Prosperity NJ: Focus on Pharma

The Mood of Business: NJBIA

Corrections or additions?

These articles by Barbara Fox were prepared for the January 29, 2003 edition of U.S.

1 Newspaper. All rights reserved.

Promoting the Princeton Corridor

Some of us know intuitively how important

this corridor is," says patent attorney Dick Woodbridge,

citing statistics such as how Princeton is the first in the nation

in dotcoms per capita. The Princeton area also has a high record for

submitted patents (second only to San Jose) and venture capital dollars

(third to Boston and San Jose).

When Woodbridge spoke at the Society of Internet Professionals Meeting

on January 8, he made a pitch for promoting Central New Jersey with

a major initiative. Drawing on corporate and government participation,

Woodbridge is trying to form an adhoc committee for this purpose (www.njiplaw.com).

Twelve years ago he participated in a similar group, headed by Jim

Clingham of Sarnoff, which aimed to promote the Route 1 corridor

as New Jersey’s Silicon Valley. This group put together a promotion

for Princeton and Rutgers Research Corridor (PARRC) that culminated

in a publication and signs along the highway. But PARRC never did

have much of an impact. In retrospect, says Woodbridge, "it was

too much to expect the major institutions (Princeton and Rutgers)

to take a major role in getting the state to participate."

In the past decade the state government has taken various, sometimes

conflicting, steps to enlist corporate support for promoting the state.

First there was Prosperity New Jersey. Then Governor Christie Whitman’s

administration changed that to Innovation Garden State, with emphasis

on a website with information to lure high tech businesses. The McGreevey

administration abandoned that website, re-assumed the name Prosperity

New Jersey, and re-ordered its priorities to be de-emphasize promotion

and more greatly emphasize education.

With Adam Pechter at the helm, Prosperity New Jersey staked

out university support by making Princeton University President Shirley

Tilghman the cochair, along with the William C. Weldon, the

CEO of Johnson and Johnson. With financial support from the pharma

and biotech community, Prosperity New Jersey is emphasizing the state’s

pharmaceutical strength.

Woodbridge, who has been active in Republican politics in the past,

says that New Jersey "has to be real careful in terms of the image

it projects."

"I think the state has got to refocus on the small startup business,"

says Woodbridge, noting that startups are flourishing even in a recession

— especially in a recession. When the big companies like Lucent

go through a downsizing, ex-employees start their own companies. "Even

in a mediocre economy, we see `destructive regeneration.’"

"The state does a lot of flashy stuff such as Prosperity New Jersey,

but the state really doesn’t help, the way it should, the businesses

that are going to replace the Lucents," says Woodbridge. "Their

business retention program is not bad but the state can be perceived

as having a high tax/low return on investment."

"It is still a good place to do business, but it has some characteristics

not attractive to small business and new businesses. The tax structure,

from a distance, would not make you want to jump up and down. New

Jersey has one of the highest gross personal incomes, but if a corporation

sees that New Jersey pays the highest wages for the same service,

that is not attractive."

New Jersey is a tax inefficient state, he says, because it pays a

lot of money in taxes and gets less in return (67 cents on the dollar)

than any other state. For retirees the state is the second most expensive

in the nation; the average New Jersey retiree couple with a $60,000

annual income pays $7,221 in taxes. (Pennsylvania comes in first in

this undesirable ranking.)

"Take a look at what you are getting vs what you are paying for,"

he advises entrepreneurs. If, like the pharmas, you need lots of the

employees that New Jersey has, it makes sense to be here. "If

your business is more transportable and doesn’t have to be close to

people you serve, you can make an argument for being more remote and

move to another state."

In his talk to the Society of Internet Professionals, Woodbridge referred

to the Technology Fast 50 list compiled by Deloitte & Touche, based

on revenue growth from 1996 to 2000, and printed in the NJBiz 2002

book of lists. Woodbridge counts half of these companies as being

in Central Jersey, including Somerset, Piscataway, Edison, and Eatontown.

Half of that group — 11 companies — are in the Princeton area

covered by U.S. 1. But as Woodbridge pointed out, statistics can be

deceiving. The downturn started in 2000 just when Deloitte & Touche’s

survey ended. It played havoc with 30 percent of the formerly fast

growing Princeton companies. These four — Novasoft Information

Technology, Hexaware Technologies, RCN, and Princeton Video Image

— are either floundering now or their growth has been severely

restricted.

Move away from the cosmetic flash and towards supporting the small

high tech start ups, by making it attractive as a high tech state

— that’s Woodbridge’s advice to New Jersey. He wants the state

to support his effort to put together a Route 1 corridor commission

and come up with a marketable moniker comparable to Silicon Valley.

"It’s time for New Jersey to wake up and smell the electrons."

Woodbridge & Associates PC, 112 Nassau Street,

Box 592, Princeton 08542-0592. Richard Woodbridge, president. 609-924-3773;

fax, 609-924-1811. E-mail: rcw@njiplaw.com. Home page: njiplaw.com

Top Of Page
Prosperity NJ: Focus on Pharma

Adam Pechter, CEO of Prosperity New Jersey and

COO of the New Jersey Commerce and Economic Growth Commission, emphasizes

that New Jersey’s riches include 75 percent of the world’s top pharmaceutical

companies’ headquarters. He suggests that the state has failed to

build upon its pharmaceutical strength in a cohesive, proactive fashion.

