by James DeChene

This week Governor Markell addressed the members of the State Chamber’s Economic Development Committee to outline the recent successes focused on economic development, and to discuss how Delaware’s economy is faring as the recovery from the Great Recession continues.

Highlighting the importance of workforce readiness and development, the Governor featured the Pathways to Prosperity program currently providing industry developed curriculum to approximately 6,000 Delaware students statewide. This accomplishment comes on the heels of the first cohort of students who graduated this past May with a focus on advanced manufacturing. Their curriculum and required internship hours were provided predominantly by members of the State Chamber and the Delaware Manufacturing Association.
The Governor also highlighted successes in retaining the majority of DuPont’s presence in Delaware, while also helping local startups like The Mill, CoIN Loft and 1313 Innovation to bring and foster new and specialized jobs to Delaware.

Lastly the Governor focused on job growth in Delaware. Pointing to Department of Labor and Bureau of Labor Statistics figures showing Delaware leading the region in jobs and outperforming the national unemployment level. Governor Markell wanted to be sure that committee members saw these positive trends.

Committee Chairman Michael Vanderslice pointed to Administration proposed efforts that the State Chamber and business community had supported, but ultimately weren’t successful. These included having state employees contribute more to their health care plans, increasing the gas tax to fund much needed state infrastructure improvements, and addressing Delaware’s poor water quality. Governor Markell remained optimistic that these efforts would be addressed in future legislation as those issues not only aren’t going away, but must be resolved if Delaware is to be able to continue to meet its budget needs.

by Mark DiMaio

Last Friday, I had the pleasure of attending the Delaware Manufacturing Extension Partnership (DEMEP) program on Supply Chain Optimization Leadership. It’s a national program developed by the Manufacturing Extension Partnership network. The program focused on understanding the advantages of incorporating a strategic approach to supply chain management, and how it can provide a positive impact on local economies. Today’s manufacturers need to be more agile, flexible, and responsive to external pressures. Competition between companies has given way to competition between supply chains. The DEMEP Supply Chain Optimization program provided a road map for companies to focus on improved collaboration and supply chain integration. I learned that the enemies of supply chain effectiveness are: the destabilizing effects of dependency; forecast inaccuracy; variation; and lack of supply chain visibility.

The program provided a working session to better understand supply chain fundamentals and the strategic implications of a poorly functioning supply chain, as well as gained insight to supply chain system dynamics. The main take away was that a lack of understanding and communication within your supply chain will drive higher inventory levels and lower levels of service. Developing a sound supply chain risk management strategy that includes strong partner collaboration will drive supply chain optimization. Rustyn Stoops, Executive Director for DEMEP, put it best, “Eliminating the four walls of your business and looking at your business as the entire Supply Chain, while improving communication and collaboration along that same Supply Chain, has the opportunity to yield some incredible results.”

by James DeChene

Two stories mentioned in this week’s Legislative Report bear some additional coverage. The first, from the News Journal editorial “Hard Economic Lessons For Delaware” pinpoints what the State Chamber has been talking about for the last few years, specifically on what appears to be a lackluster recovery from the Great Recession. With metrics and rankings all over the map, the picture of how Delaware’s economy has fared over the last few years remains murky at best. What remains, regardless of economic rankings is that public education, and other quality of life issues such as public safety, remain areas where much work needs to be done regardless of how Delaware compares economically to other states across the country and within our region.

The other story comes from the Wall Street Journal outlining how factories are struggling to find workers.  This is a story that rings true here in Delaware. For local manufacturers, a third of their collective workforce could retire within the next few years, leaving a major vacuum in employment. Add to that the profound difficulty manufacturers are having in finding suitable replacements, not just for engineering or management positions, but, most problematically, for entry level workers not requiring an advanced degree. Working together with the Delaware Manufactures Association, DelTech and the Governor’s office, we have started a successful program to help prepare high school students for these jobs. But and the range and scope of the education issues Delaware faces has become stark.

