A Competitive Industries Analysis of the Mercer Region in Central NJ and a Framework for Growing a Data Driven Economic Development Initiative

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A Competitive Industries Analysis of the Mercer Region in Central NJ and A Framework for Growing a Data Driven Economic Development Initiative

Prepared for the Growth Partnership of Central Jersey, Inc. by: Brian Reilly, Executive Director, Municipal Land Use Center at The College of New Jersey Anthony O’Donnell, Economist, Municipal Land Use Center at The College of New Jersey Virginia Carlson, PhD, Executive Director, Metro Chicago Information Center Wansoo Im, PhD, Principal, Vertices LLC Lire Botes, Project Intern, The College of New Jersey

A Competitive Industries Analysis of the Mercer Region in Central NJ

Contents I. OUR REGION’S ECONOMIC STORY: What the Research Tells Us ...... 3 A. Comparing Central NJ with Philadelphia and NYC Metros ...... 3 1. What is Central New Jersey? ...... 4 B. The Basics: How Central NJ Stacks Up ...... 4 1. GDP ...... 5 2. Educational comparatives ...... 5 3. Employee compensation (Indexed) 2001 to 2010 ...... 6 4. Regional commuting dynamics ...... 6 5. Housing ...... 8 6. Labor force characteristics ...... 9 7. General population ...... 10 C. How Site Selection Decisions are Made ...... 11 1. Keeping in their sights ...... 12 2. Fielding a responsive team ...... 13 II. BUSINESS SECTORS, SUBSECTORS AND INDUSTRIES: Our Competitive Mix ...... 15 A. Sector Level Competitiveness ...... 15 1. Competitive Mix ...... 15 2. Concentration ...... 16 3. Comparative Advantage ...... 16 B. Combining Concentration and Comparative Advantage into Competitiveness Categories (W/E/S/T) ...... 17 C. Highlights of the Sector Competitiveness Categorization ...... 19 1. Our driver industries...... 19 2. Still strong but slipping ...... 19 3. Emerging promise ...... 19 D. Sector Strengths vs. Our Competing Metros ...... 20 E. Subsector Level Competitiveness ...... 30 1. Finance and Insurance Subsector ...... 34 2. Educational Services Subsector ...... 35 3. 511 Publishing and 323 Printing: A regional strength ...... 36 4. Chemical Manufacturing: Notable exception in Comparative Advantage ...... 37 5. Sector Strength: 54 Professional, Scientific and Technical Services ...... 37 6. Sector Strength: 55 Management of Companies and Enterprises ...... 37 7. Subsector Strength: 813 Membership Associations and Organizations ...... 37 8. Leading Sector Employer: 62 Health Services ...... 38 F. Emerging Sectors (of note) ...... 38 1. Construction ...... 38 2. Transportation and Logistics ...... 38 G. Emerging Sectors, Non Priority ...... 39 1. 44-45 Retail...... 39 2. 71-72 Accommodation and Food Services ...... 39 III. ACTION OPPORTUNITIES ...... 40 A. Telling Our Region’s Economic Story ...... 40 B. State Government’s Economic Development Directions; Implications for Us ...... 43

A Competitive Industries Analysis of the Mercer Region in Central NJ

1. State priority sectors and how our region reflects those ...... 43 2. Finance Sector of State Importance and Central NJ Strength ...... 44 3. Advanced Manufacturing Cluster ...... 44 4. Machinery Manufacturing Cluster of State Importance and Central NJ Strength ...... 44 5. Transportation, Logistics and Distribution, Sector of State Importance and Central NJ Strength...... 45 6. Technology Cluster of State Important and Central NJ Strength ...... 46 7. Health Services ...... 47 8. Green Economy Industry Cluster ...... 47 9. Bio/Pharmaceuticals and Life Sciences ...... 48 C. Alignment of State Priorities and Central NJ Strengths ...... 49 1. State Strategic Directions, Regional Connections ...... 50 2. Alignment of Opportunities ...... 50 D. What Can We Do Now to Strengthen Existing Business Base and Strategically Attract More? ...... 54 1. Showing Up ...... 54 2. Develop “Hooks” ...... 54 3. Cultivate Evocative Stories ...... 55 4. Industry & Cluster Councils ...... 55 5. Identify Issues & Opportunities ...... 55 6. Get in the data game ...... 56 E. Recommendations ...... 56 1. Website...... 56 2. Messaging and Marketing ...... 57 3. Aligning levels of government “On the Ground” ...... 57 4. One Stop Shopping, Single Point of Contact ...... 58

A Competitive Industries Analysis of the Mercer Region in Central NJ

I. OUR REGION’S ECONOMIC STORY: What the Research Tells Us

A. Comparing Central NJ with Philadelphia and NYC Metros

The most successful economic development efforts start with knowing the facts about one’s business base. A data driven strategy arms such efforts with clear facts about one’s regional assets and one’s competition in the same terms companies use to evaluate a potential new location. Fundamental criteria will include some spatial characteristics, such as distances to air or water ports, proximity to certain customer bases or population levels, and the like. Given our location between NY and Philadelphia, we share many of these spatial characteristics with those metros. Intermediate criteria then include the make-up of the business environment (relative wealth and productivity) and labor force population (educational level and compensation) that would support the new facility. More detailed factors about that talent pool would be compared to the competition in subsequent steps. When trying to understand our economic story, we also want to understand the business mix of our region—its regional sector and industry strengths, their areas of concentration and competitiveness as well as indications of their local comparative advantage—factors that are amongst the most reliable predictors of where economic development initiatives will bear the most fruit. To be effective, regions must understand how site selectors “see” them (that is, how site selectors find them amid all their locational possibilities and how they evaluate them as a fit for the company they represent). Successful regions understand how their region compares to their competition in the eyes of a prospective business during each step of the site selection process. Being “seen” more often involves knowing and telling one’s regional stories of strength in terms most relevant to a target industry. The metropolitan region of Central New Jersey, centered by Mercer County and its urbanized edges such as Lambertville, Morrisville, Plainsboro and Cranbury, is located between two of America’s top five largest cities. Metropolitan Philadelphia and New York span 11 and 23 counties respectively. Those counties around metro Philadelphia (which include counties in PA, NJ and DE) and New York (which include NY, NJ counties and contain the easily identifiable additional cities of White Plains, Newark and Edison) each make up the federally defined Metropolitan Statistical Area or MSA. Most federal data on industries, employment, education, economic output, etc. are compiled and provided at the MSA level. The single county of Mercer makes up the Ewing- Trenton MSA. Component parts of these three MSAs are described below for comparison: 35620 New York-Northern New Jersey-Long Island, NY-NJ-PA Metropolitan Statistical Area Principal Cities: New York, NY; Newark, NJ; Edison, NJ; White Plains, NY; Wayne, NJ; Union, NJ; New Brunswick, NJ 20764 Edison-New Brunswick, NJ Metropolitan Division (1)Middlesex County, (2)Monmouth County, (3)Ocean County, (4)Somerset County 35004 Nassau-Suffolk, NY Metropolitan Division (5)Nassau County, (6)Suffolk County 35084 Newark-Union, NJ-PA Metropolitan Division (7)Essex County, NJ; (8)Hunterdon County, NJ; (9)Morris County, NJ; (10)Sussex County, NJ; (11)Union County, NJ; (12)Pike County, PA 35644 New York-White Plains-Wayne, NY-NJ Metropolitan Division (13)Bergen County, NJ; (14)Hudson County, NJ; (15)Passaic County, NJ; (16)Bronx County, NY; (17)Kings County, NY; (18)New York County, NY; (19)Putnam County, NY; (20)Queens County, NY; (21)Richmond County, NY; (22)Rockland County, NY; (23)Westchester County, NY

A Competitive Industries Analysis of the Mercer Region in Central NJ

37980 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area Principal Cities: Philadelphia, PA; Camden, NJ; Wilmington, DE 15804 Camden, NJ Metropolitan Division (1)Burlington County, (2)Camden County, (3)Gloucester County 37964 Philadelphia, PA Metropolitan Division (4)Bucks County, (5)Chester County, (6)Delaware County, (7)Montgomery County, (8)Philadelphia County 48864 Wilmington, DE-MD-NJ Metropolitan Division (9)New Castle County, DE; (10)Cecil County, MD; (11)Salem County, NJ

45940 Trenton-Ewing, NJ Metropolitan Statistical Area

1. What is Central New Jersey? The focus of this study is Central New Jersey—the business locations between the large metropolitan flanks of Philadelphia and NY City, anchored by Mercer County, but also including its urbanized and developed “edges” (places like Jamesburg) as well as areas within our “commute-shed” such as Bucks County, PA. This report uses the phrases Central New Jersey and Mercer Region interchangeably. It highlights one of the challenges with marketing such an area that is hard to define and locate. Central New Jersey can also mean that middle third of the state from the Delaware to the Hudson Rivers that typically includes Hunterdon, Somerset, Middlesex, Monmouth and, sometimes, Union counties. Trying to use West and East Central NJ becomes cumbersome. The fact is that the region needs an identity. That starts with understanding its business mix and how site selectors see it from a common business asset point of view. The report also contends with this geographic problem through the availability of data. Public sources collect data at various scales: MSA, County, Municipality, Zip Code, and Census Tract. Different data may be available at these different levels, which makes comparisons or aggregations challenging and time consuming. For purposes of this analysis, Mercer County is the typical level of analysis, due to the ease of availability of data. It is the same level of data most site selectors would use. With Mercer County data, however, the conclusions at the industry sector and subsector level will generally hold true beyond Mercer to those urbanized edges. Because we know that economies do not follow governmental boundaries, we have included—as part of the report’s corresponding interactive map—individual business locations that will be accessible to the Growth Partnership in those adjacent edges in surrounding counties, including Bucks, at the zip code level. This should enable the application of these economic trends derived from Mercer County data to the geographic distribution of every specific business within these sectors and subsectors throughout the Central NJ region.

B. The Basics: How Central NJ Stacks Up

When comparing MSAs to each other, a snapshot of the basic context in which businesses exist is most helpful— what is the strength of the region’s overall economy, what is the makeup of its population in terms of education, what are the labor force’s costs and skill levels are first order questions. Also of interest, would be the “labor shed” where workers live and go to work within the existing transportation systems. Mike Chrobak, Chief Economic Development Officer at Choose NJ, describes a company’s priorities as a three layered pyramid with site selection criteria at the base, jobs and investment in the middle, and workforce development and training at the top. When trying to understand a region, companies typically look at the population, education level, and some basic economic output measures to understand the basic business environment. Comparing these to their initial round of site location criteria may eliminate a region from consideration.

A Competitive Industries Analysis of the Mercer Region in Central NJ

The basics also start to reveal a general regional story. They outline a broad context of its people. Labor and talent are one of the most important (and typically the most costly) factors of business production, with land, infrastructure, and capital being others.

1. GDP This report´s analysis started by looking at the Gross Domestic Product of each of the metros, indexed to allow for easy comparability. While the other metros are much larger in size, the indexing reveals our region has a higher overall percentage growth rate in GDP from 2001 to 2010 (figure 1) and in our strongest sectors, higher growth over the same period as well (figure 2).

