Mass production

MORE THAN A dozen executives from high-tech companies doing business in Massachusetts are seated around a rectangle of wooden tables in the Governor’s Council chambers in the State House. They’ve been invited for a “technology summit” to discuss the challenges facing business with Gov. Mitt Romney and his top deputies on economic affairs, Robert Pozen and Barbara Berke. As they await Romney’s arrival, Pozen, a former Fidelity Investments executive who is the state’s new secretary of economic development, offers the business leaders a quick Beacon Hill update.

Workers at Nova Biomedical in Waltham prepare to ship supplies used in laboratory blood analysis.

“You guys should feel good,” says Pozen, and he proceeds to tell them why. Both the House and Senate, he says, have so far left in place the “single-sales factor” tax, a 1996 change in the way businesses are taxed that industry leaders said would save manufacturing jobs in the state. He tells them legislators also appear poised to approve a five-year extension of the investment tax credit, and to maintain a separate tax credit for spending on research and development. Pozen’s message: Massachusetts has become a pretty good place to do business.

With all that good news, Joyce Plotkin, president of the Massachusetts Software & Internet Council, which has helped organize the session, can’t help herself. “Well, should we leave?” she says, as the high-tech honchos break into laughter.

The declare-victory-and-go-home quip was delivered with tongue firmly in cheek. But it raises a serious question, and one that has received little attention during Romney’s first six months in office: With a string of tax cuts and credits adopted during the 1990s that made the state a more business-friendly place, what does a businessman-turned-governor do now to get the state’s economy out of the doldrums?

A year ago, this didn’t seem such a mystery. As he crisscrossed the state in last year’s gubernatorial campaign, Romney seemed to ooze executive-suite confidence. As founder of Bain Capital, he had a track record of whipping troubled companies into shape and returning them to profitability, and he pledged to bring the same business know-how to a Massachusetts economy that had gone from high-flying to wobbling in fairly short order. Romney vowed to spend his first 60 days in office as the state’s “top salesman,” meeting with out-of-state corporate chiefs to woo to them here and convincing local business leaders to remain and expand in Massachusetts.

By the time spring arrived, however, it was House Speaker Thomas Finneran, a 25-year creature of the State House, who made the biggest waves on the economic-development front, proposing an infusion of $100 million into a state fund used to spur growth of technology-related businesses. And with Romney yet to pay an out-of-state sales call, it was Boston’s workaday mayor, Tom Menino, who returned from a retailers’ convention in Las Vegas trumpeting news that he had sealed a deal, albeit months in the making, to bring a Target discount store–and about 200 jobs–to the city’s South Bay Center.

Economists agree that governors can have, at best, a modest impact on any state’s economic fortunes. That said, in Romney, Massachusetts elected a man who, by résumé alone, came into office with more business know-how than any governor in memory. And he has brought into his administration individuals with equally impressive business-world credentials. Along with Pozen, who serves in the newly created post of commerce-and-labor czar, overseeing the departments of business and technology, labor and workforce development, and consumer affairs, Romney tapped Barbara Berke, a highly regarded former vice president of the Boston Consulting Group, a management consulting firm, as director of the business and technology department (the office lost its former designation as the Department of Economic Development at the same time that Posen took the title of secretary of economic development).

If any gubernatorial team should be capable of making bold moves on the business front, it’s this one. But none has been forthcoming. So far, the Romney administration has spent most of its time preserving the tax-code status quo–resisting new taxes, as well as preserving the business tax-breaks of the ’90s–and maneuvering for its budget and reorganization plans on Beacon Hill. That has left some observers wondering when the state’s ailing economy is going to get its due. Brockton Mayor Jack Yunits says he has friends in the private sector who were salivating over Romney’s arrival in the Corner Office. Their attitude, he says, was, “Here’s a businessman; he can lead us to heaven.” Instead, says Yunits, “it’s been all politics.”

BACK TO THE FUTURE

Without much fanfare, the outlines of a Romney economic-development plan have quietly emerged. Romney has made good on his campaign promise to establish regional “economic competitiveness councils” across the state to focus on the unique strengths–and economic needs–of the state’s different regions. He’s also met with groups representing industry “clusters” that are components of the state’s knowledge-based economy.