This is becoming a constant, and repeated, refrain, from the State Chamber of Commerce and our members—Delaware’s education system requires a revamp if we want to have a workforce competitive to those around us– regionally, nationally and internationally. We are currently the 5th highest spend per student for the end result of 33% of Delaware 8th graders are proficient in math and English, with 60% of high school graduates who enroll at DelTech requiring remedial classes.

These results do nothing to push Delaware forward, and will soon have even more of an impact on Delaware’s economic rankings when businesses choose not to come to Delaware because they don’t have access to a strong and vibrant (and educated) workforce. The News Journal has it right that education reform is a key component in securing Delaware’s future.

By Robert Perkins
Executive Director, Delaware Business Roundtable

PerkinsDelaware must fundamentally change its approach to economic development and nurture a growing entrepreneurship base in the face of intense competition for jobs, investment and talent, according to a framework commissioned by the Delaware Business Roundtable released on Wednesday.

The Delaware Growth Agenda provides the private sector’s strategic framework for pursuing a new long-term approach to economic development in the state, including public policy recommendations centered on three strategic goals to be implemented over the next five years.

“The vision of the Delaware Growth Agenda is that our state will focus its efforts on becoming a global magnet for leading-edge technologies, talent and investment,” said Mark Turner, chairman of the Delaware Business Roundtable and president and CEO of WSFS Financial Corporation. “This framework puts forth clear-eyed, achievable strategic goals and strategies that can accelerate Delaware’s economic engine – but only if the public and private sectors work together to make that vision a reality.”

The non-partisan, forward-looking framework is based on interviews and guidance from more than 100 Delawareans, including representatives from economic development organizations, higher education institutions, businesses, government, labor and non-profit organizations. The framework envisions an even stronger and more robust partnership between the public and private sectors to guide future success.

The framework recommends:

Building an entrepreneurship and innovation ecosystem. This includes bolstering federal, state and private investment in higher education, and emphasizing the healthcare, science and technology fields, engineering and entrepreneurship programs. The framework calls for the creation of an “Innovation District” as a destination for entrepreneurs and startups, as well as for marketing Delaware to regional and national angel investors and risk capital networks.

Pursuing a new approach to economic development. The framework calls for establishing a public-private economic development organization, crafting a new comprehensive statewide economic development strategic plan, and a marketing campaign that pursues new investment and jobs in key industries – including financial services, business services, education and knowledge creation, manufacturing, and distribution.

Enhancing Delaware’s business climate. The Growth Agenda says the state must ensure Delaware’s infrastructure meets the needs of a 21st century economy, including updating the Coastal Zone Act to provide greater flexibility in redeveloping brownfield sites. The framework also calls for improving the state’s public education system, taking a leadership role in facilitating more efficient development and permitting processes, and creating a Futures Council of Delaware.

The full recommendations under each of the goals and strategies can be found in the framework, which was developed collaboratively by TIP Strategies and the Delaware Business Roundtable. TIP Strategies is an economic development strategy firm that has worked with states and communities across the country.

In addition to presenting a strategic vision and goals, TIP Strategies also examined Delaware’s economic health over time compared to other states in the region.

Among the findings of the framework:

• Many of the traditional economic pillars of the state – including cars and chemicals – are no longer significant job generators.
• Manufacturing accounted for about 20 percent of the state’s non-farm employment in 1990. By last year, it was just 10 percent of all jobs.
• The state lost more jobs in manufacturing and corporate headquarters than any other sector between 2010 and 2014 – while health care and professional services sectors experienced robust job growth.
• Delaware is home to a growing base on which to build a vibrant entrepreneurship and innovation ecosystem – and higher education must become the long-term driving force behind that ecosystem.
• Delaware’s labor force participation rate between 2010 and 2015 showed the fastest percentage increase among the 50 states.
• In a number of areas, such as private sector earnings growth and gross state product per capita, Delaware’s economic performance is trending negatively when compared to other states.

