ECONOMIC GROWTH

This is the latest in an occasional series focusing on the issues, records and platforms of the state's candidates for governor. Today's 
installment focuses on the economy.  Republican Gov. Cecil Underwood and his Democratic opponent for governor, Rep. Bob Wise, offer similar economic catchphrases: technology, diversification and work-force development. Their means to the end, however, are as different as a Sunday sermon from a Catholic and a 
Protestant.  Underwood prides himself on the out-of-state companies that have opened 
  • ew factories here. Underwood also touts the state's unemployment rate,
  •  which has dropped from 6.4 percent in 1999 to 4.9 percent this year.  Wise wants less emphasis on recruiting out-of-state companies. He prefers encouraging existing businesses and individuals who want to start their own businesses.  Wise disputes Underwood's unemployment rates by pointing out that by 
  • ext year the state's per capita income is expected to drop below
  •  Mississippi's. In 1998, Mississippi was the only state with a lower per capita income than West Virginia's $19,362.  Last year, West Virginia's total job growth was less than 1 percent. The increase in female workers entering the work force was more than 2 percent, which helped fuel the state's low unemployment rate.  Two weeks ago, Underwood explained in his Capitol office why two New York-based companies in Clay and Mannington are exactly the type of economic growth he wants for the state if re-elected.  "New industry locating in rural areas ... I think this is the direction we need to go," Underwood
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  •   Last month, Filcon opened with 20 employees in a former Rite Aid store in Clay. Employees manufacture heavy-equipment filters. They make $6 to $8 an hour.  In June, Molecular OptoElectronics Corp. hired 40 people in an old Mannington industrial building. Employees assemble fiber-optic connectors. They make $8 to $10 an hour.  "We're a state of small towns," Underwood
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  • "Historically, this has been a problem that led to isolation. That's different now with interstate highways now in place ... and the electronic network."  "High-tech companies" like MOEC chose West Virginia for its available and low-cost labor, higher education system and outdoor recreation, Underwood
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  • By next year, MOEC could hire 200 people, he
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  • "This is a direction where we can keep the momentum going," he
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  •   During a telephone interview from his Washington office, Wise talked more about fostering a "spirit of entrepreneurism" in West Virginia.  "There needs to be some change in the effort to encourage retention and development from within, as well as industrial recruitment from the outside. I don't think there is enough development from within," Wise 
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  •   "I can't predict every job that's going to exist." But, Wise said, "my hope is that we are actually conceiving and creating many of those jobs."  Wise emphasized "individuals getting the training, the skills and the financing they need to make a success for themselves and whatever business they're starting."  Recruit out-of-state or grow in state? It's an old debate that typically pits politicians against non-profit grass-roots development groups. That's changing.  Lately, more politicians like Wise are choosing the "grow from within" approach, said Mark D. Waterhouse, former chairman of the American Economic Development Council and president of Garnet Consulting Services in Connecticut.  Since the North American Free Trade Agreement, factory expansions and relocations are harder to come by. States are increasingly competitive with high-priced incentive packages when luring new industries. And the Internet has spurred high-profile, fast-growth companies that 
  • tarted with a few people and a computer.
  •   Ten years ago, Waterhouse worked for Kentucky's Economic Development Partnership, a business group similar to West Virginia's Council for Community and Economic Development.  Ideally, states emphasize both outside recruitment and inside expansion, but limited resources force decision-making. Kentucky "went through the same sort of debate about where to set priorities," Waterhouse
     
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  • State officials there chose recruitment.  "Put yourself in the place of the local mayor. Where would you rather have your picture taken? At a groundbreaking for a 100-employee operation or shaking hands with one of the two owners of a new business?" Waterhouse 
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  •   Kentucky recently changed its approach and added a "Cabinet for the New Economy," Waterhouse
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  •   "I think you'll see more and more of that kind of focus because it's a specialty," he
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  • "People that are talking about recruiting automotive plants need a different knowledge base than people that are talking about e-commerce."  Wise criticized, as small-business advocates have in the past, Underwood's tax reform plan, the super tax credit and the Capital Company Act.  Underwood defended his tax reform package. It provides "simpler taxes" and eases "the heaviest burden on manufacturing," he
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  •   Wise disagreed. "It unfairly shifts a lot of the tax burden from the mining industry ... and shifts it to the kinds of industries we're trying to develop - service and technology," he
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  •   The super tax credit forgives up to 80 percent of taxes for as long as 13 years for business owners who announce 50 to 1,000 new jobs. Grumbles about the tax credit are not uncommon for staff at the Business & Industrial Development Corp., said Bill Goode, president.  "We often hear that some of the incentive programs are geared toward 
  • ew companies. The same programs are available to existing companies but
  •  ... for an existing company to add 250 new jobs, that's a lot," Goode 
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  •   Sixty percent to 80 percent of new job growth comes from existing companies, Goode
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  • During fiscal year 2000, 169 companies announced new investments in the state; 57 of those were out-of-state companies, according to the West Virginia Development Office's annual report.  "Because we have so many small companies in West Virginia, to have a big impact statewide, each one of those little companies has to add a person, and that will be as big an impact as bringing in that one new company," he
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  •   In his economic development plan posted on his campaign Web 
  • ite, Wise said he wants "to make sure incentive programs provide
  •  opportunity for existing businesses as well as to attract new businesses."  Rick Clonch, a longtime coal company executive, recently started an e-commerce exchange for the coal industry, ImixInc. com. In January, Clonch opened an office in Charleston with one administrative assistant. In the past six months, he's added 12 employees. By next year, he hopes to hire another 30 people.  "I think there's a lack of venture capital that's in West Virginia, and I think whatever can be done and whatever needs to be done - it'd be nice to see things addressed in the next Legislature regarding the New Economy," Clonch
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  •   West Virginia has a venture capital program called the Capital Company Act. Since 1987, more than $100 million of state money has been given to investors who start venture funds. It is debatable whether that money has produced the type of new job growth for which it was intended.  Wise said he wants to reform the Capital Company Act. He also wants to 
  • tart a new venture capital fund, the Mountaineer Opportunity Fund, for
  •  high-risk business start-ups.  Underwood responded that Atlanta consultant Mac Holladay is conducting an in-depth analysis of the state's incentive package and venture capital 
  • eeds. Based on Holladay's report, expected in November, the development
  •  office will revise its policies, he
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  •   Development office employees have been receptive, but unable to help Clonch's start-up company. Clonch's biggest challenge is finding workers 
  • killed on the Internet. Employees make an average of $40,000 a year.
  •  "Maybe they [development officials] don't have the capacity because of the structures of the laws and things of that nature," Clonch
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  •   "That's my impression. That their hands are tied and limited because of the resources and the legislation," he
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  •   To contact staff writer Kelly Regan, use e-mail or call 348-5163.  
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