In early May, in a speech to the Greater Boston Chamber of Commerce, Romney laid out the elements of his administration’s economic development strategy. The six-point plan came complete with acronym: TOP, which stands for “tapping our potential.” Among the main points were vows to hold the line against tax hikes, to preserve the pro-business tax changes adopted in the 1990s, and to use the new regional competitiveness councils to align state colleges and community colleges with employer needs. Romney also used the occasion to trumpet a recent decision by Fujifilm to expand a Bedford production facility, adding about 90 jobs. (See “Driving a Harder Bargain,” sidebar.)

While the Fuji announcement garnered attention the next day in both Boston daily newspapers, the unveiling of Romney’s economic development strategy barely registered. The Boston Herald story made no mention of the TOP plan, while The Boston Globe cited the initiative but said it “contained few new elements” aside from themes Romney had sounded in last year’s campaign.

Barbara Berke’s business credentials now make her an important figure on Beacon Hill.

But it’s not just that the plan echoed last year’s campaign; it also sounded very much like gubernatorial pronouncements of a decade ago. In 1993, the administration of Gov. William Weld issued its blueprint for economic development, Choosing to Compete, which followed closely the views of Harvard Business School professor Michael Porter, a Weld advisor whose theories on economic competitiveness and industry clusters have made him one of the world’s pre-eminent business thinkers. The plan called for Massachusetts to leverage the potential of its increasingly technology-driven economy by coordinating the state’s education system to meet the needs of workers and business, streamlining permitting and regulation requirements, and focusing on the state’s distinct regional economies and their unique needs.

The parallels with Romney’s plan are plain, right down to Porter himself, who chaired Romney’s transition committee on jobs and the economy and is serving as a consultant to the regional councils the new governor has formed. Says one development specialist: “There’s nothing new. You’ve seen this movie before.”

Which is not to say it’s a film undeserving of a sequel. There was plenty to be said for the first run, say industry leaders and economic development officials, who claim the Weld era helped the state shed its anti-business reputation. Weld championed a series of business-friendly tax law changes as well as a major overhaul of the workers’ compensation system that cut rates paid by employers 60 percent.

But there is plenty of room to improve on that record, and all eyes will be watching to see if the state’s MBA governor is up to the job. The challenge to link the state’s higher-education system to workforce needs is one that has gone largely unmet.

And the state has lagged far behind competitors in tapping the potential of the higher-education system to team with business and government as a driver of economic development. Meanwhile, Romney has pledged to ease the regulatory path for new housing and business development at the same time he has committed to an anti-sprawl agenda that tries to steer growth to areas with established infrastructure.

“It’s a conceptual framework,” says Michael Widmer, president of the business-backed Massachusetts Taxpayers Foundation. “But it’s only a framework. The unanswered question is, what specific initiatives will follow?”

HIGH-TECH LOWS

It’s a sunny Wednesday morning in April as about 80 people, most in their 40s and 50s, take seats in a large meeting room at Congregation B’nai Shalom in Westborough. Rod Davis, a genial 56-year-old computer specialist, takes to the stage and gets the meeting going. “How many of you have been out of work for 12 months or more?” asks Davis, who was laid off from his position as an IT manager in February 2002 and is still searching for a new job. About half of those in the room raise their hands. “Isn’t it great to be retired?” says Davis.

A little black humor may not be a bad way to begin the weekly gathering of the 495 Network Support Group. Formed two years ago, the group brings together the growing ranks of those who have lost jobs in the once bustling corridor of high-tech firms between Route 128 and Interstate 495. With more than 1,000 people now on its e-mail list, the organization acts as a clearinghouse to match employers with prospective employees, and as a support group for those contending with life in the out-of-work world.

For those in high-tech–as well as many other sectors of the state’s economy–the news has been grim indeed. For the two-year period from January 2001 to January 2003, the state led the nation in its rate of job loss, with 4.7 percent of all Bay State jobs, or 157,000 positions, disappearing. “The state’s in pretty big trouble,” says economist Paul Harrington, associate director of the Center for Labor Market Studies at Northeastern University. The state’s 5.3 percent unemployment rate for May remained below the national average of 5.8 percent, but Andrew Sum, director of the center, says the unemployment figure “only tells you part of the story,” because it doesn’t count the New Hampshire and Rhode Island residents who have lost their Massachusetts jobs. The jobless rate also doesn’t reflect the drop in wages for those who have gone from full-time to part-time employment or been forced to take jobs at lower pay.

