The Real Mass Exodus can be "found" in Maryland’s Deplorable Fortune 500 Showing

The Real Mass Exodus can be found in Maryland’s Deplorable Fortune 500 Showing

‘Mass Exodus’ has been the word on the political streets for the past two weeks in Maryland’s state capital Annapolis. Screams of foul play have echoed from the county to state level in the ranks of the democratic leadership. The opposition is aimed squarely at the brand new republican Governor of Maryland, Larry Hogan.

State democrats are finding the so called “mass exodus” of tax payers hard to swallow and questionable at best. But is the new republican governor lying? To be technically (and not politically) correct, Governor Hogan didn’t specify to a granular level, which particular group is fleeing the state. But even if Governor Hogan wanted to clarify, he would still be right in saying there has been a mass exodus of tax payers from the state and it’s far worse than his state of the state speech alluded to.

The state of Maryland is almost out of Fortune 500 companies and dangerously near zero with only four left. The number is embarrassingly low and pathetic compared to main competing states like Massachusetts, Connecticut, Pennsylvania, New Jersey and Virginia. It makes a declining state like California look prosperous despite the mass exodus of companies from there. Truth be told, Maryland’s economy has been on a continuous decline since the early 1980s.

Remember that companies are tax payers too and Maryland has lost an enormous amount of them; shifting a heavy and increasing tax burden to residents. This has left the state with only four Fortune 500 companies. There would have been three left if Silver Spring-based Discovery Communications (NASDAQ:DISCA) hadn’t joined the ranks last year. How tragic would the number three be? The entire state of Maryland last year, would be equal to the number of Fortune 500 companies in Washington, D.C.

Maryland’s list of Fortune 500 companies is even worse when compared to the aforementioned competing states. Compared to Maryland’s four Fortune 500 companies, Massachusetts has 14, Connecticut has 14, often criticized New Jersey still has 14, Pennsylvania has 14, and archrival Virginia has 24.

Why is Maryland surrounded by states with double digit lists of Fortune 500 companies while it only has four? It’s a very unusual situation for a highly developed state and at least one indicator that Maryland’s economy really is in shambles or at least on a collision course towards that end. The city of Baltimore lost its last Fortune 500 in March 2012 with the buyout of Constellation Energy. Baltimore and its metro have been bombarded with unfortunate situations that have raided the region for its biggest companies. The latest company to announce a headquarter move is McCormick & Company (NYSE:MKC). The biggest spice maker in the world is looking at other states including Pennsylvania and Virginia for a new headquarters. Keeping them in Maryland will be one of the first corporate tests for Governor Hogan and his administration, the Governor has mentioned publicly that a great effort needs to be made to fix the City of Baltimore.

Opposing democrats believe the state’s situation is not as alarming, legislators, including Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch have both criticized Governor Hogan’s state of state speech, Miller has called it fictitious.

In a recent WTOP article Montgomery County Council President George Leventhal conceded that Maryland taxes are high but downplayed the fact by proclaiming, “Our taxes in the state of Maryland and Montgomery County are relatively high — and we have the best schools. So, you know, you get what you pay for.”

But “good schools” hasn’t kept jobs in a county that is at the forefront of the large corporations that have left the state. Montgomery County has also had unimpressive job growth in the past decade compared to competing jurisdictions in the D.C. area and development has focused largely on residential construction instead of office buildings that bring companies with high-skilled workers and high-paying jobs.

Let’s for the sake of argument say that several of the companies that left the state were bought out and that is a situation out of the control of political hands. With that said Maryland’s governments have not been able to lure any company of equal value to replace them, which has been the ability of other states like neighboring Virginia, who lost companies like Exxon-Mobil, Circuit City and Sallie Mae but were able to lure Hilton, Volkswagen-Audi North America and Northrup Grumman within a five year span to replace them. Notably Hilton and Northrup Grumman were two of several battles that Maryland lost against Virginia under the O’Malley Administration. The administration was never able to win any of five plus highly publicized and highly contested headquarters moves during his tenure as governor of Maryland.

While some may say the tax burden in Maryland hasn’t been a big factor in the state’s economic situation, the increases certainly haven’t helped bring any companies of Fortune 500 status to the state. When the corporate income tax was raised from 7.0 percent to 8.25 percent in 2007 under O’Malley, Maryland lost about half of its Fortune 500 companies and hasn’t been able to grow a declining list.

State

Number of Fortune 500 Companies

Virginia

24

Connecticut

14

Massachusetts

14

New Jersey

14

Pennsylvania

14

Maryland

4

 

Notable Companies that no longer have a large presence or their headquarters in Maryland.

Constellation Energy – (Baltimore’s last Fortune 500 Company bought by Illinois-based Exelon)

Coventry Health Care – (Bethesda Fortune 500 Company, purchased by Connecticut-based Aetna, part of what was a growing health insurance industry in Montgomery County)

Catalyst Health Solutions – (On the verge of Fortnue 500 status before being bought out by Illinois-based SXC Health Solutions Corp which renamed itself to the Catamaran Corp and left Rockville. Catalyst was part of what was a growing health insurance industry in Montgomery County)

CapitalSource – (Bank that moved headquarters to Los Angeles, California)

Hanger Orthopedics – (Medical firm that moved headquarters to Austin, Texas)

CoStar Group – (Moved headquarters from Bethesda to Washington, D.C. - largest commercial real estate tracking firm in the United States)

Chevy Chase Bank – (federal charter moved from Montgomery County to Mclean, Va in 1996. Finally vacated de facto headquarters in Bethesda after Capital One purchase in 2009)

Washington Real Estate Investment Trust – (Will leave Rockville for Washington, D.C.)

Provident Bancshares – (Provident Bank of Maryland was purchased by Buffalo, NY-based M&T Bank in 2009)

MedImmune – (Bought out by AstraZeneca, presence remains in Gaithersburg, Maryland but no longer independent)

SunEdison – (Growing solar energy company, moved headquarters from Beltsville after being purchased)

Vocus – (PR tech firm moved headquarters to Chicago from Lanham after going private merger)

Jos A. Bank – (bought out by Men’s Warehouse of Texas in highly publicized battle. Was Carroll County’s most valuable company)

Digene – (Biotech bought by Qiagen)

Micromet – (Biotech bought by Amgen)

Human Genome Sciences – (Biotech famous for Lupus drug, bought by GlaxoSmithKline and now defunct)

Vanda Therapeutics – (Biotech, moved headquarters to Washington, D.C.)

Black and Decker – (Century-old tools company bought by smaller Connecticut-based Stanley Group)

Hughes Network Systems, LLC – (Satellite tech company bought out by EchoStar)

Marriott Vacations Worldwide Corp – (Recent publicly traded spinoff from Marriott based in Orlando, Flordia)

Micros Systems – (The Columbia-based company was purchased by Oracle Corporation and is no longer independent)

SourceFire — (Columbia-based firm part of a new, but already shrinking cyber security industry in Maryland. The company was recently purchased by Cisco Systems)


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