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SELLING NEW JERSEY
The state takes a nimble, business-like approach
To attract and retain high technology enterprises
by Barbara Figge Fox
Government — all governments — have a
for sluggishness that is hard to shake, and New Jersey’s is no
The word "bureaucrat," "red tape," and, yes, even
"state worker" evoke the stereotype, deserved or not, of
paper-pushers who block the wheels of progress.
Last week Governor Christie Whitman and Commerce Commissioner Gil
Medina announced they want to streamline government so it can more
efficiently attract and retain business, especially high tech
They plan to abolish the Department of Commerce and Economic
and reorganize it as an independent publicprivate commission.
Will that make a big difference? It could. A commission has more
than a department and as a public-private organization it would be
in a position to recruit significant support from corporations.
would chair the commission and Medina would be CEO. Among its first
moves would be to hire technical specialists who can help draw more
high tech firms to New Jersey.
"We have an intransigent bureaucracy in place that does not allow
us the ability to react quickly to help businesses and ward off
before they turn into crises," said Medina at last week’s press
conference. "We do not have the people on staff with the knowledge
about the major industry sectors such as pharmaceutical or technology
that are important to our economy."
In the same announcement Whitman proposed "One-Stop Shopping for
Businesses," to consolidate the payments to three departments
with 11 forms to one department and four forms. All payments —
tax, unemployment and disability, workers compensation, and
fees for trade names and annual reports — would go to the
of Treasury’s Division of Revenue, created last year.
These sweeping changes stem from Whitman’s 1995 master plan for
development, and they have been engineered by Prosperity New Jersey,
a public-private partnership. Medina and Finn Casperson, chairman
of Beneficial Corporation, are co-chairs, and Stephen J. Kukan was
brought in from the private sector to be the executive director.
"I see the new commission as the ultimate in terms of being
to economic development questions and servicing clients who are
both in retention and retraction," says Kukan, who had served
on the master plan committee. An industrial engineering major from
NJIT, Class of 1967, he has an MBA from Fairleigh Dickinson and worked
for Public Service Electric & Gas.
Kukan spent virtually his entire career trying to attract business
to the state, to "sell" New Jersey. He calls it "a
product." He wholeheartedly agrees with the new, unusual strategy
and believes the commission will provide the tools to convince
that New Jersey is indeed "open for business."
"The people at the level the governor is talking about will enable
government to think like a business and business to understand more
of government’s role," says Kukan.
The proposed commission is not without precedent. The
concept was based on the Michigan Jobs Commission, created in 1993
to consolidate all the opportunities (worker training, economic
grants, etc.) available to corporations thinking of moving to
It is also not without controversy. Abolishing the department will
eliminate 120 staff jobs. Every current staffer can apply for a
job, but these jobs will be non-union and have flexible hiring and
firing rules, and the Communications Workers of America union already
has raised the predictable fuss.
Others question the plan as well. Jon Shure, president of New Policy
Perspective and formerly Governor Florio’s communications director,
points out that it was a Republican governor, Tom Kean, who divided
the Department of Labor and Industry to create the Department of
and Economic Development.
"You have to wonder what will result from losing the commitment
to a separate department," says Shure. "The extra
that you have from being an official department of state government
can be a helpful thing. It gives you equal status with other cabinet
departments." Medina will retain his seat in the cabinet, but
the next governor might not continue that arrangement. "Down the
road, when you are looking for a high powered person, you would be
hiring the head of a commission, not a member of the governor’s
Yet in 1994 Whitman eliminated a department, Higher Education, and
replaced it with a commission, and she seems bent on doing it again.
In fact, some of the elements of the future commission are already
in place. Gerald A. Janssen heads a team of six regional account
and five industry account managers (see sidebar, page 49).
But when you look closely at how New Jersey supports high tech
you realize that two important commerce organizations were already
freeing themselves from the bureaucratic mire. One is a commission,
the New Jersey Commission on Science and Technology, and one is an
authority, the New Jersey Economic Development Authority.
A commission receives its budget from the legislature, whereas an
authority, such as the Port Authority and the Turnpike Authority,
raises its own funds. Both are under Medina’s supervision and both
are public-private partnerships. Both are efficiently oiling the
of New Jersey’s high tech cart.