Scott Gauthier fits that bill on both fronts. Laid off 19 months ago from his job as a desktop support technician at 3Com in Marlborough, the 55-year-old father of two college students has resorted to a part-time job at the Home Depot in Bellingham. Though he’s earning only one-third of his previous salary, Gauthier says he may try to move into a full-time job at the home supply retailer and hope to move up a new career ladder. In the tech world, he says, “I’m not really seeing any kind of a turnaround.”

MassDevelopment’s Michael Hogan: “Our tendency to ignore “spade work” when times are good is “the curse of Massachusetts.”

And perhaps the most troubling trend of all is the re-emergence of a phenomenon that hit the state during the recession of the early 1990s: out-migration, or the loss of residents who grow so discouraged with the job outlook that they pack their bags and leave the state. “In the short run, [the exodus of workers] makes your unemployment number look better,” says Sum. The trouble, he says, comes in the subsequent upturn. “A lot of these people who left from ’90 to ’94 we could have used in the boom because they were young and they were highly educated.”

The pattern seems to be starting up again. According to census figures, in the one-year period from July 2001 to July 2002, roughly 28,000 more people left Massachusetts than came here. “You’ll have the same problem again,” says Sum. “You won’t have the well-educated people you’d like to have.”

Mark Leary is one of those who won’t be around for the economy’s rebound. A software engineer who was laid off last September, he finally landed a job this spring–but it’s in Maryland, where he’ll work for the giant defense contractor Northrop Grumman. The Franklin father of three has rented an apartment for the summer, but he hopes to buy a house and have his family join him by the start of the school year. “I can’t leave fast enough,” he says.

HOLDING OUR LEAD

The big swings in the Massachusetts economy over the past dozen years have inflicted their share of pain. But such volatility may simply be the price we pay for having an economy tied to the rise and fall of technology. That’s certainly the view of the governor. “I don’t think anyone would say, ‘Gee, we’d like to get out of the high-tech world and get into heavy manufacturing,'” says Romney, in an interview.

The state’s salesman-in-chief peddled that same point to business leaders at the WBZ Business Breakfast in May. “I read last night a piece that came over the Internet from the state of Ohio,” Romney told the gathering at the Westin Copley Hotel in Boston. “Apparently they’re going to be voting on a bond proposal of up to one and a half billion dollars to try to attract scientists and researchers and high-technology efforts to the state of Ohio. And I chuckled to myself–because we [already] have that,” he said. “We have over a hundred colleges and universities. Some of the best research in medical areas and other high-tech areas in the entire world are here.” Other states, added a self-satisfied Romney, would “trade their left arm” for our advantages.

When it comes to venture capital investments, grant-dollar support of cutting-edge biomedical research, and other measures of New Economy horsepower, Massachusetts ranks at or near the top in nearly every category. But a growing chorus of voices in the state’s business and academic communities is urging state leaders not to take those advantages for granted.

“Ohio may not have MIT; Colorado may not have Harvard,” says Christopher Anderson, president of the Massachusetts High Technology Council. “But what they do have is a commitment to create an environment where these jobs flourish.”

During last year’s gubernatorial election, five prominent leaders in business and health care called on the Democratic and Republican nominees to form an alliance of universities, health care institutions, and technology-centered businesses to drive economic development in the state. Shortly after the election, An Economy at Risk, a report issued by the business-funded research organization Mass Insight, highlighted the lack of such a coordinated effort. The report argued that other states–including some of Massachusetts’s most significant competitors–have been aggressively supporting their leading research institutions and technology-oriented companies to leverage federal research support for economic development, citing examples such as a $50 million state grant recently awarded to the State University of New York at Albany, which was matched by a $100 million grant from IBM, to fund a microchip research center. But in Massachusetts, the report charged, state government “has been a bystander, at best, and an impediment at worst, in our economic success.”

New York and California have “specifically allocated capital money as match funds for federal dollars and private dollars to build up the research centers of excellence at the public universities and to support collaboration between public universities, private universities, and businesses,” says William Guenther, president of Mass Insight. In Massachusetts, he says, “We’ve had an implicit slogan that said, ‘We’re smart, send money.'”