Index of Real GDP from 2001 to 2010 All Sectors Finance and Insurance Sector

1.30 1.60

1.25 1.50 1.40 1.20 1.30 1.15 1.20 NY-NJ NY-NJ 1.10 1.10 Phila-Wilm Phila-Wilm 1.00 1.05 Trenton-Ewing Trenton-Ewing 0.90 1.00 0.80 0.95 0.70 0.90 0.60 2001200220032004200520062007200820092010 2001200220032004200520062007200820092010 Figure 1 Figure 2

2. Educational comparatives Comparing levels of education across the three MSA reveals Mercer has the same level of Bachelor’s degrees as NYC, more than Philadelphia, but far more graduate degrees than either. To companies, this translates as our region is better educated than its regional competition, is a high talent location and has an economy with a significant number of “knowledge workers.”

100% 12.4% 14.3% 90% 17.9% Graduate or professional 80% degree 19.3% 20.8% 70% 20.8% Bachelor's degree 6.5% 60% 6.4% 6.1% Associate's degree 17.0% 50% 15.0% 16.1% Some college, no degree 40% High school graduate 30% (includes equivalency)

20% 9th to 12th grade, no diploma 10% Less than 9th Grade 0% Trenton-Ewing Phila-Wilm NY-NJ-LI 5 Figure 3 A Competitive Industries Analysis of the Mercer Region in Central NJ

3. Employee compensation (Indexed) 2001 to 2010 The two figures below show Central NJ workers are paid more on average, and more in our strongest sectors. Though this represents a cost to an employer, it also shows one result of the educational levels and knowledge professions in our region: the talent pool is deeper at more competitive, perhaps, in attracting the kinds of workers in key fields. In some sectors, perhaps industrial production, this difference might be seen as more of a cost of production. However, the more skilled a talent pool the industry needs, the more worker recruitment can be to a firm. Given the size of the NY and Philadelphia metros, and their proximity to Central NJ, the higher compensation might enable firms to recruit workers from beyond the region. All Sectors Finance and Insurance Sector

2.00 1.50 1.80 1.45 1.40 1.60 1.35 1.40 1.30 1.20 NY-NJ 1.25 NY-NJ 1.00 1.20 Phila-Wilm Phila-Wilm 0.80 1.15 Trenton-Ewing Trenton-Ewing 1.10 0.60 1.05 0.40 1.00 0.20 0.95 0.00 0.90 2001200220032004200520062007200820092010 2001200220032004200520062007200820092010 Figure 4 Figure 5

4. Regional commuting dynamics The locations of work and where workers may choose to live, and the relative mobility between the two, play a role in attracting and retaining talent. While educational levels are an initial indication of the quality of a workforce, firms will also look deeper at the “skills shed” a region represents. As part of that consideration, the tables below show the relative locations of where workers who live in Mercer County travel to work, and from where workers living elsewhere commute in to Mercer. Such information is valuable as firms consider how easily they anticipate meeting their human resource needs in a location. Subsequent tables compare other regional transportation dynamics across the three metros. Of note are Central NJ’s shorter commute times, higher incidence of carpooling and working from home.

Table 1

Employed Residents of Mercer County 148,341 100% Work in: Mercer County, NJ 71,766 48.38% Middlesex County, NJ 18,991 12.80% Burlington County, NJ 6,254 4.22% Somerset County, NJ 6,172 4.16% New York County, NY 5,431 3.66% Monmouth County, NJ 4,207 2.84% Essex County, NJ 4,195 2.83% Bucks County, PA 3,706 2.50% Bergen County, NJ 3,366 2.27%

A Competitive Industries Analysis of the Mercer Region in Central NJ

Morris County, NJ 2,805 1.89% All Other Locations 21,448 14.46%

Table 2

Persons Working in Mercer County 200,138 100% Live in: Mercer County, NJ 71,766 35.86% Burlington County, NJ 20,025 10.01% Bucks County, PA 18,661 9.32% Middlesex County, NJ 16,744 8.37% Monmouth County, NJ 9,254 4.62% Ocean County, NJ 7,952 3.97% Somerset County, NJ 7,881 3.94% Camden County, NJ 5,741 2.87% Hunterdon County, NJ 4,053 2.03% Essex County, NJ 3,768 1.88% All Other Locations 34,293 17.13% Source: OnTheMap - US Census Bureau (2009)

% of Commuters by Travel Time to Work

5 to 9 minutes

15 to 19 minutes NY-North Jersey 25 to 29 minutes Phila-Wilm 35 to 39 minutes Trenton-Mercer 45 to 59 minutes

90 or more minutes 0% 5% 10% 15% 20%

Source: American Community Survey (2010) Figure 6

A Competitive Industries Analysis of the Mercer Region in Central NJ

Average Commuting Time Table 3

Trenton-Mercer Phila-Wilm NY-North Jersey # of Workers Commuting 161,609 2,621,007 8,249,679 Avg Commute Time in Minutes 27.0 28.6 34.6 Source: American Community Survey (2010)

% of Workers by Means of Transportation to Work

Worked at home

Taxicab, motorcycle, or other means

Walked NY-North Jersey Bicycle Phila-Wilm

Public transportation Trenton- Mercer Carpooled

0% 10% 20% 30% 40%

Source: American Community Survey (2010) Figure 7

5. Housing

The following tables reveal favorable aspects of Central NJ’s housing elements including a lower vacancy rate than the other two metros and indications of greater home ownership affordability reveals by the mortgage value for new home purchases (a difference of more than $100,000) and home costs as a percentage of income at 2.5% to 3% lower than in New York metro.

Housing Overview Table 4

Housing Values Trenton-Mercer Phila-Wilm NY-North Jersey Avg. Mortgage for New Home $260,309 $220,847 $358,190

Housing Shortage or Surplus Total Housing Units 143,178 2,434,185 7,528,017

A Competitive Industries Analysis of the Mercer Region in Central NJ

% of Occupied Units Owner- Occupied 67.5% 68.6% 52.2% Total Vacant Housing Units 11,678 213,474 727,134 # of Vacant Units for Rent 3,671 60,353 185,992 Avg # of People in Household 2.65 2.62 2.73 Source: American Community Survey (2010), HMDA/Loan Application Register Data (2010)

6. Labor force characteristics

The table 5 below shows the break down by age of the regional workforces in each metro. They are generally comparable. The table 6 reveals regional differences in average wages. The table contains only those subsectors in which Mercer wages exceed those in both other two metros. This is likely to correlate to the quality of the Central NJ workforce in these subsectors, and could be promoted as a significant asset to companies in need of this specific talent. It might also make recruiting from the other metros easier.

Labor Force by Size and Age Table 5

Age of Workers Trenton-Mercer Phila-Wilm NY-North Jersey 65+ yrs 10,180 146,716 447,336 55-64 yrs 30,885 494,471 1,488,370 45-54 yrs 47,651 741,059 2,305,998 35-44 yrs 41,949 656,952 2,198,559 25-34 yrs 38,461 649,453 2,232,401 20-24 yrs 19,434 298,299 856,303 16-19 yrs 8,115 131,677 277,407 Source: American Community Survey (2010)

Average Annual Wages by Industry Subsector for Which Mercer Exceeds Other Metros Table 6

NAICS Code Mercer Philadelphia NY

101 Goods-producing $75,055 $63,967 $67,093 NAICS 323 Printing and related support activities $61,052 N $53,559 NAICS 325 Chemical manufacturing $135,305 $94,544 $108,942 NAICS 326 Plastics and rubber products manufacturing $61,665 $57,392 N NAICS 332 Fabricated metal product manufacturing $57,713 N $52,197

A Competitive Industries Analysis of the Mercer Region in Central NJ

NAICS 424 Merchant wholesalers, nondurable goods $88,236 $77,622 N NAICS 425 Electronic markets and agents and brokers $95,771 $76,094 $88,706 NAICS 447 Gasoline stations $24,484 $21,157 $22,460 NAICS 481 Air transportation $71,433 $50,724 $61,150 NAICS 492 Couriers and messengers $45,296 N $42,608 NAICS 493 Warehousing and storage $49,182 N $47,328 NAICS 518 Data processing, hosting and related services $89,274 $74,925 N NAICS 541 Professional and technical services $100,362 N $97,619 NAICS 551 Management of companies and enterprises $177,752 N $156,680 NAICS 562 Waste management and remediation services $63,374 $54,861 $56,295 NAICS 611 Educational services $68,440 $52,325 $47,445 NAICS 621 Ambulatory health care services $61,372 $56,417 $52,325 Note: Geographies adjusted for comparability. N=No data available

7. General population

Table 7 below reveals some notable characteristics of Central NJ’s population compared to the other two metros: lower unemployment by more than a full percentage point, a higher median household income (by over $9,000), higher per capital income, and a lower poverty rate. Combined with the highest levels of college education or above, Central NJ population is better educated and has fewer low income residents than the other two areas.

Table 7

Indicator Trenton-Mercer Phila-Wilm NY-North Jersey Population 366,222 5,968,252 19,069,796 Average Annual Wage $61,699 $53,108 $66,454 Number in Labor Force 203,947 2,955,610 9,469,921 Number Employed 188,013 2,689,375 8,628,205 Percent Unemployed 7.8% 9.0% 8.9% Median Household Income $70,956 $58,095 $61,927 Median Housing Value $293,600 $246,300 $426,500 Median Gross Rent $1,082 $945 $1,150 Per Capita Income $34,884 $30,250 $33,208 Poverty Rate 12.1% 12.7% 13.8% High School Graduates 87.7% 88.1% 84.6% Bachelor's Degree or Higher 34.1% 20.5% 33.5% Source: American Community Survey (2010)

A Competitive Industries Analysis of the Mercer Region in Central NJ

C. How Site Selection Decisions are Made

Savvy economic developers use the same information as company site selectors. They understand how companies are guided through a phased process of decision making for choosing a site that starts broadly and narrows at each successive step. Understanding those phases and one’s competition at each phase will help the economic development efforts focus resources by providing the right information at the right stage of the process. Companies typically select a new site to reduce costs or to provide access. A site search narrows in each successive phase. The first phase is done internally and involves setting threshold and subsequent criteria for a new expansion site and comparing it to a base case scenario. When companies are motivated by cost reduction they might look at a potential location for the best logistical economics, costs of labor or utilities, or taxes and other costs of doing business. Access moves might seek proximity to certain like firms and needed business services, locations that evoke a particular image, or talent pools related to current company needs (especially if the new location represents a change in operations such as a consolidation or delivery of new products and services). After a company does its internal determination of what is most important to it in a site, someone sits at a computer to identify geographic areas that meet these top-level criteria. In small to mid-sized enterprises, this task would fall to a principal of the firm or a trusted intermediary such as an attorney, accountant, or architect. Larger firms usually employ a site selection professional. A search area might be large, perhaps as large as the east cost of the US. Frequently searches will include more than one geographic region, like major metros with access to port facilities, sites that provide access to particular population levels or select demographics, or proximity to an existing cluster of businesses within a desired industry group. Whatever the criteria, the company develops a long list of approximately 10-12 metropolitan regions. It is here that understanding what data a company considers when compiling its long list becomes essential. Typically, companies are looking at federally collected data representing federally designated Metropolitan Statistical Areas. These data are typically provided by Census, or either of the Bureaus of Labor Statistics and Economic Analysis. Companies tend to consider locations in metropolitan areas anchored by major cities unless there are reasons to consider others. When starting a search, NY and Philadelphia easily come to mind. Once a company gets into the data, they find that NY metropolitan data comes aggregated by federal protocol along with its 23 surrounding counties. Philadelphia’s data covers 11. Our MSA bears the federal title “Trenton Ewing” and is comprised of the single county of Mercer, while our urbanized areas outside Mercer County are included in other MSAs. While our numbers within the MSA data may be very competitive to site selectors, we are at a disadvantage of being found in the first place as a metro area because of our lack of name recognition and our dispersion across MSAs. The geography of Central New Jersey can be nebulous to a newcomer and not as widely known nationally as regions anchored by major central cities. One of the first orders of business for regional development efforts should be raising awareness among potential expanding companies and site selectors so that Trenton Ewing MSA comes to mind more often when they are developing a long list. Site selectors may have no idea what metro area Silicon Valley is located within, but they are very familiar with the types of industries located there, so that region makes many long lists before further research reveals its designated MSA. Efforts could be made to grow awareness of our metro area as being particularly well suited for a specific industry. As Einstein’s Alley becomes more widely known as a technology and life science corridor, we should start to show up on more long lists even if the company researcher needed to dig for the corresponding MSA. If a company wanted to be near Educational Testing Services, locating it in people’s minds near Princeton would

