JK: Maryland has evolved into an incredibly diverse economy, but to truly understand where we are today, we need to take a look at our geography and history.
Maryland is often associated with Baltimore, and it is the historical economic hub of the state and the region. It all grew from a dominant maritime industry, the birthplace of the American railroad, and the financial services that make it all tick. Today, the Port of Baltimore ranks among the top performing ports in the world, with particular strengths in containers and cars. It leads the nation in auto handling — Mercedes Benz imports more than 100,000 vehicles through the Port each year, and Chrysler exports more than 125,000, to name just two of many. On the container side, recent investments have made it one of only two East Coast ports capable of handling the large container ships that will be moving through the Panama Canal when the expansion is completed next year. So with that, the entire East Coast will finally have a direct gateway to the Far East. Not surprisingly, Amazon just made a $200 million investment right next to the Port, and we were thrilled to announce that they’ll be bringing more than 1,000 jobs to Baltimore.
Maryland is also home to America’s first railroad, the B&O, and Baltimore is still a key rail hub both on the industrial and passenger front. It’s served by both CSX and Norfolk Southern, and CSX is currently working on an $850 million National Gateway project in six key markets with Baltimore at the center. Amtrak operates the high speed Acela passenger line from Boston through Baltimore to DC, which brings our rail and financial services heritage full circle. Amtrak has been a real driver in connecting us to New York, and one of the reasons Morgan Stanley chose Baltimore as a more cost effective location for back office investment support. And they didn’t sacrifice quality for cost. They found all the necessary financial services assets that grew out of our headquarters of Legg Mason and T. Rowe Price, plus all the IT talent and access to New York by rail in 2 ½ hours.
ESM: So that’s Baltimore, what about the rest of Maryland?
JK: Seventy of the top 100 federal contractors operate in Maryland, including aerospace giant Lockheed Martin, which is headquartered in Bethesda. They drive a whole network of subcontractors and service providers. But what the past few years of government austerity has taught us is that we have to adapt our strengths more than ever to the commercial market. A perfect example is homegrown Sourcefire, a cybersecurity company which Cisco bought last year for $2.7 billion.
They sit right down the road from the National Security Agency — which is actually midway between Baltimore and D.C. — but Sourcefire’s customers use their cyber products to protect things like energy, telecom and banking networks.
The other big driver in the DC region is life sciences. The Food and Drug Administration and National Institutes of Health are in Maryland.
So you’ve got groundbreaking research coming out of the federal labs and universities like Johns Hopkins and University of Maryland, and pharma companies like Medimmune, which was bought by AstraZeneca in
2007 for $15 billion, needing access to FDA for approval of their products, so there’s this entire life cycle in one place.
ESM: You’ve talked about what’s driving the big metro areas. What’s happening in Maryland outside of the Baltimore/DC region?
There are three other regions in Maryland: the Eastern Shore, Western Maryland and Southern Maryland. Southern Maryland is home to Patuxent River Naval Air Station. The complex has more than 15,000 Navy and defense contractor employees working on electronic warfare systems including sensors and radar, propulsion and advanced composites making aircraft lighter and stronger. A big future for the area revolves around the Navy’s unmanned aerial systems — drones if you’re watching this season of the TV show 24. But just like I talked about adapting government technology to the commercial market, we’re studying how companies like Amazon, FedEx and Domino’s can integrate into commercial airspace.
Right across Chesapeake Bay from Pax River is Maryland’s Eastern Shore. The economy revolves heavily around agriculture and seafood, and poultry is also a big industry. But there’s a lot more than chickens and soybeans. While NASA Goddard is located near DC, where all the real rocket scientists are, over on the Atlantic Coast is NASA’s Wallops Flight Center. This is where all the supplies for the international space station get launched, along with commercial satellites, and this is being supported by a cluster of microwave companies. So this is a big part of the Eastern Shore’s future.
At the other end of the state is Western Maryland. They have for generations produced coal, lumber and paper. We just announced a 120-employee expansion by paper products manufacturer National Golden Tissue in Hagerstown that, like many others in the region, will ship their products through the Port of Baltimore. Western Maryland was one of the first stops out of Baltimore on the early rail system. Then came the interstate highway system, with I-70 running out from Baltimore through Western Maryland all the way to Denver and beyond, and Hagerstown intersecting with I-81, which has become a preferred alternative to the densely populated I-95 corridor for trucking. Today there are tens of millions of square feet of distribution centers at that crossroads employing thousands of people at companies like Staples, Home Depot, Kellogg’s, Lenox and FedEx. There’s room for a couple million more square feet. Coincidentally, many of those centers have Mack and Volvo trucks coming in and out every day. Most of the powertrains in those trucks come right from Hagerstown, where Volvo is continuing to grow its 1,400-employee plant.
ESM: What else is driving growth in Maryland?
JK: Investment is a big key, and Maryland’s proven to be a place where outside investors are confident in doing just that. Maryland-grown technology is a big draw. Companies like Medimmune and Sourcefire are perfect examples. And over the past couple of years we’ve seen resurgence in IPOs in Maryland technology companies, like event management software developer Cvent, education technology company 2U, and biotechs Supernus, MacroGenetics, Intrexon, and GlycoMimetics.
Speaking of Maryland-grown, how could I forget UnderArmour, which was built literally from the ground up from founder Kevin Plank’s grandmother’s basement. Today, it’s a $2 billion company headquartered on Baltimore’s Inner Harbor.
Our infrastructure’s also captured the attention of large investors, and just a few years ago, Highstar Capital and Ports America invested more than $100 million in the 50-foot berth and supersized container cranes at the Port of Baltimore to handle the Panama Canal container traffic I talked about earlier. Maryland’s also been one of the first states coming out of the recession to start seeing speculative commercial real estate development. Investors like Teachers, PacTrust, ATAPCO and Prudential are doing more than one million square feet of spec in Prince George’s County.
We’re also investing our own money. Through a strategic plan in the life sciences industry called Bio2020, Maryland has infused more than
$700 million into research parks and institutes, and direct investments and tax credits in nanobiotech and stem cell companies to name a few. We’re well on our way to our target of $1.3 billion by 2020. We’ve also raised $84 million through a program called InvestMaryland to make venture investments and we’re partnering with VCs to make direct equity investments in promising Maryland companies.
There’s been a history of edtech – education technology – here with Sylvan Learning, now Laureate, and Educate, and now we’re seeing companies like Citelighter and Three Ring come down from New York to be part of this ecosystem.