Indeed, the teaming up of higher education and high technology has become a hot economic strategy of state leaders across the nation, says Phil Psilos, director of economic development and technology policy studies at the National Governors Association. “What you see this year, from the governors’ policy proposals and state of the state speeches,” says Psilos, “is an increasing state investment in the university systems, because competition is global, and it is based on high-end skills.”

But Massachusetts has largely counted on that happening on its own, and with public colleges and universities taking a back seat to the private. “There’s always been this ambivalence around the role of state government in sponsoring the [public] research universities and making commitments for them to be world-class when you have Harvard and MIT in your backyard,” says Ray Stata, chairman of Analog Devices. “That attitude needs to change.”

There are some early signs that that attitude is changing. Along with renaming the state’s economic development office as the Department of Business and Technology, the Romney administration wants to hire someone to focus exclusively on “technology competitiveness,” if funding permits. More importantly, say advocates of this approach, the administration is also coming through with some bottom-line support for science and technology initiatives.

In the first months of the new administration, Romney signed off on commitments of $6 million in matching funds for two major grant proposals the University of Massachusetts has pending with the National Science Foundation. The larger of these is a $5 million pledge the state has made toward a University of Massachusetts­ Amherst proposal to conduct research on weather sensor networks; UMass is a finalist for the highly competitive $17 million grant. The second state pledge, for $1 million in matching funds, would support a joint proposal from UMass­Lowell, Northeastern University, and the University of New Hampshire for nanotechnology research.

Tom Chmura, UMass vice president for economic development, says these pledges represent the “first time in memory” that the state has stepped forward with financial support for large UMass grant proposals. The National Science Foundation grants are peer-reviewed on their merits by panels of scientists, but with the field for the weather-sensing project, for example, now winnowed down to just a handful from more than 100, Chmura says the state’s financial pledge can make a big difference. “Think of it from the National Science Foundation’s point of view,” he says. “They want the most bang for the buck.”

The state commitment was remarkable for two other reasons: the ongoing budget crisis, which makes state funds hard to come by, and the governor’s battle to eliminate the office of UMass President William Bulger, which makes the state university an unlikely beneficiary of gubernatorial largesse. But the Romney administration turned to the capital budget for the matching funds. And even while Romney was hunting for his head, Bulger says, top Romney aide Pozen was “critical” to gaining the state’s backing for the grant. Bulger says Pozen was a “very quiet but effective friend of the university’s.” (Perhaps quieter than Bulger thinks: Bulger and Chmura both say a phone conversation between Bulger and Pozen was the key to securing the state funds. But Pozen says he only recalls getting a call from Bulger thanking him after the governor signed off on the grant.)

“I don’t want to be Pollyannaish here,” says Chmura. “But I do think there is a consensus emerging that I haven’t seen in 10 years around these issues. We hope the governor’s support [of the two UMass grants] is the start of a trend.”

MAKING AN INVESTMENT

No such consensus seemed to be emerging around another proposal to use state spending to leverage economic growth, this one put forward by House Speaker Thomas Finneran. In April, Finneran called for a massive boost in the Emerging Technology Fund, a 10-year-old loan pool administered by MassDevelopment, a quasi-public state agency. Rolling out his formal plan in July, Finneran proposed a $110 million investment in technology companies, administered by several agencies and funded by tobacco settlement monies.

Although the details changed, Finneran’s argument did not: that the state must do what it can to jump-start the flagging Massachusetts economy. And, the Speaker adds, if the governor’s not going to do anything, he will. “I think there’s been a regrettable silence or inactivity from the Corner Office,” says Finneran. “There’s been nothing there.”

Ironically, Finneran opposed the idea of a state-funded technology fund when Gov. Weld first proposed it in 1993. But times have changed, Finneran says, and so has he. “There’s been a little bit of a shift and a little bit of an evolution on my part,” he admits. “The reality is the New Yorks and Californias in the world do engage in this stuff; so does North Carolina. For us to fail to recognize this gives our competitors a huge lead.”

Romney immediately threw cold water on Finneran’s idea. “Somehow, the idea of state employees deciding which businesses to invest in is not a model which I would subscribe to,” the former venture capitalist told reporters.

Still, Romney’s not unalterably opposed to such state investments in private firms. In late January, he appeared in Lowell to make grants to several area businesses out of the state’s Renewable Energy Trust, which is funded by a small tax on electric bills. He also announced plans to move $15 million from the renewable energy trust into a new fund that will make venture capital investments, as well as provide loans and other assistance to companies developing alternative energy products. Recently, he’s even softened his stance on the Finneran technology-fund boost, pending further details.