A Competitive Industries Analysis of the Mercer Region in Central NJ help to get us on that long list. Over time, efforts should be made to link the strength of the Princeton name to the relatively obscure Trenton Ewing-labeled MSA. The strength of the Princeton location may not be able to be geographically situated by most people (other than “in New Jersey”), but its global name recognition could be a hook to be combined with the anchoring geography of a state capitol, which happens to have the MSA title indicated by its name. As companies seek sites to either reduce costs or gain access to assets or markets, they first understand any region at the MSA level in terms of business sectors. The economic make up of our region includes 17 primary sectors. Of these 17 sectors, we are most attractive to businesses in 11 of them, including: Finance and Insurance, Management of companies and enterprises, Professional, scientific, and technical services, Information, Educational services, Other services, except public administration, Construction, Arts, entertainment, and recreation, Transportation and warehousing, Health care and social assistance, Accommodation and food services. Table 8 below details our region’s relative strengths in these sectors and their attractiveness to industries within these sectors. Unless the site selection threshold criteria involve wanting to be proximate to an existing business cluster (i.e. the desire to be near a pharmaceutical cluster, or a particular business like Church & Dwight because of the company’s location in a supply or service chain), it is likely a site selector’s long list will include several metros in New Jersey or within nearby states. Because our region can provide access to the major locational assets of the New York and Philadelphia metros, one of our region’s goals should include getting added to a company’s long lists when they include NY and Philadelphia. Getting us favorably compared to them in subsequent steps would be another. When we compare ourselves to these two metros, we are trying to differentiate ourselves in a long list review with the aim of making it to the short list over Philadelphia or NY. To see how our region stacks up to these other two, our research compared the following types of data among these three regions: gross domestic product, profiles of educational attainment, employment by sector and industry, compensation by industry, among others. We found that our region offered comparable or stronger business location factors described below.  Strong: a regional economy that is outpacing the national average in growth and concentrations in several industry clusters representing core regional specialties  Smart, Skilled: a well-educated, well compensated, highly skilled workforce  Central: with lower commute times and good connectivity to the business assets of two of America’s top five largest metros.  Satisfaction: nationally ranked quality of life  Savings: rents, land prices, and perhaps taxes representing net cost savings At the same time, Central NJ provides access to both those competing metros and their locational strengths, such as international airports, port facilities, national freight rail networks, and access to densities of suppliers and customers within comparable drive times. In short, for several sectors, we provide much of what our nearby larger metros offer plus strong talent pools and cheaper costs.

1. Keeping in their sights In this second round of assessing their long list, companies will seek current data on population, workforce characteristics, and logistics details at the MSA and county level. They will want a quick summary of statewide factors such as taxes, relevant regulation and incentives. Locally generated information of interest will include the region’s top and new employers, educational institutions, all basic utility information and real estate costs (sale or lease rates).

A Competitive Industries Analysis of the Mercer Region in Central NJ

We know site selectors will look for standard, comparable data sources for all their long list prospects. So, we can ensure these data are easily found online to provide better understanding of our region. Recommendations for populating such a “Data Warehouse” over time are included in the recommendations section of this report. They would augment the data already compiled as part of this report and submitted as the initial Data Warehouse and corresponding materials provided. When doing web research to cull a long list, some researcher might not need to look at websites for the nearby mega metros because they either are already generally familiar with them from prior searches or assume somewhere within them will be places that meet their threshold criteria. They don’t know that about us. An economic development website that at this stage makes accessing our region’s information easy can keep us in the game. The “hassle factor” involved in having to dig for such information from a one-county unknown metro might be enough to drop us from a long list. We are also vulnerable to site selectors finding poor information from other sources and dropping us for any number of reasons. For example, a Google search of “Mercer County, site selection” returns no relevant results in the top 10 other than http://www.ecodevdirectory.com/pennsylvania.htm, which seems to contain the keyword somewhere deep within the site. A scan of the home page lists only Pennsylvania locations and no mention of Mercer at all. When a searcher does not find what he or she is looking for within seconds, the tendency is to go to regional websites that offer the desired data more quickly. Other search terms bring up sites like www.city-data.com,whose data for Mercer is from 2002. As this phase of a company’s research is intended to drop sites that do not meet their site criteria, our region is also vulnerable to websites that might show up in a search but do not put the region in a good light. Several of the sites that appear in search results are of poor quality. They either push formulaically generated content or lack the typically sought after data because they fail to address the particular questions site selectors ask at this stage. Not understanding the needs of the site selector or, worse yet, trying to tell them only what local promoters want them to know, delays a site selector in completing their required research and encourages them to move on down the long list to websites that better anticipate and deliver on their needs. Also, merely having the right content is not sufficient if the site cannot be found (ideally it shows up in the top search results), so SEO (Search Engine Optimization) is an equally important web site design feature and requires ongoing management over time to maintain that positioning.

2. Fielding a responsive team In the next phase, companies need more industry specific information. Prior stages assessed a general climate and threshold criteria. Now, within those, companies are determining whether sites meet more operational and preferential criteria. Rather than drill down and do time consuming original research with data that may not easily be accessible in a national search, companies might issue a Request for Information or RFI. If conducted by a site selector, the company name may not be disclosed. While some industry specific information from this report may still be helpful, RFI’s usually seek more customized answers such as a the number of sites within a specific distance to highways, presence of rail, or detailed labor force characteristics (such as employment by industry, average salaries by key occupation), etc. Frequently, RFIs require case by case research with very quick turnaround times (sometimes days). RFI questions can be very specific such as a medical device manufacturer wanting to know how many pigs are available within an hour’s driving time, a factor for their inoculation testing protocols. It is impossible to anticipate the range of RFI inquiries across hundreds of industry types. The most successful approach involves organizing the region’s various economic development assets into a dynamic and adaptable

A Competitive Industries Analysis of the Mercer Region in Central NJ team-based structure where members from various organizations with access to different relevant information can be pulled together on a dependable, as needed basis. Such a research team “bullpen” might include representation from:  County of Mercer (geographic and parcel based information, local regulation)  Utilities (dual feed electric and telecom, fiber locations and rates)  Members of business organizations (peer organizations, supply and service chain members)  Real estate community (available private sites, available publicly owned sites, vacant facilities, leasable space)  Research or educational & training tie ins  State of NJ (Choose NJ, Biz Action Center, regulators, others)  Among others While the Growth Partnership could convene teams to respond to each RFI, the composition of each team would be tailored to the needs represented by the opportunity (for example, some companies will be interested in educational or training tie ins, others will not, so a representative of the Workforce Investment Board may be involved in some teams and not others). The RFI response should come back to the company under the signature of a single point of contact, a representative of the region in all future interactions. This will start reinforcing name recognition and establish a long term client service relationship. Though the RFI response may be returned to a staff person, assume company principals will be seeing it themselves. A contact person of sufficient local standing helps demonstrate seriousness on the part of the region and provides a “go to person” who can mobilize assets in the future to assist the company in its information collection needs. When a short list of three or so finalists has been identified, companies will typically want to make a site visit. Here too, a website should drive the company quickly to an entity that can deliver what the company desires from Central NJ, an area potentially unknown to them. Site selectors have obvious starting points in our competing regions: New York’s City Hall or Select Greater Philadelphia (Select Greater Philadelphia also helps cover Mercer County, NJ. It provided the initial firm-level data for this report’s corresponding interactive map). Our region would benefit from such an obvious starting place. Site visits too are best prepared for and conducted using a team-based approach in which a lead organization assembles individuals relevant to the company’s stated needs. Companies would typically want confidential interviews with similar employers to obtain a better understanding of current and future labor force trends and lessons from their operating experience. Other human resource, staffing, training and recruiting insights might also be desired. Site maps and tours which include desired information about site locations vs. competitors’ talent pools are usually part of the visit. A lead agency (in NJ, the Business Action Center) should also be available to talk preliminarily about an incentive package. Upon return home, as the company compares its finalists, it may have additional questions about Central NJ to which the research team could respond. In some cases the site selection team would continue to service the client under the coordination of the region’s lead point of contact. For complex projects, such as those spanning multiple sites, a “deal team” might be assembled within the region that would include local municipal representatives and others who have the ability to bring to the table information and/or contributions to a site selection package.

A Competitive Industries Analysis of the Mercer Region in Central NJ

II. BUSINESS SECTORS, SUBSECTORS AND INDUSTRIES: Our Competitive Mix

The best way to understand what a location’s assets of potential interest to prospective businesses may be is to look at what businesses are already there and thriving. The current business mix gives a good indication of the local factors (natural resources, talent pools, location of supply chain elements, access to markets, etc.) that are likely fueling existing success. These factors, along with awareness of the companies currently benefiting from them, become assets to be strengthened to generate further growth. The factors also represent ways to promote the region to new companies.

A. Sector Level Competitiveness

Businesses are classified by six digit codes under the North American Industrial Classification System or NAICS. The first two digits of a NAICS code are large groupings of companies that represent a business “sector”. All North American businesses are represented in one of the system’s 20 sectors, 17 sectors are present at significant levels in our region. In this report, all NAICS sector, subsector and industry grouping descriptive titles will be represented in capitalized italics. Some sectors, like Agriculture, are a negligible part of our regional economy, just as Information might not be present in significant levels in the economies of some other regions. In our region, these 17 sectors represent about 150,000 private sector jobs. Public sector jobs total 30% (21% state, 8% local, 1% federal) for a total countywide employment base of 224,967 (2010). For the purposes of economic development this report will only consider the private sectors. Within those 17 that make up our region’s economic base, we can define a Competitive Mix that includes the sectors involving:  (52) Finance and Insurance  (55) Management of Companies and Enterprises  (54) Professional Scientific and Technical Services  (51) Information  (61) Educational Services

1. Competitive Mix Competitive Mix is a term used in this report to describe those sectors in which our region is specialized and concentrated at a greater rate than the national average. Our region is good at the businesses that make up these sectors and is producing enough goods and services within them to export beyond the region. Exporting goods and services beyond the region is the definition of growth because that exchange brings in new money to the regional economy by selling to customers outside it. Not all sectors, nor all individual businesses, operate this way. A corner retail store will never become a net importer of wealth from beyond the region because it is designed (like most retail) to address local needs. The entire retail sector (comprised of retail shops, consumer electronics outlets, grocery stores, gas stations, and the like) is almost exclusively designed to meet local needs. A counter example might be a “destination retailer” to which people from outside the region would travel to purchase something they typically cannot get near them.

