The Future's Growth Today
Forecasting the future of business in America can be problematic. Technological change can shift the demand for different products. Geographic preferences could lead to business relocations. Global uncertainty continues as many states and countries struggle to gain a footing in the economic malaise caused by the Great Recession. Although some indicators point to slow, steady increase in economic growth, this growth in many places is still tenuous at best. The key to sustaining any growth will be in identifying advancing industries and taking innovative steps to ensure their long-term economic health.
For those searching for clear signs that the economy is pulling itself out from under the weight of the past four years, one may not have to look far beyond the Baltimore-Washington, D.C., metropolitan region. Studies show that the market for the Greater Baltimore area is growing considerably, both in terms of employment and in the production of goods and services, and the region is home to one of the most highly educated workforces in the United States. Reports have ranked the Baltimore-Washington area as one of the top places in the country for technology job growth and innovation, while a 2011 U.S. Census American Community Survey lists Washington, D.C., first and Baltimore fourth for the percentage of the population with graduate or professional degrees.
How has the Greater Baltimore area achieved this growth during a period of uncertainty, and what might this mean for the both the future of business and business schools? In this month’s feature, J. Thomas Sadowski, president and chief executive officer of the Economic Alliance of Greater Baltimore, explains how Baltimore-Washington is well-positioned to compete and evolve in today’s market. Sadowski discusses the future of business in Baltimore and other cities, growth industry trends, and the prospects for graduate business students and business schools.
What is the current makeup of industry concentrations in the Greater Baltimore area and how does it compare to past economies in the area?
The Greater Baltimore market is heavily concentrated in key high-wage, high-skill, and high-growth industries, such as professional, scientific and technical services, educational services, and health care. The move toward a more technical and professional service-oriented economy has been ongoing:
It is important to note that while the manufacturing industry has lost almost half of its employees since 1990, manufacturing is still an important part of the regional economy. At its core, the Greater Baltimore economy is one that is driven by innovation. New technologies and next generation manufacturing principles have therefore made industry much more productive. Manufacturing GDP and value added per employee in the region is consequently higher than ever. New public/private improvements being made at the Port of Baltimore have enhanced our competitive profile globally and we expect the manufacturing sector here to grow and thus benefit from what is a rich tradition in manufacturing excellence.
Financial services has contracted to a smaller degree related to the national recession, but a healthy base of financial institutions, employment base, and our value when compared to other major U.S. market puts Greater Baltimore in a solid position to gain in this key sector. We are and will continue to be heavily concentrated in federal government operations. While this area is subject to fluctuation related to the federal budget, the strategic importance of these operations (health care, medical research and development, and information technology) suggests they will continue to be major contributors to the region’s economic base.
Do these industry changes in Baltimore relate in any way to larger national trends?
These are certainly reflective of national trends, though they seem to be more magnified in Greater Baltimore. For instance, many metros experienced an employment shift away from manufacturing and trade toward education, health care, and professional and business services. Greater Baltimore has markedly higher concentrations in the latter sectors. In fact, as of year-end 2011, Greater Baltimore had 78 percent more employees in educational services than the national average due in large measure to the quality of educational and research institutions, career opportunities, and standard-of-living factors enjoyed here.
(This is no different in Greater Baltimore, except education and health services serve the region’s largest economic sector.)
What are other growth trends in industrial concentrations or economic sectors are you seeing?
Health care and educational services continue to grow at an extraordinarily fast pace. It is the fastest growing sector in the U.S. economy. The professional, scientific, and technical services subsector in Greater Baltimore has grown nearly 80 percent since 1990, which is faster than the U.S. average.
Baltimore has been recognized by a variety of media outlets (link to E.A.G.B. Regional Economic Update report) as arguably the strongest growing information technology market in the United States? Can you elaborate on the factors that have led to this growth?
The No. 1 factor right now is proximity to key federal government, research labs, and installations that rely heavily on private sector innovators and technology service/solution providers. There is no better place to locate an IT or cyber security firm than Greater Baltimore. The region is home to two technology-driven military installations at the U.S. Army’s Fort George G. Meade and Aberdeen Proving Ground. The National Security Agency and the U.S. Cyber Command both reside at Fort Meade and rely on technologies developed by private industry and higher education institutions in the region. The world’s first general purpose computer was produced at Aberdeen Proving Ground and today the Communications-Electronics Command is located there. Many of the federal agencies such as the National Institutes of Health, the FBI and even the Social Security Administration and Centers for Medicare/Medicaid Services rely on IT, security services, and systems developed by private industry. It’s no surprise that this region is dubbed the cyber security capital of the world.
The region’s educational institutions are vital, innovative partners in this area, structuring their programs to reflect the needs of private employers and their federal clients. Their coursework continues to evolve to ensure that its students are getting the proper skills needed to compete in the workforce. This creates a pipeline for the federal government and private IT firms and also an attractive place in which to learn and pursue career advancement.
The State of Maryland has made this a particular area of focus (through its Cyber Maryland initiative) and Economic Alliance of Greater Baltimore is working closely with the state to market the state’s assets and resources and help further establish a supportive eco-system. That eco-system would not only sustain current economic activity but also encourage public/private investment in new innovations, tech transfer, collaboration, commercialization, and entrepreneurship.
The key to success here is the partnership between government, industry, and higher education. This dynamic relationship is central to fostering innovation, attracting new investment, attracting and cultivating talent, achieving higher productivity, and fostering business retention and growth.
What do these discussed trends mean for those with advanced degrees or current graduate students in the Greater Baltimore area?
We’ve been able to build a concentrated network of very bright, highly skilled, and educated workers in a variety of fields. People with advanced degrees have access to a network of skilled professionals to serve as a resource or potential partner. Current students have the opportunity to receive mentoring from a pool of professionals in their chosen field. Not only is this good for the market and firms or organizations that are located here, but it also makes it a unique place in which to learn and grow.
Business schools must continue reaching out to private sector and federal customers to better address skills and needs with program offerings. Limited financial resources have posed some challenges but online course offerings, on-site training programs, and creative research partnerships are helping address immediate needs and longer term opportunities
Do you have additional advice for our readership?
This is a world-class market. We have taken delegations of government, industry, and higher education leaders on visits to California, New York, and Texas. We have learned a great deal from what is going on in these key markets—resulting in new business opportunities, government programs (such as Invest Maryland), and educational initiatives (mostly in the area of tech transfer). What has been most valuable however is the sense of pride we take back home. Beyond the numbers and statistical rankings, this region is pioneering new technologies, protecting the nation’s critical infrastructure, discovering new treatments for disease, while providing the best health care and innovative educational programs in the country. Our charge going forward is to make sure there is a greater appreciation for what is happening in Greater Baltimore—the projects, the people, the institutions, and the companies making things happen for the better, here in our own backyard.