The New Jersey Commission on Science and Technology, headed by Jay
J. Brandinger (executive director) and Irwin Dorros (formerly
vice president of Bellcore), has just six staff members. It gets about
$15 million from the legislature, including nearly $12 million for
R&D programs and $2.7 million for business assistance programs, and
it attracts matching funds from private industry, philanthropy, and
the federal government.
Last year it gained some nimbleness for its granting procedures.
of being tethered to "line items" on a budget passed by the
legislature, it now gets a lump sum. Now, says David R. Eater,
director, it can respond more quickly to changes on the technology
The New Jersey Economic Development Authority, directed by Caren
and chaired by Anthony Coscia, is able to sidestep the legislative
funding process completely. It uses no taxpayer dollars and raises
its own money. Then it reinvests to support business ventures that
need more help than commercial sources can give. In 23 years it has
provided more than $12 billion to more than 600 entrepreneurs and
corporations. (See Survival Guide, page 6, for examples.)
"For years the private sector has been trying to get the attention
of the public sector in terms of being responsive to private sector
needs," says Kukan. "We at Prosperity New Jersey say that
economic development has to be the governor’s bag, and the private
sector has to be an active participant in terms of resources and
I look at this, the proposal for the commerce department, as the
point. It shows that all bets are off," says Kukan. "It is
not business as usual in New Jersey."
Call her the unflappable Franzini. As executive director
of the New Jersey Economic Development Authority, Caren S. Franzini
works with bankers, lawyers, accountants, and CEOs to arrange
of more than $600 million a year to more than 200 companies. But
she has a dinner meeting she manages to leave her office at 5 p.m.
sharp to pick up her two school-age children and her three-month-old
"She’s a cool cat . . . she never gets flustered," says one
of her employees.
"As far as I’m concerned, she walks on water," says a former
"Hers is one state agency that really works," says a prominent
With its impressive list of accomplishments the EDA has been making
news on its own, but the proposal to change the commerce department
to be more like the EDA, an independent public-private partnership,
makes it an even more intriguing subject. Add a much-admired executive
director who balances the needs of private business with the goals
of the state — and juggles her work schedule with being a mother
of three — and it’s a fascinating story indeed.
Her vision for the EDA? "I like to keep pushing it in new
says Franzini, "to be responsive to and adhere to policy
that the governor and Commissioner Medina set forth, and to work with
the business community to implement them. We are really that middle
ground. It’s great fun."
Fun for someone as unflappable as Caren Franzini. "She is an
women," says Alison Harris, former director of McCarter Theater,
now director of business development for the Mapleton Road architect,
Ford Farewell Mills & Gatsch. Harris and Franzini had served together
in the Kean administration as assistant state treasurers under Feather
O’Connor. "There are a lot of good women in state government,
but she is a shining example of someone who is nonpartisan and has
deep roots in the state but understands the way the state operates
and knows how to make everybody around her do their best work. As
far as I am concerned she walks on water."
Franzini credits O’Connor with being an important mentor who showed
her how to empower others to be creative. "At a young age for
me, she gave me a lot of independence to think for myself and come
up with ideas to present to her. It made me rise to the occasion and
to try that with people I work with as well, to let other people share
in the glory."
But she was also strongly influenced by her parents. One aspect of
her success is her ability to build consensus, to sell an idea to
everyone who will be at the table before they get to the table. That
came from her father. "My father was in politics for a long time.
He knew how to get everyone on your side before you walk in the door
— and I grew up selling. That is part of my personality."
Another success factor is being able to come up with creative
to conflict. That came from her mother, who served as the problem
solver in an extended family of 12. "Her technique was to let
people talk and try to come up with a solution so that each party
knew they were giving up something." For instance, her mother
solved a continuing squabble over whether Caren could borrow her older
sister’s clothes with the compromise that Caren was allowed to wear
one of the coveted outfits — but only once a week.
Her mother’s conflict solving translates to: "Before you sit down
with a client who is mad at you, find out where they are coming from,
and know how to listen."