We are facing real challenges, but the Growth Agenda encourages a reset of economic development in Delaware over the next five years. First and foremost, things cannot continue as they have because Delaware’s existing companies – nor the industry sectors themselves – can be counted on to serve as engines of future growth. We must take a new approach, and the public and private sectors must work together to get it done.

The Roundtable’s intention is for the Delaware Growth Agenda to spark a much-needed discussion of how to expand economic opportunity and jobs throughout the state during the 2016 election cycle that will result in concrete action thereafter. It comes on the heels of the Roundtable’s 2015 study of state finances, which clearly articulated the structural budget challenge facing the state as it wrestles with unsustainable revenue sources and spending patterns and strongly recommended that Delaware focus on expanding economic growth as one part of the solution.

The Delaware Business Roundtable plans to continue to promote sustainable economic expansion and growth in Delaware.

About the Delaware Business Roundtable
The Delaware Business Roundtable is a non-partisan, volunteer consortium of CEOs whose companies collectively employ over 75,000 people in Delaware. Since its inception in 1981, the Roundtable’s broad mission is to enhance the quality of life in Delaware by promoting commerce, job creation and select public policy issues. In recent years, the Roundtable has been a leading supporter of public education transformation and entrepreneurs in Delaware.

About TIP Strategies
TIP Strategies, Inc. (TIP) is a privately held economic development consulting firm, with offices in Austin and Seattle. Established in 1995, TIP is committed to providing quality solutions for public and private sector clients. TIP has completed more than 300 engagements across 38 states and 4 countries. The firm’s primary focus is strategic economic development planning. In addition, TIP has experience with entrepreneurship, target industry analysis, workforce, and redevelopment. The firm’s methods establish a clear vision for economic growth. Community leaders across the country have embraced the TIP model of Talent, Innovation, and Place to achieve successful and sustainable economies.

​by James DeChene

The Delaware State Chamber of Commerce, along with others in the business community, have urged modernizing the Coastal Zone Act (CZA) in order to spur the next generation of economic growth in Delaware. The focus of modernization has been solely on existing industrial sites sitting abandoned or underutilized where redevelopment of the property is hindered by Delaware specific restrictions created by the Coastal Zone Act.  Recognizing that any effort towards modernization will involve community education that process has begun at the State Chamber and will continue in the coming months.

It may come as a surprise that Delaware has lost over 1000 jobs from companies located in the Coastal Zone in the last few years.  Between the closure of the Evraz steel plant site and reductions at the Edgemoor TiO2 facility Delaware has lost quality jobs proving difficult to replace.  Much of that difficulty stems from Coastal Zone Act regulations that serve as a barrier for companies interested in purchasing and redeveloping property in this state.  One has to look no further than across the state line into Marcus Hook to see how Sunoco’s $2.5 billion expansion is providing quality jobs, yet the 44 acres sited in Delaware have seen no redevelopment, in large part due to the CZA.

With the focus on job growth, what sometimes gets lost in the discussion is what happens if businesses with operations in the Coastal Zone continue to either leave the state or continue to choose not to locate here?  Who is responsible for maintaining containment of mobile contaminations?  What will be the cost to DNREC, DEDO, and Delaware taxpayers for continued involvement in these properties over the long-term?

There exists a case study for these questions in the former Syntech site in Newark.  Between 1981 and 1987, Helix Associates operated a specialty chemicals manufacturing and processing facility which reportedly recovered iodine from waste sulfuric acid solutions. In 1986, an explosion in a 750-gallon reactor vessel destroyed a portion of the manufacturing building and eventually led to closure of the Helix facility. In July 1989, Synthesis Technologies, Inc. (Syntech) began operations by manufacturing specialty batch diazo compounds, including dyes for cloth, color photography, 4 and biological tissue staining until its closing in February 1991. In 1990, a reactor leaked vapors containing heptanes and nitric acid into the outside atmosphere.  As a result of releases of hazardous substances, groundwater has been contaminated.  The site is awaiting redevelopment, but as of now no plans have been filed to do so.