Romney says he generally believes the private market should be the one to “support enterprise that is viable and has a great future.” But the governor allows that the state might appropriately put money into “a project or an initiative that does not meet market standards or market-rate returns, and where the state may decide to bolster the investment attractiveness.”

THINKING REGIONALLY

The handsome red-brick former mill buildings along Canal Street in Lawrence pay testament to the city’s once-proud industrial past. But the 40 or so people gathered in one of the now-converted mill buildings have come to talk about the region’s economic future–especially, how to identify and capitalize on the area’s “competitive advantages,” in the Michael Porter phrase.

It’s the inaugural meeting of the Northeast regional competitiveness council, one of the six regional panels the Romney administration has established. Although the governor himself attended the kick-off meeting in each of the five other regions, he has skipped the Lawrence session to take in opening day at Fenway Park, and Berke, the state’s director of business and technology, is running the session.

Avant’s Una Ryan applauds the state’s efforts to get biotech sites up and running.

A former vice president at the Boston Consulting Group, Berke earns praise from leaders in business, academia, and local economic development groups for the energy and purpose she has brought to her new post. Andrew Scibelli, the president of Springfield Technical Community College and a member of the Pioneer Valley regional council, calls her “a real dynamo.”

But even her boosters have their doubts that Berke is going to make any big breakthroughs with the new regional councils. For one thing, in several areas of the state, regional economic development organizations are already in place–outgrowths of the earlier Porter-inspired push to think of the state’s economy in regional terms. Some even include higher education leaders–a key selling point of the Romney initiative. Scibelli, for example, already sits on the board of the Economic Development Council of Western Massachusetts, formed seven years ago.

“I think the competitive council concept is a good one,” Scibelli says. “It is, however, a little bit duplicative of what is already going on, at least in Western Mass.”

The same could be said for a chunk of the area covered by the Northeast council, where the three-year-old Merrimack Valley Economic Development Council is in operation, or in the New Bedford and Fall River area, where the SouthCoast Development Partnership was established more than three years ago to bring a regional voice to economic development.

Still, there are areas, such as Worcester County, that had no regional entity to coordinate development. And even where there were such groups already, such as the Pioneer Valley, local leaders hope that the council’s direct link to the state apparatus will translate into greater responsiveness to regional needs and issues.

Nearly everyone, however, has the same worry: Once the regional councils come up with development priorities, will the state be able to deliver? “Even if we end up with the best ideas in the world, [the state] doesn’t have a dime to spend,” says William Kennedy, publisher of the New Bedford Standard-Times and co-chairman of the SouthCoast Development Partnership. The South Coast group has already identified five priority areas for their region, including marine science and engineering, tourism, and “back office” clerical work. Kennedy’s question for state leaders is, “Are they going to be able to help us fund missions, help us acquire land?”

Joseph Alviani, a secretary of economic development in the Dukakis administration, says that, in the current fiscal crisis, these councils could be set up for an exercise in futility. “The danger, I think, is [what happens] if you have all these meetings and raise expectations and then you’re not in a position to invest anything because of the budget crunch,” says Alviani.

Concern about resources seems well-founded. Last year, the budget for the Massachusetts Office of Business Development, the main unit within the Department of Business and Technology focusing on business growth, was down to $1.7 million, nearly $1 million less than in fiscal 2002. And money remains tight in the 2004 budget, which level funds the business development office while making cuts in other areas of the business and technology office.

But the problem isn’t just the fiscal crunch of the past two years. The economic-development apparatus was losing money and staffing even during good times, when state revenues and spending were on the rise. Appropriations for the business-development office fell from $4.3 million in fiscal 1998 to $3.3 million in 2001, before the economic slide began. Staffing has fallen from 42 full-time positions in 1995 to 21 last year.

Michael Hogan, who directed the state’s business-development office from 1993 to 1995, says Massachusetts seems to let up on development efforts when the economy is humming, whereas other states maintain their efforts at business boosting.

“Our inclination as a state is, when things get really good, that you don’t have to do the kind of spade work everyone else does,” says Hogan, who now directs MassDevelopment, the quasi-public economic development agency. “We are a boom-and-bust economy,” he says, and the state’s commitment to economic development “ride[s] that wave too. That has been the curse of Massachusetts.”

