Transcript Pennsylvania Management Associate Agency Briefing

Strategic Importance of
Wall Street West
Lehigh Valley Community Forum
August 23, 2007
Luc M. Miron
DCED Technology Investment Office
Strategic Importance of Wall Street West
Key Component of the Rapidly
Evolving “Innovation Economy”
Opportunity + Competitive Advantage
Wall Street West / WIRED Initiative
Two (2) Components
– “Economic Development” Component (Wall Street West)
• Extend synchronous fiber optic connectivity between
Northeast PA (NEPA) and NYC
– “Workforce Development” Component (WIRED)
• Federal DOL program - successful $15M grant award
• Goal: Implement a transformational regional strategy
through the intersection of workforce/economic
development objectives around Wall Street West remote
facilities
Wall Street West: Impetus for Project
Project Impetus
– September 11 terrorist attacks caused major
interruptions
– Demonstrated vulnerabilities of US financial system
– Interagency Paper on Sound Practices to Strengthen the
Resilience of the U.S. Financial System (April 3, 2003)
– DCED/Commonwealth commitment to implement
– WIRED funding – $15 million federal DOL grant
Interagency Sound Practices
White Paper
S.E.C. Recommendations (Sound Practices):
1. Identify clearing and settlement activities in support of critical
financial markets
2. Determine appropriate recovery and resumption objectives for
clearing and settlement activities in support of critical markets
3. Maintain sufficient geographically dispersed resources to meet
recovery and resumption objectives
4. Routinely use or test recovery and resumption arrangements
Law of Physics
• Two types of data processing lead to two different requirements
1. Batch Processing - Typical of most banks, and some
insurance companies (asynchronous)
• Requirement is for space, power, and bandwidth, no inherent latency
limitations
2.
Real Time Processing - Typical of brokerage houses and
mutual funds (synchronous)
• All transactions must be mirrored in real time
• This translates to maximum latency of roughly 6 milliseconds; this
latency corresponds to 125 route miles or less of fiber
Attractiveness of NEPA
Proximity to NYC –within 125 fiber miles
Separate power grid from NYC
Different water shed
Potential labor pool; fastest growing counties in PA
“Business Case”: lower realty costs, labor costs, etc
Availability of potential locations
Critical mass of back office industry peers
. NYC
Pennsylvania’s Strategy Elements:
–
–
–
–
–
Focus
Research & Commercialization
Capital
Workforce
Infrastructure
Focus:
• IBM Global Competitiveness Report
Identified four growth-oriented industry clusters and 11 subclusters:
–
Life sciences
• Integrated Biopharma Manufacturing
• Biotech Research
• Medical Equipment and Devices
–
High technology
• Next Generation Electronics
• Alternative Energy
–
Advanced manufacturing and materials
• Powdered Metals
• Agro-Food Processing
• Prefabricated Housing
–
Business services
• Creative Industries
• Regional Headquarters
• Financial Services/back office/transactions
Targeted Business Development
Competitive
Cluster
A. Life Sciences
B. ‘High technology’
Test Sub-sector
A1. Integrated bio-pharma
manufacturing
A3. Medical equipment & devices
A2. Biotech research
A4. Advanced medical devices
B1. Next generation electronics
B5. Alternative energy-solar panels
B2. Alternative energy-wind blades
B6. Alternative energy-waste coal
B3. Alternative energy-wind
generators
B7. Alternative energy-bio fuel
B4. Alternative energy-wind turbines
C. Advanced manufacturing &
materials
D. Business services
C1. Powdered metals
C4. Tooling/metal fabrication
C2. Agro-food processing
C5. Fine chemicals
C3. Prefabricated housing
C6. Defense production
D1. Creative industries
D4. Financial services/back office
D2. Regional HQ
D5. Printing/publishing
