New Jersey is keen to emphasise just how strong its location is, and with good reason. The north-east the state borders with New York and the south-west Philadelphia, and this proximity to metro areas with a combined population of nearly 30 million undoubtedly has its appeal to investors, particularly when cheaper real estate costs in New Jersey are taken into account.
However, after the onset of the economic crisis it became apparent that New Jersey had been over-reliant on these two assets, and had neglected its business infrastructure. According to data compiled by the New Jersey Policy Research Organization Foundation, in 2007 only 17% of employers considered the state a good place for business. To make matters worse, the US's State Business Tax Index and the Small Business Survival Index showed that at that time the state was considered as one of the worst in the country in terms of its tax regime and its support for small business.
With the state’s economy in such dire straits, there was little surprise when incumbent governor Jon Corzine was voted out of office in 2009. The changes brought about by his successor, Chris Christie, seems to have gone some way to putting the state’s economy back on track. Mr Christie started his tenure by putting lieutenant governor Kim Guadagno – his second in command – in charge of economic growth and forming new entities to focus on attracting and retaining investment. All of these new initiatives had to be done on a tight budget, as Mr Christie office at a time when the projected fiscal deficit of the state was at $2.2bn.
“Right after Governor Christie took his oath of office, we had to actually send the treasurer out to stop our wire transfers, because we knew we did not have money to pay all those millions of dollars that have been coming out of the state,” recalls Ms Guadagno.
In such a situation, luring investors through bigger incentives and aggressive marketing was not an option. The new administration decided to go for aggressive networking instead.
“We approached the biggest companies in our state, asking for help in changing [its] economic future,” says Ms Guadagno. This saw 16 enterprises agree to donate $150,000 over a three-year period to create an entity called Choose New Jersey, a non-profit organisation focusing on investment promotion and improving the business climate in the state.
“The dialogue between business executives enables us to tackle the main issues and work on solutions together with the state,” says Tracye McDaniel, CEO of Choose New Jersey.
The organisation became a part of the newly formed Partnership for Action, a centrepiece of all economic initiatives in New Jersey. Apart from Choose New Jersey, the entity includes the Economic Development Authority (EDA), which provides financial support to businesses in the state, and the Business Action Center, a newly established body that helps entrepreneurs navigate between the departments in the state.
“We can provide some incentives, we can woo [investors] here, but what really matters is state support. We bring every piece of state government to the table, we do not bring [businesses] to the state and walk away,” says Ms Guadagno.
Panasonic stays put
This approach has already proved to be instrumental in keeping some big names in New Jersey. A couple of years ago, Japanese electronics giant Panasonic was considering relocating its North American headquarters from New Jersey to Atlanta, Chicago, New York or California. However, instead the company decided to remain in the state, and simply relocated from Secaucus to the centre of Newark. And although company executives admit that tax incentives were the main factor behind the decision to stay and build a new office in New Jersey, liaisons between the state and the company were necessary to get the project off the ground. Construction of the new site would require the closure of one of the busiest intersections in the whole state for 18 months. Because of negotiations between the state, Panasonic and local engineers, this time was cut to six months.
“We are happy with the outcome. It shows that the state can work with businesses to find necessary solutions,” says Michael Van Wagner, executive director of the Business Action Center.
This feeling is reciprocated by Michael Riccio, vice-president of Panasonic North America, who says: “We are happy to be relocating to the centre of Newark. And with the new building we will have plenty of room for expansion.”
SThe provisions for such expansion are already in place. Panasonic's decision to stay in New Jersey came with various tax incentives, but under the premise that it creates a minimum of 250 jobs in the state in the next five years and an additional 200 over the next decade. Meanwhile, Panasonic – once so close to exiting New Jersey altogether – has recently announced that it will build a new technology complex in Harrison, a town located near Newark.
Incentives and state help are not restricted to industry giants such as Panasonic. “Bridging gaps in financing small and medium-sized enterprises is in the core of our activity,” says Lori Matheus, the managing director of the EDA. To further boost the economic activity of medium-sized businesses already present in the state, the EDA joined forces with Citibank to launch a $50m foreign trade fund. Ms Matheus admits that so far her office has not been overwhelmed with applications, but the interest of investors is growing steadily. This contrasts with the volume of greenfield crossborder investments, which experienced a robust growth of 32% between 2010 and 2011, according to fDi Markets.
Mr Christie’s fame is also on the rise, and clips of his speeches on YouTube have surprisingly high viewing figures, so much so that his popularity may soon be on a par with that of the state's most famous residents, rock stars Jon Bon Jovi and Bruce Springsteen. Mr Christie's hope, however, will be that would-be investors are as impressed with his pro-business policies as his army of fans on YouTube are with his speeches.