An agency bent on economic diversification is diversifying its recruiting
pitch. The Nevada Development Authority, known for cheeky advertising
campaigns that take pot shots at California’s business climate, is reaching
across the continent in a bid to capture some of New Jersey’s prized
biotechnology and life-sciences companies. Earlier this month, the authority
launched a $100,000 advertising buy in four East Coast newspapers: the Times
of Trenton (N.J.), the Press of Atlantic City, Business News New Jersey and
the Philadelphia Inquirer. The ad features Las Vegas Mayor Oscar Goodman
flashing the peace sign while leaning on a 6 of hearts card that touts the
city’s business environment. Nevada Development Authority President and
Chief Executive Officer Somer Hollingsworth said the ad buys resulted from a
July budget impasse in New Jersey that led to the shutdown of the state’s 12
casinos. When New Jersey Gov. John Corzine’s proposed budget included an
increase in the state’s sales tax from 6 percent to 7 percent to cover a
$4.5 billion deficit, legislators refused to pass the spending plan.
The state ran out of money, and government offices including the Casino
Control Commission closed. Without state inspectors to watch over them,
casinos were shuttered for three days until legislators passed a spending
plan. The new budget included Corzine’s sales-tax boost.
“It was very obvious to us that (New Jersey businesses) are taxed to the
point that no one wants any more taxes,” Hollingsworth said. “With the
casino shutdowns and the tax problems there, we saw an opportunity and
decided to see what we could do.”
The authority’s goal: to siphon off some of New Jersey’s biotech sector.
Biotech is vital to the New Jersey economy: New Jersey life-sciences
companies spent more than $12 billion on research and development in 2003,
according to the Biotechnology Industry Organization. More than half of the
new medicines the federal Food and Drug Administration approves were
developed in the Garden State. Global pharmaceutical companies including
Merck & Co., Ortho-McNeil and Johnson & Johnson are headquartered there.
Authority officials said they hope some of the companion businesses that
have clustered around Big Pharma will consider moving or expanding to
Nevada.
“If we can get them out here, they’ll see the cost of living is much lower,”
Hollingsworth said. “They can do the same business they’re doing and put
major dollars on their bottom line, just by moving here.”
Philip Kirschner, president of the New Jersey Business & Industry
Association, spotted the authority’s ad in Business News New Jersey. The
promotion caught his eye, he said, because he’d never seen relocation pleas
from such a far-flung state. Most pitches for New Jersey business come from
nearby states such as Virginia and the Carolinas.
Kirschner said the authority’s ad was cause for concern.
“Every state wants to protect the base of companies it has,” he said.
“Obviously, any threat to that base is something that should be taken
seriously.”
Added James Hughes, dean of the Bloustein School of Planning and Public
Policy at Rutgers University in New Brunswick, N.J.: “New Jersey should
worry, and is starting to worry. New Jersey still has enormous
concentrations of pharmaceutical headquarters, but the state has not focused
much on economic development.”
However, Kirschner and Hughes said Silver State officials have to overcome
significant obstacles to draw companies away from the Eastern seaboard.
Life-sciences companies might hesitate to abandon New Jersey’s massive
concentration of biotech labor and capital for a market that doesn’t have
much of either thus far.
“(Biotech companies) have a lot of natural buyers for their products in New
Jersey, and a lot of people who might acquire their companies when the
founders cash out,” Kirschner said. “There’s a lot of talent already here
that life-sciences companies can raid. We have the infrastructure, the major
hospitals and the pharmaceutical companies. These are the collaborations
scientists and businesspeople are looking for that you can’t create
overnight.”
Also, Hughes said, the biotech businesses that are expanding are looking for
locations near top-flight research universities in major cities such as
Boston and San Diego. They’re after the abundant doctorate holders and
“faculty superstars” that big-name schools churn out, he said.
And life-sciences companies are unlikely to yield their positions near New
York and Philadelphia, which have their own big biotech contingents. In
addition, dual-income families living in central New Jersey can access about
9 million jobs in New York, Pennsylvania and New Jersey by car, rail or
ferry — a key factor that could help New Jersey retain biotech experts,
Hughes said.
There’s also hope in the state that Corzine, despite his sales-tax increase,
will roll back some of the state’s business levies.
Kirschner said the state’s newest budget reversed a 4-year-old law that
barred companies from claiming net operating losses. It also struck down the
state’s alternative minimum assessment, which ordered companies to pay taxes
even if they lost money on the year.
Hollingsworth said he has a plan to maneuver around those hurdles.
He’ll call on the new Nevada Cancer Institute to help with the authority’s
sales pitch. The institute has hired researchers from the University of
Chicago, Yale University, Memorial Sloan-Kettering Cancer Center and MD
Anderson Cancer Center.
“We’ll have (institute researchers) tell recruits why they came from all
over the world to Las Vegas,” Hollingsworth said.
Hollingsworth said the cancer institute, the Lou Ruvo Alzheimer’s Institute
planned in downtown Las Vegas and the Nevada Neurosciences Institute are
just a handful of developments that could attract biotech research and
development to Las Vegas.
Next week, the authority will launch a direct-mail campaign targeting the
top management at 250 biotech and life-sciences companies in New Jersey.
If response to the authority’s initial marketing blitz is positive, the
group will roll out a second ad in September giving specifics on Nevada’s
tax structure.
“We would like nothing better than to educate people and tell them, ‘You
don’t have to commute from one state to another for work or home,'”
Hollingsworth said. “We’ll tell them, ‘It’s all here for you: quality of
life, home — everything is here.'”