A Competitive Industries Analysis of the Mercer Region in Central NJ

Unlike retail or even some business services (that by their nature are designed to serve local needs), some sectors have the real potential to grow strong enough to not only meet local demand, but exceed it. Making sales outside the region brings in “net new income” to the region from abroad. The sectors in Mercer whose data seem to show this promise to grow beyond meeting local needs include:  (23) Construction  (81) Other Services (except public administration)  (71) Arts, Entertainment and Recreation  (48-49) Transportation and Warehousing  (62) Health Care and Social Assistance  (72) Accommodation and Food Services Sectors are large groupings of varied but related industries. For example, (48-49) Transportation and Warehousing is composed of six industry groups, which themselves are comprised of 42 industries (See Table 9 below). There are a variety of forces that can have different effects at different levels. Among them the dynamics of concentration, employment levels, industry trends, and local and national forces might have different effects at the sector, subsector, industry group and particular company level. However, at this gross level, the sector shows some promise. Further analysis later in this report will reveal more information at the industry level. Whether these industries or this sector will ever become a net exporter, they still do have some importance to the regional economy in their employment, tax contribution, and support of other exporting sectors and industries by virtue of being in their supply or service chains. Still, more would need to be known to consider whether or not they would merit economic development attention as do net exporting firms.

2. Concentration Table 3 below shows the region’s sector competitiveness vs. our competition in terms of two factors that we will call Concentration and Comparative Advantage. In this report, we use the label Concentration to describe a measure of the local concentration of that sector (or subsector or industry) vs. its appearance elsewhere in the nation. It represents a region’s share of that business vs. its share nationally, and shows how concentrated our region is in a particular type of business activity. Concentration could be measured in dollars (some kind of sales or other economic output), but firms, concerned with competition, do not like to make public that kind of information. The data most easily accessible are employment levels measured in the number of jobs. So, in this report we measure a sector’s Concentration in terms of the number of its regional jobs compared to the same sector’s job count nationally. The resulting compound ratio in the field of economic development is called a Location Quotient or LQ. LQs with a value greater than one indicate a local concentration above the national average. A value of 2 would show a region is twice as concentrated as other locations across the country in that particular sector, subsector or industry. This measure also reveals whether a sector is a net importer or exporter. In general, values of .9 to 1.2 show a sector is meeting local needs for the products or services the sector offers, and the sector is neither an importer nor exporter. Values over 1.2 indicate the (sector, subsector, industry, etc.) is a net exporter. Values below .9 reveal the entity in our region is the subject of some other location’s net exports, that is, our region is a net importer of that sector’s goods and services from elsewhere.

3. Comparative Advantage A sector is impacted by many forces and its performance is reported as an aggregate of those forces. The result is described as the total jobs changed or shifted (gained or lost) over a particular period. It is possible to isolate the local factors that may be contributing to a sector adding or losing jobs from other factors such as national growth rates and industry trends. This is helpful for us to understand what, if anything is unique about our

A Competitive Industries Analysis of the Mercer Region in Central NJ location for a particular sector compared to what is impacting that sector uniformly across the nation or the business type. Local factors are a “share” of all forces typically measured which include national and industry shares as well. We can isolate the local share of this shift in jobs using an analysis technique called Shift Share. This local shift shows us that something is different about our location, and how many jobs are being impacted just by it. Local factors might include things like natural resources, relationships with other industries, productivity or other talent pool characteristics. Within a particular sector, such factors specific to our region are providing a Comparative Advantage over that sector in competing regions. The Shift Share analysis does not tell us what those local factors are, only their magnitude and that they are local and not the same as those operating at the industry or national level as a whole. The data can only show the presence of such local advantages in hindsight, after the employment data used for the analysis is collected (usually annually). Again, because of what data are easily available, job numbers are used to calculate local share. Once we see where local forces are acting in particularly strong ways, we can work toward uncovering what these specific local factors are that are contributing to local growth. This is best done through dialogue with those who work in the sector and its component industries in our region. Local share is not a net number. It is the magnitude of job change due only to local factors. National and industry shifts also add or subtract jobs in the same period for a total net job change or shift figure. Local, national and industry shifts are independent of one another. One or more could increase while the other or both decrease. Economic reporting commonly reports a region’s total jobs created or lost, usually annually. Annual net job change can swamp local share or, conversely, be predominantly determined by it. A local share of +100 could be masked by a larger national shift of 1,000 jobs lost during the same period, netting an annual change of 900 jobs lost. Here, the local Comparative Advantage would not be readily apparent amid the far larger impact of a national trend. It does not mean, however, that it may not be important. Further information would need to be considered (such as trends over time) to determine whether local share change is indicating a large change in local factors impacting business. So the local share reflected in this report is not total job change in the region’s sector, but simply the gain or loss of sector jobs within that regional economy attributable to local factors only. Positive local shares represent a Comparative Advantage. Negative values represent a Comparative Disadvantage.

B. Combining Concentration and Comparative Advantage into Competitiveness Categories (W/E/S/T)

When applying these two analyses to each sector, the results can be combined and categorized into one of four types: (W)inning: (+Location Quotient, +Local Share) means the sector is leading the competition nationally in Concentration, has a local Comparative Advantage, and is likely a relative exporter beyond the region. (E)merging: (-LQ, +Local Share) means the sector is growing in local Comparative Advantage which may allow it to grow in Concentration vs. its competition in other geographies. But, it is below the nation in Concentration, so typically it is partially or fully meeting local needs but not exporting. (S)lipping: (+LQ, -Local Share) means the sector is outpacing the nation in Concentration, but declining in local Comparative Advantage. Usually it is a relative exporter as well. (T)railing: (-LQ, -Local Share) shows neither Concentration compared to the nation nor local Comparative Advantage. Such combinations are not typically exporting.

A Competitive Industries Analysis of the Mercer Region in Central NJ

This categorization reveals which sectors are driving regional growth and allows for more focused economic development effort by understanding which sectors are contributing to the economic base and which are best positioned to contribute if current trends continue. It also provides an early warning where the economic base is Slipping due to local factors. With this knowledge, efforts may be deployed to shore up local factors that can strengthen Comparative Advantage. Table 8 below shows how Mercer’s 17 top business sectors can be categorized from 2010 data: Table 8

Comparative Advantage vs. Sector Concentration vs. competition competition (a ratio of jobs in sector locally vs. (10 year job change due to local

nationally) factors only) (W)inning Finance and insurance 1.33 1,732 Management of companies and 1.17 1,338 enterprises Professional, scientific, and technical 1.7 1,165 services Information 1.36 201 (S)lipping Educational services 3.39 -6,265 (E)merging Other services, except public 0.82 1,144 administration Construction 0.61 1,042 Arts, entertainment, and recreation 0.96 1,032 Transportation and warehousing 0.61 784 Health care and social assistance 0.99 642 Accommodation and food services 0.65 71 Retail trade 0.82 10 (T)railing Utilities 0.51 -245 Real estate and rental and leasing 0.81 -273 Manufacturing 0.44 -423 Administrative and waste services 0.87 -1,158 Wholesale trade 0.6 -1,625 Source: 2001-2009 US Department of Commerce Data Note: Concentration values of between .9 and 1.2 indicate the local Key to W/E/S/T Colors need for the sector’s goods and services are being met, and the Emerging Trailing sector is neither exporting nor importing. Values above about 1.2 Slipping Winning indicate a relative exporting sector and below .9 shows the sector is a net importer from other regions.

A Competitive Industries Analysis of the Mercer Region in Central NJ

C. Highlights of the Sector Competitiveness Categorization

1. Our driver industries As described in the above table, Sectors 51 Information, 52 Finance and Insurance, 54 Professional and Technical Services and 55 Management of Companies and Enterprises top our driver list and are the industries bringing in money from outside the regional economy. Two additional drivers, Sector 62 Health Care and Social Assistance and Sector 81 Other Services, Except Public Administration, are Winning as well, but are meeting the regional need for their goods and services, not exporting. This means they are merely re-circulating existing money within the regional economy. Sector 62 Health Care and Social Assistance, however, is the region’s leading sectorial employer (with the most jobs—25,700) compared to the second largest employer (Sector 54 Professional and Technical Services) with 20,300 jobs. Sector 81 Other Services, though Winning, represents an employment base in our region of just 7,400 jobs. A snapshot of our Winning sectors and their regional employment levels can be found in table 4 below.

2. Still strong but slipping The Educational Services sector is one of our region’s top three employers (13,300 jobs), and our single leading exporter by far (almost twice the sector Concentration than any other in the region and five times the Concentration found across the rest of the nation). Still, the sector is losing Comparative Advantage. More information is needed to determine why and what local factors are contributing to this. Sector 99 Unclassified is also Slipping, but represents just 413 jobs in the region.

3. Emerging promise These sectors are still not meeting all local demand for their products, but they are experiencing job growth due to local factors showing they likely have some Comparative Advantage that could, if maintained, enable further growth. At the sector level, most in the Emerging category are non-base (non-exporting) sectors that do not induce regional growth, but follow it. Sectors 44-45 Retail Trade 48-49 and Transportation and Warehousing grow when base sectors grow, and contract similarly. Numbers in our region for Sectors 72 Accommodation and Food Services and 71 Arts, Entertainment and Recreation also show we are not bringing in much business here from beyond the region. Therefore, none of these sectors would be recommended for special economic development attention unless specific subsectors in subsequent analyses showed more potential economic return for any attention paid to them. Sector 23 Construction, particularly given New Jersey’s small size and its proximity to larger metro markets, might represent some strength at the subsector level, particularly if significant portions of their sales occur beyond the region. More detail is needed below the sector level. Manufacturing, however, is without a question a base sector. Our regional Concentration is lower than the national average and the sector employs 9,000 workers. Further detail at the subsector level would help reveal areas within manufacturing that might represent local specialization or Comparative Advantage and thus merit economic development attention. According to economic calculations by the Bureau of Labor Statistics, a single job in a base sector typically supports two to five other jobs (base and non-base) in the local economy. Therefore, 9,000 manufacturing jobs in Mercer County could have an aggregate impact of perhaps 27,000 jobs, a level on par with the region’s leading sectorial employer. So, by the numbers, this sector’s impact is significant. It will take looking at the analyses and categorizations to determine whether and where supportive actions might further strengthen this part of our regional economy.

A Competitive Industries Analysis of the Mercer Region in Central NJ

Overall, a handful of sector strengths stand out among the Winning and Emerging categories. They form the crux of our regional story in which skilled talent is being deployed in a central location and the region yields firms various types of cost savings. Bright spots within some sectors at a finer-grain subsector analysis could add some detail to those strengths and reveal hidden industry-level strengths of our region.

