Economic study: Kent County a goldmine for business services

Gregg Moore, who chairs the Greater Kent Committee’s economic development group, and executive director Shelly Cecchett, explain the findings in a recent in-depth business analysis of Kent County. Delaware State News/Ian Gronau

DOVER — An economic study of Kent County released Wednesday determined that the biggest potential economic gains for the county lie in the business and legal services sector.

The good news: Currently, businesses in the county are buying $1.6 billion worth of these services. The bad news: $775 million of those services are being imported from elsewhere.

That means a big opportunity for service businesses to start up or move into the county with its ready-made market, the study notes.

The study, commissioned by the Greater Kent Committee (GKC) — a non-profit membership organization comprised of CEOs and business executives in Central Delaware — was released during a presentation at Delaware Technical Community College’s Terry Campus.

The committee hired Rockport Analytics about six months ago to conduct the study, hoping to identify Kent County’s best future economic development prospects.

“This firm has studied Disney’s and the Super Bowl’s economic impact, so they’re a serious group,” said Gregg Moore, who chairs the GKC’s Economic Development Committee. “Their analysis in Kent County tells us what business groupings are best suited for this area— taking into account factors like population, current business activity and imports and exports.”

Mr. Moore, along with Kenneth McGill from Rockport Analytics and Edward McWilliams from Reach Market Planning LLC, presented the findings of the analysis to area business leaders and politicians at the local and state level.

In making an examination of the county, the firms involved first examined the state’s biggest employers. The employers with the largest impact (based on data from 2016) included state government, federal government (Dover Air Force Base mostly), the poultry processing industry, real estate and the healthcare industry.

Based on the needs of the existing businesses in the county and its inherent strengths, Rockport Analytics determined that the biggest potential economic gains for the county lie in the business and legal services sectors.

“We were able to see that there are certain sectors that would be more lucrative for the county to attract than others,” said Mr. McGill. “We looked at 500 different sectors and business and legal services floated to the top. Why? Currently, Kent County’s businesses are buying $1.6 billion worth of these services right now. Unfortunately for the county, $775 million of that is being imported from elsewhere. So we see some big opportunities here for businesses to move into the county and have a ready-made market.”

Business and legal services include things like computer design and programming, scientific research and development, human resources services, advertising and public relations and legal, accounting and building services. The study claims that there is the potential for 4,500 jobs in the sector if businesses sprung up to meet the demand and the average salaries in the field hover around $80,000.

Not too far behind, the study states that the distribution, warehousing and logistics sector has the second highest potential in the county. Mr. McGill notes that while the county does have a fair amount of warehousing available, much of it is dominated by self-storage and the agriculture industry. He notes that businesses in the county are spending $756 million per year on these types of services, but importing $310 million of that total. If those resources were available locally, Mr. McGill claims there is the potential for at least 2,300 new jobs in the sector that pay an average salary of $54,000.

In addition to identifying opportunities, the study also examined the barriers to entry in both the state and county.

Interviewing a sample group of investors — both corporate and private — that had opened multiple businesses in Delaware, Maryland, Virginia, New Jersey and Pennsylvania, the researchers tried to determine where the state stood on the ease of doing business.

“We wanted to understand what their perceptions were of the permitting and inspection process and how easy it was to do business in Delaware versus our neighbors,” said Mr. McWilliams. “The verdict was that Delaware wasn’t at the bottom of the barrel, but it’s been moving in that direction. You are being beat out by Virginia and Maryland, but not by Pennsylvania and New Jersey who are at the bottom because of the complexities in their processes. So you have room for improvement.”

The researchers said that while some localities seem to have a faster approval and business permitting process, others often defer to the state, which can cause delays.

“In Middletown, the average permit process time is three months and in Newark it’s 24 moths,” said Mr. McWilliams. “There can be a huge difference from one location to another.

“Because you have a lot of smaller rural communities, they tend to defer to the state first, and the state’s process can add a minimum of nine months. It’s clearly an opportunity for a re-engineering of the process and an advocation for technology that may enable us to streamline it dramatically.”

While focusing mostly on potential opportunities, the study also suggested five “critical challenges” that lay ahead for the county:

• Attracting a skilled workforce and developing it

• Providing quality of life amenities that include culture, arts, recreation, shopping and healthcare

• Evolving access to broadband Internet infrastructure

• Providing access to travel infrastructure

• Needing to change the traditional post-secondary curriculum for a targeted work force

Kent Economic Partnership

GKC recently announced a merger with the county-run Kent Economic Partnership and it claims the partnership will be the new engine that helps address the recommendations in the report.

“We need to do a lot more than just look at data, but now that we have it, it has given us a great jumping off point,” said Mr. Moore. “We’re going to focus on taking a comprehensive approach to address these issues and this data will help steer us on that”

As part of their agreement to join the partnership, GKC pledged to inject $100,000 worth of annual funding to the newly reorganized budget. Recent bylaw amendments approved by Levy Court in mid-March, among other changes, also awarded two seats on the partnership to the Greater Kent Committee.
The Kent Economic Partnership is a 501c3 organization that has existed in its current iteration since around 2008.

According to Kent County officials, the current budget of their economic development office is about $214,000 and the partnership has about $60,000 of its own funds raised through banquets and other functions.

To some extent, the new collaboration was inspired by the state’s move to transition the Delaware Economic Development Office (DEDO) toward a public/private effort called the Delaware Prosperity Partnership (DPP). Mr. Moore also sits on that board. The two organizations are similar, but not identical in their orientation.

“The state changed from a full government economic development program under DEDO to one that includes the private sector with DPP — they created a 501c3 and populated it with a combination of government and business representatives,” said Mr. Moore. “Kent County was already doing that with their partnership, so the Greater Kent Committee saw this as a great time to refresh the partnership, sort of using what the state was doing as a model, and making some tweaks.”

Mr. Moore believes the state-level program is already starting to have a positive impact, but he’s concerned that their work may naturally gravitate toward industries that thrive in New Castle County.

“Including myself, there are at least three board members from Kent County on DPP, so we do have representation,” he said. “The problem that we face is that our county is drastically different from New Castle County in terms of types of businesses and available workforce.”

The Delaware State News has representation on the Greater Kent Committee.

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