D3. Financial services/transactions
D4. Financial service backoffice
Total weighted quality scores
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
AllentownBethlehemEaston,
Lehigh Valley
Columbus,
OH
Elkhart, IN
1. General business environment
Erie,
Northwest
Harrisburg,
Southcentral
MiddlesexSomersetHunterdon,
NJ
2. Local potential to recruit skilled staff
Orlando, FL
Pittsburgh,
Southwest
3. Presence of industry / cluster
Raleigh, NC
Reading,
Southeast
4. Flexibility of labor & regulations
Richmond,
VA
5. Infrastructure
Rochester,
NY
6. Real estate
ScrantonWilkes-Barre,
Northeast
7. Living environment
State
College,
Central
D4. Financial service backoffice
Annual operating cost (million USD)
30.0
25.0
20.0
Utility costs
Tax costs
15.0
Real estate costs
Labor costs
10.0
5.0
0.0
Allentown- Columbus,
BethlehemOH
Easton,
Lehigh
Valley
Elkhart, IN
Erie,
Harrisburg, Middlesex- Orlando, FL Pittsburgh, Raleigh, NC Reading,
Northwest Southcentral SomersetSouthwest
Southeast
Hunterdon,
NJ
Richmond, Rochester,
VA
NY
ScrantonWilkesBarre,
Northeast
State
College,
Central
D4. Financial service backoffice
Cost-Quality Ranking
7.5
Qualitative score
(Score from 1 to 10)
7.0
Middlesex-SomersetHunterdon, NJ
6.5
Allentown-BethlehemEaston, Lehigh Valley
Reading, Southeast
Columbus, OH
Pittsburgh, Southwest
Richmond, VA
Harrisburg, Southcentral
Scranton-Wilkes-Barre,
Northeast
6.0
Raleigh, NC
Orlando, FL
Rochester, NY
State College, Central
5.5
Erie, Northwest
Elkhart, IN
5.0
120
115
110
105
100
95
Operating cost index (average = 100)
90
85
80
Pennsylvania’s Strategy Elements:
–
–
–
–
–
Focus
Research & Commercialization
Capital
Workforce
Infrastructure
Research: Economic Engine &
Leverage Effect
– 260 Colleges and Universities
– Pennsylvania ranks fourth in academic Research and
Development and its world-class academic/research
institutions garner substantial NIH funding-- $1.4
billion in 2004.
• More than 22,000 students received degrees in the
engineering and sciences fields.
• Pennsylvania provides over $130 million to academic
research projects each year.
Research is a Powerful Tool
•
Job Creation – approximately 36 jobs per $1
million of research
+ Construction and service sector positions
+ Indirect jobs (multiplier effect)
•
Increase the number of start-ups and the number
of company attractions to the state through
enhanced research pipeline
•
Innovation in existing companies
Commercialization:
Keystone Innovation Zones
– Capitalizes on the Commonwealth’s greatest asset – our young and talented
graduates and our world-class college and university system.
– Designates zones in colleges and university communities that will foster
innovation and create entrepreneurial opportunities to keep young, talented
graduates in Pennsylvania.
Pennsylvania Provides:
– Operational funding for public/private partnership, incubators
– “Starter Kits”: Funding for university technology transfer and key
faculty hires
– Tax credits for start-ups
– Capital for growth
•
Erie
Warren
McKean
Potter
Tioga
Susquehanna
Bradford
Wayne
Crawford
Forest
Elk
Venango
Cameron
Mercer
Wyoming
Sullivan
Clinton
Pike
Lycoming
Clarion
Luzerne
Jefferson
Columbia
Lawrence
Clearfield
Butler
Union
Centre
Armstrong
Beaver
Snyder
Allegheny
Carbon
Northumberland
Mifflin
Juniata
Indiana
Cambria
Blair
Westmoreland
Perry
Northampton
Schuylkill
Dauphin Lebanon
Huntingdon
Washington
Lehigh
Berks
Bucks
Montgomery
Cumberland
Lancaster
Fayette
Greene
Monroe
Somerset
Bedford
Fulton Franklin
York
Adams
Chester
Delaware
Pennsylvania’s Strategy Elements:
–
–
–
–
–
Focus
Research & Commercialization
Capital
Workforce
Infrastructure
Capital
Goal is to encourage and partner with private sector to fill gaps
Early Stage
– Ben Franklin Technology Partners
– Venture Capital: $60 million state investment generated $240 million in new capital.