The State of Delaware now owns that site, and others like it, in and around the Coastal Zone, forcing continued investment in environmental monitoring and potential remediation.  The plan is that modernizing the CZA for redevelopment will result in jobs for Delawareans with the additional benefit of reducing the financial impact of monitoring these sites, but we aren’t there yet.
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As the State Chamber has said before, we believe the role of the CZA was not to have industrial sites in the zone wither and die or to handcuff existing facilities by creating barriers that result in limiting expansion or improvement.  It is only through modernizing the Coastal Zone Act in industrial areas to make Delaware more competitive and attractive for redevelopment that jobs and investment will flow.  The alternative, to make no changes to the Act, will insure that there will be an increase in abandoned or underutilized sites resulting in fewer jobs for Delawareans and will cripple the state’s long-term economic growth.

​by James DeChene

The week started off with the Delaware State Chamber and Delaware Manufacturing Association hosting the annual Legislative Brunch and Manufacturing Conference. Attended by over 200, along with two dozen state officials, the event highlighted recent manufacturing growth in Delaware. Remarks by Governor Markell touting this growth, along with the success the Pathways to Prosperity advanced manufacturing curriculum has had this year, capped off the brunch.

At Legislative Hall this week, a bill to raise the state’s minimum wage was put into limbo in the House Economic Development/Banking/Insurance/Commerce committee. The bill will not likely see any further action this year, barring any last minute horse trading on June 30. Should the bill not see any further action, it would have to be reintroduced next year in the 149th General Assembly. The Delaware State Chamber will continue to monitor and provide updates as needed.

A bill relating to parking lots, handicapped spaces and restriping was not released from the House Public Safety Committee. The bill, introduced and released from that Committee last June, was substitute language for the original bill. With input from the Counties and several Chambers, the bill was modified, but still not acceptable to the broader business community. It is unclear as of now whether the bill will be modified further, be “walked around” to release it from committee, or if it will remain in Committee seeing no further action this session, much like the Minimum Wage bill.
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The General Assembly is out for two weeks for Easter break, and returns on April 12. More updates from Dover upon their return.

​by Mark DiMaio

The Chamber’s Committees are in full swing, with the Transportation and Infrastructure Committee meeting to discuss the Coastal Zone Act (CZA) and recommendations from the Clean Water Task Force and the proposed DNREC regulations regarding storm water management. The committee continues to discuss the modernization of the CZA and how to best stimulate economic growth in the zone.  The Delaware Clean Water Task Force is looking at a new draft bill related to water fees that focuses on a fixed fee per each Delaware business versus a fee for every business tax parcel. Concerns remain with the recently proposed DNREC storm water regulations. The committee will work with member companies to find a workable solution to the proposed regulations.
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The Chamber’s Economic Development Committee (EDC) held its kick-off meeting last week. The Committee discussion focused on Delaware’s current development climate and ways in which the committee could engage on issues.  Much of the committee dialogue centered on the importance of keeping pace with the rapid economic changes both locally and nationally. The EDC will concentrate its efforts on both short and long-term topics and issues that will best advance Delaware’s existing business climate and foster an innovative environment for future development.  In coordination with other State Chamber Committees, The Delaware Manufacturing Association and the Delaware Public Policy Institute, the EDC will work with stakeholders to advance policies to strengthen Delaware’s economy.

​by James DeChene

For more than 40 years, the Coastal Zone Act has set Delaware apart for companies looking to conduct business on Delaware’s coast. Whether it was meant to eventually force manufacturing and industry to “wither on the vine” or to balance the types of allowable companies with keeping our natural resources pristine, it has created a logjam in the process. Regardless of the intent of the legislation, it is clear that Delaware’s Coastal Zone Act must be modernized in order for Delaware to grow.