Berke acknowledges the reality of limited resources, conceding that she can’t even assign one person full-time to work with each regional council. “Our investment in economic development has declined, and relative to other states it’s been declining even more sharply,” she says. During a recent drive to Amherst for meetings at UMass about the National Science Foundation grant, Berke says she heard ads on National Public Radio promoting business development in three or four different states. “It’s been at least two years since we’ve had any budget to promote Massachusetts,” she laments.

But that will soon be changing. Despite the tight budget times, Romney and state economic development leaders unveiled plans in June for a multimillion-dollar marketing campaign to promote Massachusetts as an ideal location for firms in biotech, medical devices, and other fast-growing industries. The state’s Department of Business and Technology and MassDevelopment are each contributing $250,000 toward the $1 million budget for the first year of the campaign, with private companies funding the remaining $500,000.

And if the Romney-as-salesman role is one we’ve seen little evidence of to date, gubernatorial spokeswoman Shawn Feddeman says that with the budget now completed, Romney will “focus his attention almost entirely over the summer and fall on job creation.”

Berke, seemingly an incurable optimist, claims there is much that can be done with the state playing the role of catalyst. She makes frequent references to Malcolm Gladwell’s book The Tipping Point, which argues that trends or new ways of thinking can burst forth after reaching a critical mass, often driven by small groups of social “connectors” who spread the word.

“I am not a central planner, and I am not at all certain that adding state resources in state government guarantees results,” says Berke. “I need just enough resources here to provide the ‘activation energy’ and to provide some of the basic networks.”

MAKE IT IN MASSACHUSETTS

One area where Berke and others hope the new marketing campaign and other efforts will provide those networks and activation energy is in the state’s biotechnology industry. Although Massachusetts is home to firms doing some of the most advanced research in the field, the biotech industry employs just 30,000 people in a state workforce of more than 3 million. Industry officials say a big area of untapped biotech potential in the Bay State is the manufacturing of biotech products. But it’s a potentially rich area of growth that won’t take root here on its own.

That’s the message at the annual meeting of the Massachusetts Biotechnology Council in late April. “We are behind, we are losing ground,” Cynthia Fisher, chairman of the council, tells members of the trade group at the Sheraton Hotel in Boston. “As our companies have matured from R&D to manufacturing, the manufacturing job growth has been going elsewhere.” She cites “hundreds of millions” of dollars in biotech capital and thousands of jobs that have landed not in Massachusetts, but in states like North Carolina, which has made an aggressive pitch for biotech production. A report issued by the biotech council last fall claims that with the right support, the Massachusetts biotech industry could employ 100,000 people by 2010 and generate as much as $1 billion in state income tax revenue.

One area in particular where many industry leaders say Massachusetts risks missing the boat is in “pilot manufacturing,” or the early-stage production of biotech drugs used in clinical trials. “There is a significant advantage to having pilot manufacturing in close proximity to R&D,” says Fisher. “We have it all here. We have all the right ingredients. It just takes leadership and focus to make it happen.”

State and industry leaders say that leadership and focus may finally be crystallizing. In January, MassDevelopment hired the former site selection manager for Genzyme, one of the state’s leading biotech companies, to head a new effort to convince biotech companies to locate manufacturing facilities in Massachusetts.

“First and foremost, we need to talk to companies that are here and dispel some of the misconceptions,” says Scott Sarazen, the new biotech industry ambassador at MassDevelopment. When the cost-of-living is compared to a national benchmark of 100, Sarazen says, areas just outside Route 495 register at 110, while Springfield is rated 102. And when it comes to business costs, says Berke, “You don’t have to go very far outside of the Greater Boston area to find production costs that match or beat North Carolina or Texas.” Until recently, however, she says, “We weren’t telling the stories.”

With about 30 Massachusetts companies at or near the stage of making decisions about where to locate production facilities, Berke and her staff have teamed up with Sarazen, Secretary of Environmental Affairs Ellen Roy Herzfelder, and officials from the biotechnology council to start “telling the stories.” They are identifying promising locations for biotechnology production ahead of time, and working with municipal officials in an effort to “pre-certify” potential manufacturing sites. Having sites ready to go can be important in biotech. Firms often cannot commit to production until late in the research phase, yet patent and other competitive considerations mean they must move quickly once they’ve got positive results. “So they are the poster child for in-late and up-fast in terms of putting plants in the ground and ramping it up to production,” says Berke.