D. Sector Strengths vs. Our Competing Metros

Several of our region’s core Winning sectors cannot be compared to those in our bookend metros because some of the data for these sectors in those metros are not reported by the federal government. Yet, with the data that are available, the Finance and Insurance sector in our region is outperforming its counterparts in the New York and Philadelphia metros, where it is Slipping. The relative size of this sector in each metro varies greatly (it employs over half a million people in NYC, 150,000 in Philadelphia, and almost 14,000 in Mercer County), but the Concentration within our region’s economy is much greater than in either of the others. The sector’s growth due to local factors here is positive, not negative like in both of the others, indicating our region may be taking jobs from these nearby metros in this sector. The table below reveals other strengths compared to the two mega metros: New York-Northern New Philadelphia-Camden- Jersey-Long Island,NY-NJ-PA Wilmington, PA-NJ-DE-MD Trenton-Ewing, NJ MSA MSA MSA U.S. TOTAL Total Conc Comp Conc Comp. Total Conc Comp. Industry Total Jobs 2010 Jobs . . Adv. . Adv. Jobs . Adv. Base Industry: 106,201,23 158,285 6,743,419 2,227,278 Total, all industries 2 NAICS 11 Agriculture, 1,146,962 187 0.11 ND* ND* forestry, fishing and hunting NAICS 21 Mining, quarrying, and oil 651,631 16 0.02 1,223 0.03 ND* and gas extraction NAICS 22 Utilities 551,287 606 0.74 -45 ND* 9,766 0.84 -1,620 NAICS 23 5,489,499 5,010 0.61 895 284,586 0.82 ND* Construction NAICS 31-33 11,487,496 9,067 0.53 874 ND* ND* Manufacturing NAICS 42 5,466,463 5,168 0.63 -724 ND* 105,516 0.92 -7,999 Wholesale trade NAICS 44-45 Retail 14,481,324 19,197 0.89 370 826,006 0.90 47,832 287,173 0.95 -6,524 trade NAICS 48-49 Transportation 3,943,659 4,307 0.73 1,136 ND* 73,225 0.89 168 and warehousing

NAICS 51 2,703,886 5,526 1.37 117 246,641 1.44 -6,989 49,314 0.87 -4,140

A Competitive Industries Analysis of the Mercer Region in Central NJ

New York-Northern New Philadelphia-Camden- Jersey-Long Island,NY-NJ-PA Wilmington, PA-NJ-DE-MD Trenton-Ewing, NJ MSA MSA MSA U.S. TOTAL Total Conc Comp Conc Comp. Total Conc Comp. Industry Total Jobs 2010 Jobs . . Adv. . Adv. Jobs . Adv. Information NAICS 52 Finance 5,486,241 13,831 1.69 3,266 519,636 1.49 58,212 159,187 1.38 -2012 and insurance NAICS 53 Real estate and rental 1,915,571 1,827 0.64 -144 184,449 1.52 12,127 34,613 0.86 -2,939 and leasing NAICS 54 Professional and 7,457,913 20,352 1.83 557 610,494 1.29 48,163 ND* technical services NAICS 55 Management of 1,854,778 3,227 1.17 1,345 148,345 1.26 ND* companies and enterprises NAICS 56 Administrative and 7,399,320 9,539 0.86 -747 437,559 0.93 139,525 0.90 -5,785 waste services NAICS 61 Educational 2460150 13,350 3.64 -4664 237,714 1.52 10,560 102,054 1.98 10,823 services NAICS 62 Health care and social 16,196,009 25,733 1.07 1,358 1,210,450 1.18 44,483 420,804 1.24 13,789 assistance NAICS 71 Arts, entertainment, 1,903,739 2,614 0.92 722 136,304 1.13 13,074 41,370 1.04 2,923 and recreation NAICS 72 Accommodation 11,103,075 10,871 0.66 259 537,061 0.76 61,281 180,164 0.77 580 and food services

NAICS 81 Ot svcs, 4,349,563 7,446 1.15 1,590 306,969 1.11 12,653 86,742 0.95 -1,395 not public admin

NAICS 99 152,667 413 1.82 -21 27,928 2.88 2,050 1,573 0.49 -807 Unclassified NAICS 111 Crop 528,867 107 0.14 -40 4,216 0.13 ND* production

NAICS 112 Animal 225,138 25 0.07 354 0.02 ND* prodn & aqua

A Competitive Industries Analysis of the Mercer Region in Central NJ

New York-Northern New Philadelphia-Camden- Jersey-Long Island,NY-NJ-PA Wilmington, PA-NJ-DE-MD Trenton-Ewing, NJ MSA MSA MSA U.S. TOTAL Total Conc Comp Conc Comp. Total Conc Comp. Industry Total Jobs 2010 Jobs . . Adv. . Adv. Jobs . Adv. NAICS 113 Forestry 56,152 NC** ND* 29 0.02 and logging NAICS 114 Fishing, hunting and 8,205 NC** 101 0.19 35 0.20 trapping NAICS 115 Agriculture and 328,600 56 0.11 15 1,341 0.06 ND* forestry support activities NAICS 211 Oil and 158,423 ND* 41 0.00 ND* gas extraction NAICS 212 Mining, 203,498 ND* 1,078 0.08 804 0.19 -318 except oil and gas NAICS 213 Support activities for 289,709 ND* 105 0.01 108 0.02 19 mining NAICS 221 Utilities 551,287 606 0.74 -45 ND* 9,766 0.84 -1,620 NAICS 236 Construction of 1,226,917 946 0.52 -68 ND* ND* buildings NAICS 237 Heavy and civil 811,123 814 0.67 265 ND* ND* engineering construction NAICS 238 Specialty trade 3,451,459 3,250 0.63 703 187,006 0.85 10,932 62,115 0.86 887 contractors NAICS 311 Food 1,442,112 437 0.20 -298 41,831 0.46 ND* manufacturing NAICS 312 Beverage and 183,414 ND* 2,983 0.26 2,005 0.52 tobacco product manufacturing NAICS 313 Textile 119,385 ND* 3,922 0.52 1,696 0.68 404 mills NAICS 314 Textile 119,145 ND* 4,253 0.56 1,238 0.50 50 product mills

A Competitive Industries Analysis of the Mercer Region in Central NJ

New York-Northern New Philadelphia-Camden- Jersey-Long Island,NY-NJ-PA Wilmington, PA-NJ-DE-MD Trenton-Ewing, NJ MSA MSA MSA U.S. TOTAL Total Conc Comp Conc Comp. Total Conc Comp. Industry Total Jobs 2010 Jobs . . Adv. . Adv. Jobs . Adv. NAICS 315 Apparel 157,587 ND* 22,093 2.21 2,636 0.80 manufacturing NAICS 316 Leather and allied product 28,109 ND* 1,232 0.69 130 0.22 manufacturing NAICS 321 Wood product 339,542 ND* 2,826 0.13 ND* manufacturing NAICS 322 Paper 392,853 260 0.44 -92 14,070 0.56 ND* manufacturing NAICS 323 Printing and related 485,523 659 0.91 -208 24,740 0.80 -3,602 ND* support activities NAICS 324 Petroleum and 110,972 NC** 2,308 0.33 ND* coal products manufacturing NAICS 325 Chemical 785,283 2,752 2.35 1,592 68,459 1.37 29,231 1.77 -8824 manufacturing NAICS 326 Plastics and rubber 623,259 432 0.47 -256 ND* 10,734 0.82 products manufacturing NAICS 327 Nonmetallic 368,097 329 0.60 -26 ND* 4,957 0.64 mineral product manufacturing NAICS 331 Primary 361,211 ND* 4,157 0.18 ND* metal mfg NAICS 332 Fabricated metal 1,276,933 412 0.22 -30 34,382 0.42 -4,676 18,979 0.71 -1,262 product mfg NAICS 333 991,039 1,391 0.94 305 15,835 0.25 -5,272 10,780 0.52 Machinery mfg

NAICS 334 Comp & 1,097,216 1,183 0.72 -191 37,282 0.54 ND* elec prod mfg

A Competitive Industries Analysis of the Mercer Region in Central NJ

NAICS 336 Transpo 1,327,169 ND* ND* 16,695 0.60 equipment mfg

NAICS 337 Furniture & rel 356,094 68 0.13 12 10,561 0.47 4,342 0.58 product mfg NAICS 339 Miscellaneous 566,479 236 0.28 -63 ND* ND* manufacturing NAICS 423 Merchant 2,718,043 3,155 0.78 278 169,267 0.98 -15,690 53,694 0.94 -3,140 wholesalers, durable goods NAICS 424 Merchant 1,935,875 1,599 0.55 -356 ND* 37,572 0.93 679 wholesalers, nondurable goods NAICS 425 Electronic markets 812,545 414 0.34 -726 34,151 0.66 14,251 0.84 -6,491 and agents and brokers NAICS 441 Motor vehicle and parts 1,630,802 1,728 0.71 113 58,655 0.57 1,556 27,988 0.82 -773 dealers NAICS 442 Furniture and 436,314 646 0.99 -128 ND* 9,896 1.08 754 home furnishings stores NAICS 443 Electronics and 502,036 627 0.84 38 38,372 1.20 9,215 0.88 -1,354 appliance stores NAICS 444 Building material and 1,141,826 1,419 0.83 49 49,433 0.68 -893 19,510 0.81 -362 garden supply stores

A Competitive Industries Analysis of the Mercer Region in Central NJ

New York-Northern New Philadelphia-Camden- Jersey-Long Island,NY-NJ-PA Wilmington, PA-NJ-DE-MD Trenton-Ewing, NJ MSA MSA MSA U.S. TOTAL Total Conc Comp Conc Comp. Total Conc Comp. Industry Total Jobs 2010 Jobs . . Adv. . Adv. Jobs . Adv. NAICS 445 Food and beverage 2,813,131 5,008 1.19 -346 194,357 1.09 34,076 67,129 1.14 302 stores NAICS 446 Health and personal care 979,729 1,302 0.89 14 79,940 1.29 4,623 22710 1.11 -3218 stores NAICS 447 818,057 654 0.54 40 17,806 0.34 1,225 9,951 0.58 876 Gasoline stations NAICS 448 Clothing and clothing 1,379,749 2,634 1.28 577 142,191 1.62 4,705 31,584 1.09 -6206 accessories stores NAICS 451 Sporting goods, 604,441 992 1.1 -171 34,704 0.90 -6,511 11,904 0.94 -334 hobby, book and music stores NAICS 452 General merchandise 2,988,606 2,974 0.67 102 ND* 47,198 0.75 611 stores NAICS 453 Miscellaneous 772,389 980 0.85 108 41,556 0.85 3,050 15,576 0.96 257 store retailers NAICS 454 414,244 235 0.38 -20 24,286 0.92 -1,078 14,511 1.67 1,990 Nonstore retailers NAICS 481 Air 448,145 27 0.04 1 44,951 1.58 9,057 0.96 transportation NAICS 482 Rail 584 NC** ND* ND* transportation NAICS 483 Water 62,401 NC** 4,592 1.16 ND* transportation NAICS 484 Truck 1,249,934 876 0.47 260 36,943 0.47 -7,374 15,182 0.58 -1,496 transportation NAICS 485 Transit & ground 419,152 1479 2.37 -294 68,641 2.58 825 12,933 1.47 -843 passenger transpo NAICS 486 Pipeline 42,265 ND* ND* ND* transportation

