax revenue, infrastructure and knowledge spillovers that such investment brings. Enticing out-of-state companies to relocate or open new operations in Maine is an important component of a sound economic development policy which involves careful fine-tuning of economic incentives and analysis of their costs and benefits. But beyond economics, such decisions are often influenced by perceptions.
Emphasizing the work ethic of an educated work force, quality of life and improvements in the business climate paints a favorable and truthful image of Maine’s business advantages.
Ivan Manev, an accomplished scholar in international business and entrepreneurship, joined the faculty of the University of Maine in 1997 and currently serves as dean of the Maine Business School.