There are a number of large economic development projects underway in and around Delaware, including the redevelopment of Sunoco’s Marcus Hook site, of which 40-plus acres are located in Delaware. To date, Sunoco has not indicated any plans for development on that ground, most notably due to conforming to the Coastal Zone Act. The redevelopment of the former Claymont Steel plant is another potentially huge economic development project to bring jobs to Delaware, and hurdles continue to mount for next stage planning.

The world economy has changed significantly since 1971, and the manufacturing world has changed with it. It is readily apparent that manufacturing is not as it once was, and for modern manufacturing plants, whether making cars, medical equipment or other products, the focus is on clean and efficient production. Companies looking for manufacturing and production sites expect the process to be clear, timely, and reasonable, and unfortunately right now that is not a process Delaware can provide.

There is a balance to be reached between protecting the thousands of acres of land within the Coastal Zone that have not seen, and should not see, commercial development and allowing those sites sitting abandoned, underutilized or other properties that have a history of commercial use prior to the Coastal Zone Act enactment in 1971 to be actively, and easily, used. Plans do not, and would not, include refineries or smelting plants as acceptable in the Zone, but instead focus on bringing high tech, efficient manufacturing and other related businesses to Delaware.

Delaware is currently at a crossroads in its history. The fourlegged stool that has been the primary backbone of our economy in recent years—cars, chemicals, chickens and credit cards—has changed dramatically. As our jobs shift away from the chemical industry, Delaware must make itself as attractive as possible in order to bring new business to the state, and modernizing the Coastal Zone Act is a lynchpin to that success. To that end, the State Chamber will begin, and lead, the discussions and debate surrounding how to modernize the Coastal Zone Act. The continued future of economic development in Delaware will be predicated upon the outcome of what will be undoubtedly be a heated debate.
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Our message is, and will remain clear: Delaware cannot afford to have its economic policy dictated by extreme or unreasonable elements of the environmental activist community if there is to be the future successful economic growth this state needs to survive.

​by Mark DiMaio

The Delaware Manufacturing Association (DMA) kicked off 2016 by hosting Delaware Governor Jack Markell for a manufacturing policy discussion.  The Governor was introduced by State Chamber President Richard Heffron and DMA Chairman, Brian Nixon of Invista.

The Governor was quick to recognize the workforce development efforts of DMA and its members.  The Governor highlighted the fact that in just over two years, the Pathways to Prosperity Initiative, has grown from just one program with a couple of dozen students to an initiative that will reach 5,000 students in 29 Delaware high schools.

DMA Vice Chair Liza Bartle with Agilent Technologies was highlighted in Governor Markell’s State of State press release “as representative of private sector employers who have joined the Pathways to Prosperity Initiative, which places students with employers to learn valuable job skills that today’s employers need, from manufacturing to computer networking, health care, and culinary arts. Business partners are committing to increase the number of students who gain the opportunity to work directly with employers.”
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In addition to Agilent Technologies, DMA members PPG, AstraZeneca, Siemens Healthcare Diagnostics, Kuehne Chemical Co., Bloom Energy, DuPont, FMC BioPolymer and Delaware City Refinery all offered craftsmanships to students. We continue to look for organizations willing to participate in the program in 2016.

Governor Markell also highlighted the legislature’s quick passage and his signing of the Delaware Competes Act (HB 235), a law changing the way corporate income tax is calculated to ensure companies don’t pay more for decisions to hire and expand in the state.  The bipartisan bill received near unanimous approval from the Delaware General Assembly and will serve as another tool to help Delaware attract news business to the state.

Please mark your calendars for the Delaware State Chamber of Commerce Spring Legislative Brunch and Manufacturing Conference to be held on Tuesday, March 22nd at DelTech’s Terry Campus in Dover. Click here for more information.