A Competitive Industries Analysis of the Mercer Region in Central NJ

New York-Northern New Philadelphia-Camden- Jersey-Long Island,NY-NJ-PA Wilmington, PA-NJ-DE-MD Trenton-Ewing, NJ MSA MSA MSA U.S. TOTAL Total Conc Comp Conc Comp. Total Conc Comp. Industry Total Jobs 2010 Jobs . . Adv. . Adv. Jobs . Adv. NAICS 487 Scenic & sightseeing 26,399 ND* 1,911 1.14 ND* transpo NAICS 488 Support activities for 540,988 118 0.15 21 ND* 9,221 0.81 -57 transportation NAICS 491 Postal 4,424 NC** 106 0.38 ND* service NAICS 492 Couriers 519,434 955 1.23 274 39,621 1.20 ND* and messengers NAICS 493 Warehousing and 629,934 828 0.88 680 27,294 0.68 ND* storage NAICS 511 Publishing 754,903 2,379 2.11 199 72,538 1.51 -2,391 ND* industries, except internet NAICS 512 Motion picture and sound 368,885 226 0.41 -163 ND* ND* recording industries NAICS 515 Broadcasting, 293,533 241 0.55 36,210 1.94 3,324 0.54 except internet NAICS 517 Telecommunicatio 902,691 2,109 1.57 284 ND* ND* ns NAICS 518 Data processing, hosting 242,412 276 0.76 -107 ND* 7,399 1.46 -907 and related svs NAICS 519 Other 141462 295 1.4 -520 25,890 2.88 2,143 0.72 -3,289 info services NAICS 521 Monetary 20,735 NC** ND* ND* authorities - central bank NAICS 522 Credit intermediation & 2,536,762 2,938 0.78 305 158,923 0.99 19,183 67,032 1.26 -1,041 related activities

A Competitive Industries Analysis of the Mercer Region in Central NJ

New York-Northern New Philadelphia-Camden- Jersey-Long Island,NY-NJ-PA Wilmington, PA-NJ-DE-MD Trenton-Ewing, NJ MSA MSA MSA U.S. TOTAL Total Conc Comp Conc Comp. Total Conc Comp. Industry Total Jobs 2010 Jobs . . Adv. . Adv. Jobs . Adv. NAICS 523 Securities, commodity 800,476 6,321 5.30 2,944 212,141 4.17 ND* contracts, investments NAICS 524 Insurance carriers 2041869 4,427 1.45 -22 138,299 1.07 57,912 1.35 & related activities NAICS 525 Funds, trusts, and other 86,399 145 1.13 78 ND* ND* financial vehicles NAICS 531 Real 1,382,794 1,597 0.77 -35 158,968 1.81 4,567 ND* estate NAICS 532 Rental 507,470 ND* 22,328 0.69 10,865 1.02 -586 & leasing services NAICS 533 Lessors of nonfinancial 25,307 ND* 3,153 1.96 ND* intangible assets NAICS 541 Professional and 7,457,913 20,352 1.83 557 61,0494 1.29 -48,163 ND* technical services NAICS 551 Management of 1,854,778 3,227 1.17 1,345 148,345 1.26 ND* companies and enterprises NAICS 561 Administrative and 7,043,417 9,041 0.86 -677 416,620 0.93 14,216 133,023 0.90 -4,769 support services NAICS 562 Waste mgmt & 355,903 498 0.94 -84 20,939 0.93 6,501 0.87 -1,100 remediation svcs NAICS 611 Educational 2,460,150 13,350 3.64 -4664 237,714 1.52 -10560 102,054 1.98 -10823 services NAICS 621 Ambulatory health 5,969,545 8,995 1.01 1,261 428,319 1.13 130,131 1.04 -11312 care services NAICS 622 4,639,079 8,555 1.24 256 328,898 1.12 134,057 1.38 -7695 Hospitals

A Competitive Industries Analysis of the Mercer Region in Central NJ

New York-Northern New Philadelphia-Camden- Jersey-Long Island,NY-NJ-PA Wilmington, PA-NJ-DE-MD Trenton-Ewing, NJ MSA MSA MSA U.S. TOTAL Total Conc Comp Conc Comp. Total Conc Comp. Industry Total Jobs 2010 Jobs . . Adv. . Adv. Jobs . Adv. NAICS 623 Nursing and residential 3,119,452 4,112 0.88 489 ND* ND* care facilities NAICS 624 Social 2,467,934 4,071 1.11 -590 ND* ND* assistance NAICS 711 Perf arts & spectator 394,835 453 0.77 -74 46,506 1.85 7,713 0.93 sports NAICS 712 Museums, hist 127,527 149 0.78 -21 13,765 1.70 3,930 1.47 -198 sites, zoos & parks

NAICS 713 Amusements, 1,381,377 2,011 0.98 818 76,033 0.87 10,679 29,727 1.03 gambling & rec

NAICS 721 1,747,254 1,001 0.38 129 70,288 0.63 6,630 16,986 0.46 -158 Accommodation

NAICS 722 Food 9,355,821 9,870 0.71 -16 466,774 0.79 52,604 163,179 0.83 -665 services & bars

NAICS 811 Repair 1,135,118 985 0.58 -114 53,539 0.74 361 21,513 0.90 -1,239 and maintenance NAICS 812 Personal & laundry 1,266,794 2,165 1.15 671 106,965 1.33 11,491 31,989 1.20 1,833 services

NAICS 813 Membership assns 1,313,677 3,851 1.97 972 119,870 1.44 9,779 29,792 1.08 2,841 & orgs

NAICS 814 Private 633,973 445 0.47 167 26,594 0.66 -10,226 3,449 0.26 -3,099 households NAICS 999 152,667 413 1.82 -21 27,928 2.88 2,050 1,573 0.49 -807 Unclassified NAICS02 516 Internet publishing NC** NC** NC** NC** and broadcasting *(ND) Not Disclosable **(NC) Not Calculable, the data does not exist or it is zero ** For comparability across the three MSAs, different federal data sources were used from the sector table for Trenton- Ewing MSA earlier in the report. This resulted in a few changes in W/E/S/T characterization.

A Competitive Industries Analysis of the Mercer Region in Central NJ

As the table above shows, our region’s biggest difference in strength vs. our competition is our region’s (51) Information sector which is Winning, while Philadelphia’s is Trailing, and New York’s is Slipping. Data are not fully available in the other two metros for our other top sectors. (61) Educational Services is Slipping in all three metros due to local factors in each, but our Concentration in this sector is almost certainly among the highest in the nation, and almost double that of these other two metros. As might be expected, (71) Arts, Entertainment and Recreation are Winners for the big city metros. (62) Health Care and Social Assistance is our strength, yet Slipping in both metros. While our regional competition may be different for each company’s site selection process, our goal should be to make the company’s long list of up to a dozen metros under their initial consideration. The size and visibility of both the NY and Philadelphia metros present a challenge to gain a site selector’s attention. Each metro spans more than one state and both contain easily recognizable and familiar place names (such as Camden and Wilmington and the entirety of Long Island). Both are within two of the nation’s five largest urban centers. One way to compete might be to demonstrate higher value. This report’s data analysis sought to identify areas of differentiation between the strongest and most competitive sectors in Central NJ vs. these nearby mega metros. Big is not always better. Certain technology companies will more favorably consider Silicon Valley in the San Jose-Sunnyvale-Santa Clara MSA than a location in the far larger Los Angeles MSA because the location better meets a company’s site location criteria. Looking at the results of the sector analysis for the Mercer region should facilitate the development of sector-level strategies that build on our strengths and contrast us with our two nearby mega metros. Using US Department of Labor employment data to compare sectors among the three MSAs reveals some surprises. Our region, though far smaller in population and total jobs than the mega metros, has six Winning sectors, while NY has four and Philadelphia one. The Competitiveness of our top sectors (51 Finance and Insurance, 54 Professional and Technical Services, and 61 Educational Services), measured by location quotient scores of 1 or above, is greater than every other sector in both mega metros (other than NY’s Unclassified Sector 99, which represents a very small relative number of jobs—28,000 vs. 520,000 in its Finance and Insurance sector). This means we are far more specialized in these three areas than our competition. In those financial and professional sectors the Concentrations differ from NY metro by small but significant amounts (1.69 vs. 1.49 and 1.83 vs. 1.29). At 3.64, our Educational Services Concentration far exceeds everything in either mega metro by 75%. Of course, the size of the economies of those MSAs dwarfs ours. They contain 6.7 and 2.2 million jobs to our 158,000. Their economies are larger and more diversified, so it would be expected that their Concentrations in any one sector would be smaller. Yet, local factors in our top two financial and professional sectors are strong, though weak in both the other MSAs, revealing Comparative Advantage in Mercer. Local factors in all three MSAs are causing Slippage in Educational Services. Our region has a cluster of Finance, Technical and Management Services (Sectors 52, 54, and 55) that is a clear strength versus our competition. Our location can reinforce that strength by promoting its proximity and convenient access to both these competing large urban centers and their assets. The ease of movement of people, goods and data from our region to both these metros is very important to that value proposition. Presumably, even back office and computing centers, like our region’s Dow Jones Data Center, require fair amounts of staff travel between the Wall Street and Princeton locations with as much ease as many Princeton residents commute to Manhattan daily. As we promote that access to prospective companies, we will become increasingly aware of how important infrastructure is to our economic development agenda. Recent reports considering Philadelphia a possible hub for US high speed rail from Boston to Washington DC puts our Trenton Transit Center literally in the center of those national investment decisions under consideration. Being on that route, with a significant amount of underdeveloped real estate immediately nearby, could generate new and very competitive business locations for some of these clusters.

A Competitive Industries Analysis of the Mercer Region in Central NJ

Corporate real estate trends also reveal potential for our regional strategies. As businesses grow, the location of their own existing real estate and physical assets is playing an important part in their new site selection. Particularly in difficult economic times, companies are seeing more clearly the cost of past decisions to spread out operations. Our region should consider what existing regional companies might need to grow in place over time, allowing the possibility for new and even unrelated business functions across the firm to have an ease of expansion where the company already operates. Also, by understanding and strengthening the local factors that contributed to our companies’ original decisions to choose Mercer (such as access to talent pool, proximity to research and technical institutions, location of peer companies, and services from a value chain), we can cultivate new opportunities to capture more growth over the long term. The Educational Services sector and international name recognition of Princeton can be linked to places beyond Princeton but associated with it (such as office parks with Princeton in their name). The interrelations among businesses in this cluster need to be better understood to assess whether there are local conditions and factors that might enhance this sector’s existing Comparative Advantage. Local intelligence is needed to understand the recent drop in this local advantage and whether anything can be done to help reverse this. Other infrastructure such as highway, electric and data should also be evaluated. Technology companies today want multiple telecom providers and sites to have dual feed (service by two central switching offices). Reliable and clean (no spikes for electronic equipment) electric power is as important as redundancy (dual feed) to certain precision operations. Our region must be highly and reliably connected to the other urban centers that anchor the nearby mega regions but provide business locations with lower costs or other value.