The day before this interview an attorney had called about a client,
an elderly gentleman who wants to build a shopping center but refuses
to personally guarantee the loan. "I understood he did not want
to jeopardize his estate or have his wife worry about the loan if
he passed away, but I also knew we had to have collateral. I told
the attorney we don’t have to have his personal guarantee if he gives
me a CD or a letter of credit that would equal the value of what we
That simple change, to separate the loan from the estate, was
"I got what I needed by thinking out of the box and being
Caren S. Raphel Franzini grew up in Atlantic City, where her family
started out living "over the store," Gordon’s, a
store with clothing for infants through adults. The family consisted
of her parents and two siblings plus an aunt and uncle and three
in another apartment, and grandparents who lived in a third apartment.
Everyone ate dinner together, and when they moved to a house, they
all moved together.
"When I was really young I would help do things like check in
the clothes and gift wrap, and when I was 11 or 12 I started selling.
I was tall," she remembers, "and I could get away with looking
With six years of experience at the cash register,
went to University of Pennsylvania, Class of 1980, to major in urban
studies. She was influenced by a Wharton professor, Anita Summers,
to choose a Wharton MBA rather than a graduate degree in public
"She said that Wharton would help me understand how the private
sector thinks, and that I should take the nuts and bolts, finance
and marketing courses, to learn how to apply the skills of private
business to government."
Her first job was as a consultant with Public Financial Management,
a financial advisory firm in Philadelphia, and then she worked in
the finance division at the Port Authority of New York and New Jersey.
After a stint as assistant state treasurer in the New Jersey Treasury
Department she joined the New Jersey Economic Development Authority
in 1991. She was appointed executive director of the NJEDA by
Medina in January, 1994.
Last year the EDA’s financial activity totaled $790 million, making
it one of the most aggressive and diversified financing and real
development agencies in the country (http://www.njeda.com).
With 1997 financing to more than 300 businesses and not-for-profits
it helped generate $1.27 billion in new investments that will create
4,000 permanent new jobs and employ 7,200 construction workers on
It creates public-private partnerships to bridge financing gaps and
increase access to capital for small and middle-size businesses and
not-for-profit borrowers. It arranges low-cost financing, loan
creative financing packages. It provides a full range of real estate
development services, and it offers technical support to strengthen
targeted business sectors important to the state’s economy.
Franzini is past president of the National Council of Development
Finance Agencies, a member of the Edison II Advisory Committee, a
director of the New Jersey Technology Council, and president of the
Corporation for Business Assistance in New Jersey. The AFL-CIO
Investment Trust recently honored her, along with Mayor Willie Brown
of San Francisco, with the Golden Investment Partnership Award for
her part in innovative investment partnerships that create jobs in
New Jersey. Her salary is on the brink of six figures.
She is married to an attorney, and their three children are ages 7
1/2, 5, and 3 1/2 months. She did some work from home during maternity
leave and returned to the workplace full-time when the baby was 10
weeks old. Her day starts at 6 a.m. "Every day is a new
says Franzini. "If I have to be at a breakfast meeting, my husband
will take all three kids; they get dropped off at three places. We
work with each other’s schedules."
Her strict rule is to leave on the dot of 5 p.m., unless she has a
dinner meeting, to pick up the children. During the day she has
stickered" articles she wants to read from the EDA’s assortment
of newspapers and periodicals, and she reads them and answers memos
after the children are tucked in.
She advocates the same flexibility for her staff, "whatever you
need to get the job done, get it done. Everyone has their own needs
and work habits."
Her goal for the EDA? "To never lose the excitement for the staff,
that when they come to work they are helping the businesses of New
Part of the excitement is empowerment. "I want people to come
to me, as some do now, and say, `Caren, why don’t we start this new
area,’ to be proactive in the marketplace." Part is creativity,
"to understand the gaps in the marketplace and come up with the
right way to fill them."
Part is "getting out there" to talk and listen to people.
Franzini increased EDA’s outreach by one-third last year, going from
160 speaking engagements in 1996 to 240 in 1997 (which, it must be
noted, was an election year). "We get out in the trenches, to
speak to all kinds of professionals — lawyers, accountants,
county and municipal development authorities, business groups —
to understand what they need and tell about our programs."
Part of the success secret is just plain being likable. "I get
a lot of letters saying, for instance, `I worked with this loan
and he or she was helpful, and that makes them feel good about New
Jersey. Commissioner Medina wants people and an organization that
is proactive and that will make people feel good about the business
community. Bankers and lawyers and accountants like dealing with us,
and you want to keep them happy to deal with us."