Una Ryan, CEO and president of Avant Immunotherapeutics, a Needham biotech firm that will soon be deciding on a production site, says the state’s new focus is a welcome shift. In a recent talk, Ryan mentioned the possibility of doing her company’s manufacturing in Missouri. Afterward, she says, Sarazen “buttonholed me at the door and said, ‘I want to change that to Massachusetts.'”

That kind of attitude from the state is exactly what biotech entrepreneurs are looking for, says Ryan. “We know we have high land costs, high employment costs” in Massachusetts, she says. “We’re not looking to change reality. But we don’t need to wait 18 months to get a permit when, in another state, the state government will walk you through and get [you] a permit.”

BALANCING THE PORTFOLIO

Not only would biotech production mean more jobs in Massachusetts, it would broaden the workforce of an industry now top-heavy with PhDs and highly trained scientists to include many more good jobs that pay in the $40,000-to-$50,000 range. Such an evolution in biotech, as well as in other areas of the knowledge-based economy, is crucial given the decline of the state’s older, industrial manufacturing sectors.

Without it, Massachusetts will become “a lot less conducive toward a broad middle class than it ought to be,” says Jack Donahue, a lecturer at the Center for Business and Government at Harvard’s Kennedy School. Right now, he says, “we’re moving into more of a winners-and-losers structure.”

One thing such growth is predicated on, however, is the ability of Massachusetts workers to step into those jobs. A report issued by MassINC three years ago found that as much as one-third of the state’s workforce, or 1.1 million workers, lack the basic skills and training that are needed for the jobs of the state’s fast-changing economy. It’s something Ryan, the biotech CEO, knows full well, and worries about as she contemplates expanding here. “We’ve got all sorts of Harvard and MIT PhDs,” she says. “But we don’t have enough people who know how to run a fermenter.”

“We have to do a lot better on the community college level, and make sure those are geared to what we have as workforce needs,” says Pozen, Romney’s secretary of economic development.

Some community colleges are widely recognized for doing just that. Springfield Technical Community College secured money from the Legislature in the early ’90s to establish a technical park adjacent to the campus on a former Digital Equipment Corp. site. The business center now houses 18 companies with more than 750 full-time workers and has become a vital hands-on training and internship center for its students as well as a pathway to post-college employment. Nonetheless, Springfield Tech’s president calls the workforce development system in Massachusetts “an absolute nightmare.”

“It’s a quagmire. It’s overly burdened with bureaucracy,” says Scibelli. Even after 20 years at the Springfield college, he says, “I still don’t fully understand it.” In contrast, North Carolina uses its community colleges “unabashedly as workforce development centers, end of story,” he says. Some Bay State community colleges do that, says Scibelli, “but we do that on our own.”

Indeed, some experts say education may be the state’s single most critical investment for economic development. “What do states need to get right?” asks Harvard’s Donahue. “They need to have good, efficient K-12 and higher-education systems, including worker training and vocational education systems. That especially applies to Massachusetts, because we don’t have oil fields or cheap commercial land or amber waves of grain to bail us out if we drop the ball on human capital.”

In that sense, economic vitality in Massachusetts is not just about tax breaks, government regulation, and industry clusters. It’s also a function of public investment.

Meet the Author

Michael Jonas

Executive Editor, CommonWealth

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

That message came through loud and clear when MassINC convened five leading officials from the Weld and Dukakis administrations several years ago to talk about how state government can best aid economic growth. In that 1998 report, Lessons Learned: 25 Years of State Economic Development Policy, the former officials emphasized the importance of infrastructure spending and the imperative of building a top-notch public education system. At the same time, the five former officials–three Democrats and two Republicans–also urged state leaders to hold the line on state spending and taxation, calling, for example, for a return to the state’s pre-1989 5 percent income tax rate, a goal Romney has vowed to achieve by the end of his first term.

It’s these conflicting imperatives–public restraint, in taxing and spending, versus public investment, in education and infrastructure–that make a bold and coherent economic-development plan a tough sell for Romney. In the current fiscal circumstances, striking the right balance may be the ultimate economic challenge facing the new administration. But then, the importance of maintaining a balanced portfolio should be clear to any investor as savvy as the state’s MBA governor.