E. Subsector Level Competitiveness

The sector level analysis yielded a general understanding of our regional economy’s competitive mix (W/E/S/T). Subsequent analysis at the subsector level revealed more detail as to which industry types contribute to Central NJ’s strongest sectors. Our region’s 17 most significant sectors are composed of 66 subsectors, which themselves are broken down into over 300 industry groups. Such a large number of industry groups is a somewhat unwieldy basis from which to develop broad economic development strategies, so this report uses the set of 66 subsectors from which to highlight regional strengths with more specificity while avoiding the clutter and complexity at the industry level. Sectors themselves break down into as few as one subsector to as many as 12, with most in the 3 to 5 range. To get a better sense of the change in resolution between sector and subsector level analysis, consider the Construction sector. It is broken down into three subsectors: Construction of Buildings, Heavy and Civil Engineering Construction, and Specialty Trade Contractors. Manufacturing breaks into 12 subsectors. Both sector and subsector levels are shown in Table 9 below. Table 9

Comparative Sector Employment Competitiveness (2 Digit Description Subsector (3 digit NAICS) Advantage NAICS) 2001 2010 2001 2010 2001 2010 22 Utilities 221 Utilities 708 606 0.87 0.74 7 -45 236 Construction of 23 Construction 1,296 946 0.61 0.52 62 -68 buildings 237 Heavy and civil 643 814 0.5 0.67 -50 265 engineering construction 238 Specialty trade 3,140 3,250 0.54 0.63 219 703

A Competitive Industries Analysis of the Mercer Region in Central NJ

Comparative Sector Employment Competitiveness (2 Digit Description Subsector (3 digit NAICS) Advantage NAICS) 2001 2010 2001 2010 2001 2010 contractors 31-33 Manufacturing 311 Food mfg 792 437 0.37 0.2 33 -298 322 Paper mfg 517 260 0.66 0.44 -2 -92 323 Printing and related 1,366 659 1.31 0.91 -73 -208 support activities 325 Chemical 1,409 2,752 1.08 2.35 -489 1,592 manufacturing 326 Plastics and rubber 988 432 0.81 0.47 -1 -256 products manufacturing 327 Nonmetallic mineral product 524 329 0.71 0.6 -209 -26 manufacturing 332 Fabricated metal 577 412 0.25 0.22 -37 -30 product manufacturing 333 Machinery 1,491 1,391 0.8 0.94 133 305 manufacturing 334 Computer and electronic product 2,189 1,183 0.92 0.72 -833 -191 manufacturing 335 Electrical equipment and 361 221 0.48 0.42 -15 -12 appliance mfg. 337 Furniture and related product 101 68 0.12 0.13 -3 12 manufacturing 339 Miscellaneous 376 236 0.39 0.28 3 -63 manufacturing 423 Merchant Wholesale 42 wholesalers, durable 3,289 3,155 0.78 0.78 -175 278 Trade goods 424 Merchant wholesalers, nondurable 2,036 1,599 0.74 0.55 179 -356 goods 425 Electronic markets 851 414 1.03 0.34 -142 -726 and agents and brokers 441 Motor vehicle and 44-45 Retail Trade 1,838 1,728 0.73 0.71 39 113 parts dealers 442 Furniture and home 954 646 1.3 0.99 -308 -128 furnishings stores 443 Electronics and 653 627 0.86 0.84 84 38 appliance stores 444 Building material and garden supply 1,368 1,419 0.88 0.83 88 49 stores 445 Food and beverage 5,593 5,008 1.4 1.19 133 -346 stores

A Competitive Industries Analysis of the Mercer Region in Central NJ

Comparative Sector Employment Competitiveness (2 Digit Description Subsector (3 digit NAICS) Advantage NAICS) 2001 2010 2001 2010 2001 2010 446 Health and personal 1,233 1,302 0.96 0.89 54 14 care stores 447 Gasoline stations 690 654 0.55 0.54 14 40 448 Clothing and clothing accessories 1,974 2,634 1.09 1.28 26 577 stores 451 Sporting goods, hobby, book and music 1,312 992 1.41 1.1 24 -171 stores 452 General 2,710 2974 0.71 0.67 -17 102 merchandise stores 453 Miscellaneous store 1,119 980 0.83 0.85 19 108 retailers 454 Nonstore retailers 293 235 0.45 0.38 -15 -20 Transportation 48-49 and 481 Air transpo 36 27 0.04 0.04 7 1 Warehousing 484 Truck transpo 682 876 0.36 0.47 32 260 485 Transit & ground 1,572 1,479 3.11 2.37 40 -294 passenger transpo 488 Support activities 95 118 0.13 0.15 5 21 for transportation 492 Couriers and 783 955 0.96 1.23 13 274 messengers 493 Warehousing and 120 828 0.17 0.88 578 680 storage 511 Publishing 51 Information industries, except 2,929 2,379 2.12 2.11 592 199 internet 512 Motion picture and sound recording 387 226 0.77 0.41 -24 -163 industries 517 2,613 2,109 1.48 1.57 -65 284 Telecommunications 518 Data processing, hosting and related 769 276 1.16 0.76 145 -107 services 519 Other information 265 295 4.23 1.4 6 -520 services 522 Credit Finance and 52 intermediation and 2,691 2,938 0.76 0.78 -273 305 Insurance related activities 523 Securities, commodity contracts, 3,516 6,321 3.1 5.3 1,991 2,944 investments 524 Insurance carriers 4,591 4,427 1.6 1.45 108 -22

A Competitive Industries Analysis of the Mercer Region in Central NJ

Comparative Sector Employment Competitiveness (2 Digit Description Subsector (3 digit NAICS) Advantage NAICS) 2001 2010 2001 2010 2001 2010 and related activities 525 Funds, trusts, and 67 145 0.56 1.13 33 78 other financial vehicles Real Estate 53 531 Real estate 1,578 1,597 0.87 0.77 311 -35 Rent & Leasing Professional, 541 Professional and 54 Scientific & 18,238 20,352 1.95 1.83 -431 557 technical services Tech Services Management 551 Management of 55 of Companies companies and 1,741 3,227 0.74 1.17 676 1,345 & Enterprises enterprises Admin Support & 561 Administrative and 56 10,240 9,041 1.01 0.86 -211 -677 Waste Mgmt support services & Rmdn Svcs 562 Waste management and 516 498 1.2 0.94 -57 -84 remediation services Education 611 Educational 61 13,792 13,350 5.37 3.64 25 -4664 Services services Health Care 621 Ambulatory health 62 and Social 5,770 8,995 0.95 1.01 100 1,261 care services Assistance 622 Hospitals 7,169 8,555 1.31 1.24 136 256 623 Nursing and 3087 4,112 0.85 0.88 -97 489 residential care facilities 624 Social assistance 3,489 4,071 1.39 1.11 34 -590 711 Performing arts and 71 Arts, Ent & Rec 505 453 0.98 0.77 61 -74 spectator sports 712 Museums, historical 153 149 0.98 0.78 16 -21 sites, zoos, and parks 713 Amusements, gambling, and 1,115 2,011 0.63 0.98 77 818 recreation Accomm & 72 721 Accommodation 912 1,001 0.37 0.38 92 129 Food Svcs 722 Food services and 8,742 9,870 0.78 0.71 103 -16 drinking places Other Services 811 Repair and 81 (except Public 1,210 985 0.71 0.58 48 -114 maintenance Admin) 812 Personal and 1,474 2,165 0.87 1.15 54 671 laundry services 813 Membership associations and 2,790 3,851 1.61 1.97 -206 972 organizations

A Competitive Industries Analysis of the Mercer Region in Central NJ

Comparative Sector Employment Competitiveness (2 Digit Description Subsector (3 digit NAICS) Advantage NAICS) 2001 2010 2001 2010 2001 2010 814 Private households 190 445 0.32 0.47 114 167 999 Unclassified 723 413 2.08 1.82 306 -21

The following are observations on key regional subsectors:

1. Finance and Insurance Subsector Our region’s leading competitive sector in Concentration and Comparative Advantage, (52) Finance and Insurance, is composed of four subsectors: Table 10

Jobs Jobs LQ* LQ LG LG Sector Subsector 2001 2010 2001 2010 2001 2010 52. Finance and 522 Credit intermediation and 2691 2938 0.76 0.78 -273 305 Insurance related activities 523 Securities, commodity contracts, 3,516 6,321 3.1 5.3 1,991 2,944 investments 524 Insurance carriers and related 4591 4427 1.6 1.45 108 -22 activities 525 Funds, trusts, and other financial 67 145 0.56 1.13 33 78 vehicles * For space reasons, LQ and LG are labels used in some tables to indicate Location Quotient and Local Growth Share, the same as Competitiveness and Comparative Advantage in other tables. ** 2002 Data were used in place of 2001 due to availability from federal sources

Sector categorizations can fluctuate slightly depending on the period considered and the sources of the data, but the differences are not significant for the purposes of economic development strategy. So while this subsector level analysis categories Sector 52 Finance and Insurance as Emerging, the sector level analysis categorized it as Winning. Within the sector, we see strong Concentrations and Comparative Advantages in all of its subsectors, with Insurance Carriers and Related Activities Slipping but still strong. The sector represents 8.8% of the county’s employment. These analyses do not show the dollar values of subsectors. The sector’s high number of jobs has been relatively stable with some growth, though losses are indicated in years impacted by the Great Recession. Subsector 523 Securities shows an exceptionally high local Concentration compared to the national average, which also showed up in the sector level analysis. Sector 52 had a Concentration across all its subsectors of 1.69 (Using US Department of Labor data). Our region is five times more Concentrated in Securities, Commodity Contracts and Investments than we are in the (52) Finance and Insurance sector of which it is a part. Strength enough at the sector level, exceptional strength at the subsector level, this represents the strongest Concentration of any of our sectors or subsectors, far exceeding our second highest subsector’s Concentration from (61) Educational Services. In terms of employment, this entire Finance and Insurance sector represents 13,800 jobs or 8% of Mercer’s private sector employment base. Subsector 523 Securities, Commodity Contracts, Investments employs 6,320 of

A Competitive Industries Analysis of the Mercer Region in Central NJ those 13,800, and is entirely made up of the following nine industries (as shown by their four digit industry groups below): Table 11

5231 Investment Banking & Securities Dealing 5231 Securities Brokerage

5231 Commodity Contracts Dealing 5232 Securities and Commodities Exchanges 5239 Miscellaneous Intermediation 5239 Portfolio Management 5239 Investment Advice 5239 Trust, Fiduciary, and Custody Activities 5239 Misc Financial Investment Activities

Areas of concern within the sector include a sudden drop in Competitive Advantage in 2005 due to local factors for Subsector 524 Insurance Carriers. The sector was further hit very hard (losing 500 jobs) due to those factors during the years of the Great Recession, though local factors seem to have improved in the past couple of years to almost regain the pre-drop level in 2010 (though it is still causing the subsector to show up as Slipping, however just slightly). Conversations among regional industry members in that subsector would help clarify whether any of the local factors impacting this subsector might be able to be influenced by future economic development policy or programmatic interventions.