It comes from her father’s slogan: "find out what your customer
wants, and give it to them." Caren Franzini is selling New Jersey.
Prosperity New Jersey is, says Governor Whitman,
the book on how to do economic development in the state of New
Commissioner Gil Medina — an alumnus of Rutgers and Temple who
is both an attorney and a CPA — planned the creation of Prosperity
New Jersey, and several of its major initiatives are already in place.
It has accomplished a technology promotion strategy called the Edison
Partnership, a tourism master plan, and research and recommendations
for regulatory reform, a $1.8 million image marketing campaign, a
business resource center, and a system of accounts managers. The
of Accounts Management, launched last September, is modeled after
corporate sales organizations and organized by geographical territory
and business type.
"The account executives are going to give New Jersey a true
edge," says Medina. He appointed Gerald A. Janssen to be executive
director of the accounts management office. Janssen spent seven years
at Sarnoff and was most recently senior vice president of human
and facilities operation. He had also worked for Pullman Company (a
diversified merger and acquisition manufacturing firm), PTC Aerospace
Inc. (a Pullman subsidiary and a manufacturer of commercial aircraft
interior products), and UOP Inc. (a petrochemical research unit of
The account executives are charged with providing a 24-hour guaranteed
response for requests for assistance so that any business with a
will hear from the appropriate person in government. Industry
will focus on the largest employers and those with the greatest growth
potential. Already appointed are John Celentano (food processing),
Jim Donnelly (telecommunications), Sophia Koch (F.I.R.E. —
insurance, and real estate), Charles Lynch (petrochemical), and Keith
Moore (urban). Yet to be covered are business services,
Janssen has also appointed regional account managers to work with
companies with less than 100 employees. They include Maryann Buga
(for Hudson, Essex, Morris, Warren counties), Edward Dietz
Camden, Gloucester, Salem), Gary Marx (Bergen, Passaic, Sussex), Paul
Shaffery (Middlesex, Monmouth), Charlotte Tomaszewski (Mercer,
Hunterdon, Union), and James Waldron (Ocean, Atlantic, Cape May, and
A Business Resource Center has centralized all the current information
on site availability, tax incentives, local zoning and regulation.
This year a multimedia tool for the account executives is planned.
By answering a questionnaire based on a company’s statistics and needs
they will be able to produce a custom CD-ROM — overlaid with a
message from the governor — for any client. A less detailed
will be for general use on the Internet.
Says Medina: "We want to make sure that no business falls through
EDA programs pave the way for businesses to get the capital they need
to invest in New Jersey. It has a Commercial Lending Division
with more than a dozen programs, including the Statewide Loan Pool for
Business, which works with New Jersey banks to arrange loans of up to
$3 million; long-term financing through the federal SBA 504 program of
up to $750,000 for fixed assets; loan guarantees of up to $1 million
for working capital and $1.5 million for fixed assets; and direct
loans of up to $500,000 for fixed assets and $250,000 for working
The Community Development and Small Business Lending Division
offers financial and technical assistance to start-up and
micro-businesses located in qualified municipalities. New this year: a
$36 million EDA regional venture capital fund, GS Capital, targets
women’s and minority businesses. Organized as a Small Business
Investment Company the fund has $12 million from the EDA and private
banks and $24 million from the federal Small Business Administration.
It aims to help minority and female entrepreneurs get into business in
such tested franchise products as fast food restaurants and service
stations, and it provides financing below conventional venture capital
The Real Estate Development Division supports projects of
significant economic impact by helping with land assembly, site
improvements, construction, and renovations. Princeton area projects
range from a loan of $162,500 for the Association for the Advancement
of Mental Health’s purchase of a headquarters building on Alexander
Road to a $12,000 site remediation loan for a Princeton borough
homeowner. In Trenton, site remediation loans total $154,000 and $1.35
million has been loaned to Roebling Urban Renewal Associates.
The Investment Banking Division offers long-term, lower interest
rate bond financing for a minimum of $750,000 for a wide variety of
businesses and not-for-profit corporations including the New Jersey
Performing Arts Center in Newark and the 50-acre Technology Center of
New Jersey in North Brunswick (Franzini is justifiably proud of both
these projects). Bonds are financing a total of $19.3 million for the
Peddie School and Lawrenceville School.
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