A public relations campaign can’t fix this, he says, in an apparent

reference to his predecessor’s campaign and Innovation GardenState

website, nor can spending more money. "This is not a matter of

money — it is a question of leadership, focus and commitment.

We must do more with what we have. This is the new charge of Prosperity

NJ," Pechter said in a speech last fall.

Pechter’s organization functions as a think tank for the McGreevey

administration and the commerce commission. It aims to find ways to

grow the revenue base, develop workforce skills, and create jobs.

In a speech last fall Pechter had rank-ordered his areas of interest:

Pharmaceutical products "as NJ’s silicon. Michael

Porter, the Harvard-based author of "The Competitive Advantage

of Nations," is known for his research on how competition is affected

by geographically concentrated clusters. Governor McGreevey met Porter

at the national governors’ conference in August. Porter is being paid

$250,000 to analyze the state’s cluster of pharmaceutical, medical

technology and biotechnology companies and develop an action plan

to improve the state’s competitive advantage. Helping foot the bill

for this are two of the state’s major trade groups, Healthcare Institute

of New Jersey (about a dozen of the biggest pharmas) and Biotechnology

Council of New Jersey (the smaller biotechs). Porter will present

his study at a board meeting of Prosperity New Jersey on Friday, February

14.

Rutgers, Princeton and Bell Labs "as huge petri

dishes that will return New Jersey to dominance in innovation."

Pechter enlisted Princeton University’s president Shirley Tilghman

to co-chair Prosperity New Jersey.

Back offices of Wall Street firms in Jersey City and the

insurance industry in north Jersey as an "economic engine focused

on information and data management" requiring north Jersey improvements

in transportation and education.

Main goods supply points for the northeast. To enhance

the distribution centers such as those now flourishing at Exit8A,

for instance would involve dredging the harbor, expanding Newark Airport,

upgrading Route 1, and building a another rail tunnel to Manhattan.

In a recent telephone interview Pechter emphasized why setting priorities

is so important. The Whitman administration had allocated $2.5 million

to his department, and corporate contributions doubled that. But Pechter’s

current budget is just $550,000.

"It’s not just about money," Pechter says. "The `old’

Prosperity New Jersey had become a branding entity. We looked at the

Innovation Garden State campaign, and it wasn’t getting results. The

big contributors to it weren’t happy. When you spend public money,

you have to have measurables, and you have to be focused."

"It is unclear when the telecommunications firms are going to

see the light at the end of the tunnel," says Pechter, explaining

why he isn’t trying to promote telecommunications right now. "With

limited resources, it is really important to prioritize and build

on our strength. There isn’t anything Prosperity New Jersey can do

until the phone companies start buying equipment for the networks."

"We have to tap the strengths that makes us unique," says

Pechter. "No other state has 75 percent of the top pharmaceutical

companies."

"And with the government facing fiscal restraints," says Pechter,

"I would rather go to a J&J or a Merck and ask for funds for a

mentor program for a local high school then for a branding campaign."

In a speech for the Princeton Area Chamber of Commerce on January

9, Pechter emphasized the need to improve education by changing the

paradigm, by establishing "an innovation triangle of partnerships

between the private sector, the university community, and the state."

"New Jersey has one of the best educational infrastructures in

America. And we’re home to some of the greatest companies in the world.

However, these communities haven’t been communicating well with one

another."

"To address this challenge, we asked Shirley Tilghman, president

of Princeton University, and Bill Weldon, chairman of Johnson & Johnson,

to chair our board. To have the president of Princeton and the chairman

of J&J bridge the communications gap makes a big difference."

The results, as he cites them, include the new "Career Academies,"

high schools where students are exposed to better facilities, technology,

and mentoring relationships and internships. One academy connects

PSE&G with Trenton High School.

He also cites the state’s participation in the Nanotechnology Research

Center at Bell Labs (U.S. 1, October 16, 2002). "Many states are

scrambling to put together similar facilities, costing tens of millions

of dollars. We already have this facility. And our hope is that it

will become a job creation engine over the next decade."

Prosperity New Jersey, 20 West State Street, Box

820, Trenton 08625-0828. Adam Pechter, CEO. 609-292-3685; fax, 609-984-4920.

Home page: www.state.nj.us/prosperity/

Top Of Page
The Mood of Business: NJBIA

The New Jersey Business & Industry Association hopes

to encourage business expansion and job creation in 2003, says Philip

Kirschner, executive vice president. Kirschner reports that although

employers as a group are feeling more optimistic about their business

prospects, they are feeling less sanguine about the state’s political

leadership.

In response to NJBIA’s 2003 Business Outlook Survey, employers gave

the governor and the legislature an approval rating of only 11 percent.

Yet the same survey found that employers are optimistic for the first

time in several years.

Thirty-six percent of respondents to the NJBIA survey, conducted in

September 2002, said they expected conditions to improve in the first

six months of 2003, versus only 23 percent who expected conditions

to worsen and 41 percent who expected conditions to stay essentially

the same.

Last year more were pessimistic than optimistic. All major sectors

were positive except retail and construction, which were basically

neutral.

The employment outlook, however, is the second worst in nine years.

Only 24 percent of respondents expected to add jobs this year, while

10 percent anticipated cutbacks and 66 percent expected no change.


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