Growth Stage:
– Venture Capital: $310 million state investment will generate $900 million in new capital.
Maturity and Reinvention
– Working Capital
• Second Stage Loan Guarantee + PNC’s Pennsylvania Working Capital Growth Fund
= $200 million
– Construction
• PIDA + Sovereign Bank’s Pennsylvania Small Business Growth Lending Program
– Machinery and Equipment
• Core Industries + Citizens Job Bank
Technology-based Economic Development Tools Along the Continuum
Pennsylvania’s Strategy Elements:
–
–
–
–
–
Focus
Research & Commercialization
Capital
Workforce
Infrastructure
Workforce:
Advanced technology “knowledge workers” to retain and
attract high-tech employers
•
•
Without a highly skilled workforce, employers in
life sciences, information technology, advanced
manufacturing and business services are less
likely to locate in Pennsylvania.
PA needs to capitalize on a solid base of students
and research activity; translating it into new
“family sustaining” employment.
Workforce: WIRED Grant
• Through WIRED (Workforce Innovation in Regional
Economic Development) initiative, the U.S. DOL will
invest $195 million in thirteen regional economies
• NEPA is one of 13 national awards in 1st cycle funding$15 million over next 3 years (“A WIRED Wall Street
West”)
• Regional transformational strategy involving economic
development, workforce development and education
Pennsylvania’s Strategy Elements:
–
–
–
–
–
Focus
Research & Commercialization
Capital
Workforce
Infrastructure
Infrastructure/Sites
• More than $1 billion in infrastructure
improvement funding available through
the Economic Stimulus Package.
• Used for acquisition/site preparation/onsite infrastructure/construction
• Focus on brownfield sites
The Business Case
•DCED IBM Global Competitiveness Study identifies
Financial Services as a key growth industry
where PA has a competitive advantage
•Moran, Stahl & Boyer, LLC: 25,000 residents in Northeast
PA employed in the Financial Services and
Insurance Industry (Bank of America; Sallie
Mae; Wachovia; Sovereign; PNC Bank;
Prudential Financial, etc.)
•U.S. Dept of Labor Financial Services Factbook 2005:
Financial Services and Insurance constitute
nearly 8% of PA Gross State Product ($36 B)
•U.S. Dept of Labor Financial Services Factbook 2006:
Financial Services and Insurance Industry will
grow by 12% to 2012
The Business Case
•New York Times 12/05: “Allentown, Bethlehem and Easton
drew 14,000 new residents from the New York
Metro Area in 2005 -- doubling migration
numbers from 1998.”
•Penn State Data Center: Pike County led all PA counties in
population increase from ‘04 to ‘05, followed
by Monroe County. Pike has also been the
fastest growing PA county since 2000,
up 21.7 %, +10,035 persons, followed by
Monroe, up 17.7 %, +24,547
•Penn’s Northeast: “Locating a 500-employee business unit
in Northeast PA (vs NY/NJ Metro) would
save the company $83 M over 5 years in
taxes, payroll and real estate costs -- if
located in a KOEZ, $165 M by 2013”
Financial Services Industry in NEPA Region
“Build It and More Will Come”
Lackawanna & Luzerne Counties
Back office operations, data center, business processes, insurance, etc
• 15,077 employees
(source: Penn’s Northeast)
Lehigh Valley
Call centers, back office operations, etc
• 10,016 employees
(source: Lehigh Valley EDC)
Wall Street West/WIRED Key Deliverables
• 5 to 10 mid- to large-sized financial services firms
establishing or growing operations in NEPA
• Creation of approximately 1,000 jobs and training
1,500+ during the WIRED grant period
• Branding NEPA as industry standard for business
continuity and disaster recovery while bolstering NYC
as ‘financial services capital’ of the world
• NEPA business growth in financial services and in all
vendor support operations to the industry
And It Gets Better…
• Wall Street West leads to other opportunities
– Data centric or data intensive needs
• And it’s also about “Main Street”
– Improving “last mile” situation in NEPA