2. Educational Services Subsector There is no subsector for this sector designated by a 3 digit NIACS code. Instead, it is made up of approximately 17 industries (designated by 4 digit NAICS codes). Industries within this sector include private elementary and secondary schools, colleges, universities, and a range of training programs (e.g. apprenticeship, technical, management, sports & recreation, language, driving, computer). Most of these are designed to meet local demand. This sector in our region is likely powered more by the Educational Support Services industry (6117), which is the industry category for Educational Testing Services, the world’s largest private educational testing and assessment organization. ETS is headquartered in the county with operations in Ewing and Lawrence Townships as well as throughout the nation and in several other countries. ETS employs almost 2,300 people. Interesting for tax revenue purposes, ETS happens to be a not for profit corporation and is tax exempt. Employment in Sector 61 Education Services (which includes both (611) Educational Support Services and the other private schooling and training-related industries) totaled 13,350 in 2010 and has hovered around that 13,000 mark for the last 10 years. At the beginning of the study period, the first three years showed sector job growth from 13,000 to a peak of 15,000 in 2003 followed by a cliff drop of almost 2,000 jobs in 2004, and stabilizing at around 13,000. From the data alone, we cannot tell if those losses were on the school/training side, the educational services side, or spread across both (the latter seems unlikely). Since the school and training jobs are in the private sector, independent from each other and diversified (language, sports, driving, test prep etc.), they are unlikely to be impacted greatly by a single set of forces as might a public school system engaged in massive cuts, for example. There could have been a layoff at ETS, but employment data available in these data sets has too many gaps for such a firm-specific event to show up. This is common with federal data because it is often suppressed for confidentiality purposes when it might reveal too much about a particular business. This

A Competitive Industries Analysis of the Mercer Region in Central NJ would be the case when a unit of analysis (subsector, industry group) is made up of one or a small number of businesses. As a result, available data alone are not sufficient for us to draw solid conclusions. When confronted with such gaps, collecting human intelligence is the next logical step. Conversations with people in the region’s educational support services industry and among various schools and training programs would likely reveal insights into what happened in 2003 and 2004. It would be particularly useful to determine if local factors were a primary cause. In terms of Concentration vs. the national average, our region’s Concentration in this sector was at a regional high of 5.37 in 2001. This means we were as concentrated in (61) Educational Services sector then as we are today in (523) Securities subsector. However, that Concentration (which far exceeded current Concentrations in our competing MSAs) has slipped each of the last ten years to a value of 3.64 today. We are still far more Concentrated than NY or Philadelphia (which are below 2), but the steady decline is troubling and worth looking into. Regarding local Comparative Advantage for this sector, Philadelphia and New York metros both experienced about 10,000 jobs lost due to local factors (though for this report we did not collect data on their net total job growth or loss, so all we know is whatever the net change was). This job loss is within a sector with 100,000 and 237,000 jobs in those metros respectively. It could be that job “churn” is common to private schools and training programs, where instructors are given short term course-length contracts. Both metros are net exporters of these services, and in these industries a large number of the trainees may be outsiders coming into the metro for the coursework (thus delivering their dollars themselves), which is another way for an industry or company to be a net exporter. Neither metro economy is anywhere nearly as specialized as ours in this sector. However, assuming comparable private schooling and training across all three MSAs, if ETS is driving the educational support services industry in Central NJ, it might explain our atypically high Concentration of this blended sector. The Trenton-Ewing metro added a net of 106 jobs in this sector between 2009 and 2010, but the number of jobs lost due to local factors was 4,600 in that period. Understanding these dynamics and their potential regional causes should be an early task for the Growth Partnership. Comparative Advantage is our term for the local portion of the Shift Share analysis, which has three components of job change: change due to local factors, change due to industry trends and change due to national growth factors. When local share, (or as we call it Competitive Advantage) changes on a magnitude of 4,000 and net job change is 100, it means job gains of at least 4,000 were also made in either/or the industry and national components to result in a net change of +100. To gain 100 jobs in Trenton-Ewing in one year but have lost 4,000 due to local factors means there must have been an offsetting gain due to either or both national and industry gains of a little over 4,000, resulting in 100 net gained.

3. 511 Publishing and 323 Printing: A regional strength (511) Publishing is a Winning subsector, and combined with (323) Printing, (strong but Slipping), represents a regional strength. There are likely to be value chain or other connections within this sector throughout Central New Jersey counties that should be better understood, as they might be an asset to market to this industry cluster. Together the cluster employs about 4,000 people in Mercer. Printing lost 38 net jobs in the last year (2009-2010) and a little over 200 of those were due to local factors. So, industry and/or national growth trends must have added a significant number of jobs above that to register this slight net loss. The subsector’s Concentration has slowly declined over the last 10 years, but remained reasonably strong and its Comparative Advantage has been improving over the same period. More would need to be learned about the dynamics of this cluster, its customer base and the relationship to firms within the industry, to better envision ways in which this regional strength might be capitalized. More too should be learned about the composition of our region’s

A Competitive Industries Analysis of the Mercer Region in Central NJ

Subsector 517 Telecommunications. Its employment levels have maintained above the 2,000 mark this past decade, its Concentration has been consistently above the national average, and its local Comparative Advantage has remained strong.

4. Chemical Manufacturing: Notable exception in Comparative Advantage Subsector 325 Chemical Manufacturing as a Winning subsector is a noteworthy exception to an otherwise Trailing (31-33) Manufacturing sector, which shows low Concentration and consistent Competitive Advantage loss, especially in (311) Food Preparation and (326) Plastics and Rubber Manufacturing. The latter is surprising, given its presumed connection with chemical manufacturing from a process standpoint. However, this Concentration might have been skewed toward Rubber, which was has been a very concentrated industry in Trenton since the Industrial Revolution. More local information is needed to understand these potential relationships and the current composition and viability of each. (325) Chemical Manufacturing is also related to Pharmaceutical and Medicine Manufacturing which happens to be a State of New Jersey priority industry. Subsector 325 Chemical Manufacturing’s employment in the region is strong at 2,750. It experienced a large gain in employment between 2009 and 2010 of 920 net jobs, amid steady growth over the past decade (other than a large drop between 2001 and 2002). 2010 also showed a marked increase in regional Concentration vs. the nation from 1.57 to 2.35. Clearly, 2010 was a strong year for the subsector in the region and all the net job growth was attributable to local Comparative Advantage. Such strengths should be understood and the issues and opportunities to solidify those gains and build upon them should be a regional priority.

5. Sector Strength: 54 Professional, Scientific and Technical Services This Winning Sector (54) is comprised of the Subsector (541), which is the largest regional employer, providing over 20,000 jobs. Its Concentration and Competitive Advantage show some recessionary impacts but remain high. There is much more to learn about the nature of the particular industries that make up our regional mix within this subsector. One of those industries, (5417) Scientific Research and Development Services, is a core part of the State’s Pharma/Life Science Industry cluster, and knowing just how strong our region is in that industry would be an immediate research goal. Research and development industries are also components of the State’s Green and Technology clusters, so understanding better what kinds of firms are represented by these 20,000 jobs in our region is important to understand what makes up our region’s largest sectorial employment base and how they may be related to state priorities. As a start, the Data Warehouse prepared as a companion to this report has a list of individual businesses in each of these subsectors and industries.

6. Sector Strength: 55 Management of Companies and Enterprises A similar set of questions relates to this sector which employs 3,200 in our region: what kinds of industries comprise this subsector and to what other industry types might their work relate? Employment in the subsector has doubled in our region since 2001. Concentration has remained reasonably steady over the last ten years, but local Comparative Advantage has shifted from Slipping to Winning since the early part of the decade. It may be that many component industries within this subsector are related to the Finance and Insurance sector or others moving from New York City post 9/11. However, more detail at the four digit NAICS level will need to be reviewed to better understand the relative concentrations and distribution of this Winning subsector.

7. Subsector Strength: 813 Membership Associations and Organizations Similar in employment levels to Management of Companies and Enterprises, this subsector is perhaps not unexpected in a state capitol. More would need to be known about the nature of these associations and

A Competitive Industries Analysis of the Mercer Region in Central NJ organizations, but if they related to businesses and industry trade groups, for example, they might represent a regional cluster when combined with Subsector 55.

8. Leading Sector Employer: 62 Health Services Whereas Professional, Scientific and Technical Services are the region’s largest job provider as a subsector, Hospital and Social Assistance is the largest employer as a sector (over 25,000 jobs). The region’s Concentration in hospitals is drawing patients from beyond the region. Of the sector’s four subsectors, three are Winning (623 Nursing and Residential Care Facilities would be categorized as Winning if discounting the first year of the research period in which its Comparative Advantage was negative). Only the Social Service subsector with its 4,000 jobs is Slipping, but it is still strong. From a regional employment standpoint, the sector has a large number of jobs, yet organizations like the Workforce Investment Board would also be interested in the wages of those jobs, job ladders and long term career opportunities for this portion of the region’s workforce. The strong numbers of jobs in this sector might be offset somewhat by lower wages, while a subsector like Finance and Insurance might show fewer, but more highly compensated jobs.

F. Emerging Sectors (of note)

1. Construction Table 12

Subsector (3 digit NAICS) Employment 2010 LQ 2010 LGS 2010 236 Construction of buildings 946 0.52 -68 237 Heavy and civil engineering construction 814 0.67 265 238 Specialty trade contractors 3250 0.63 703

All of Sector (23) Construction is a State focus in some of its department’s documents. In Mercer, both (237) Heavy and Civil Engineering Construction and (238) Specialty Trade Contractors are Emerging subsectors. Both showed steady and recent year employment and job growth (together employing about 4,000) and particularly strong Comparative Advantage increases in the past couple of years. The causes of this should be investigated further.

2. Transportation and Logistics This is another state priority cluster and related subsectors in which our region has Emerging strengths. Relationships between our industry and firm mix compared to state priorities should be better understood with some industry intelligence. Table 13

49-49 Transportation and Warehousing 481 Air transportation 484 Truck transportation 485 Transit and ground passenger transportation 488 Support activities for transportation 492 Couriers and messengers 493 Warehousing and storage

A Competitive Industries Analysis of the Mercer Region in Central NJ

G. Emerging Sectors, Non Priority

1. 44-45 Retail Though (44-45) Retail sectors are classified as Emerging, they are not recommended to be a focus of economic development efforts because in Mercer, as in most American counties, they respond to, rather than drive, economic growth. As the economic developer adage goes “retail follows rooftops.” This describes (44-45) Retail as population driven. When an economy adds jobs through the activities of its economic base, more of those workers establish residences nearby, increasing the demand for secondary economic activities involving consumer goods such as groceries, etc. Those residents pay for those goods with wages generated from the increased economic base activity. Unless one is within a tourism-driven economy (such as places like the Jersey Shore), the Retail sector’s industries are neither importing nor exporting, but serve local needs. In Mercer, these Retail sector data are fairly typical and as expected, though it is interesting to see regional residents are actually buying much of their gas and general merchandise from beyond Mercer County. Perhaps this is related to commute patterns. It also shows another reason not to engage in economic development efforts aimed at retail for purposes of wealth creation or economic growth.

2. 71-72 Accommodation and Food Services Though one might assume strength here due to being home to a state capitol and several historic American assets, in general, Sector 71 Arts, Entertainment and Recreation is not likely a broad area for economic development focus. More investigation at the industry group level may indicate some specialization related to historic tourism or being a state capitol and these should be investigated.

A Competitive Industries Analysis of the Mercer Region in Central NJ

III. ACTION OPPORTUNITIES

A. Telling Our Region’s Economic Story

One of the most reliable ways to envision the future of a region is to understand what exists in the present. The table below shows Mercer County’s top employers by subsector. It does not address the relative economic value of these jobs or the businesses within them, but it provides a different lens on our regional economy in addition to the Competitiveness Categorization (W/E/S/T). Many site locators will look at such a table to get an initial understanding of the economy in which they are considering a new location. Table 14

Top Employers/High Growth Industries Trenton-Ewing, NJ MSA All NAICS Subsectors 160,736* 1 541 Professional, Scientific, and Technical Services 21,982 2 611 Educational Services 14,815 3 722 Food Services and Drinking Places 9,247 4 561 Administrative and Support Services 9,059 5 622 Hospitals 9,003 6 621 Ambulatory Health Care Services 8,689 7 524 Insurance Carriers and Related Activities 5,513 8 623 Nursing and Residential Care Facilities 4,701 9 523 Securities, Commodity Contracts, and Other Financial Investments and Related Activities 4,652 10 624 Social Assistance 4,255 11 445 Food and Beverage Stores 4,140 12 813 Religious, Grantmaking, Civic, Professional, and Similar Organizations 4,048 13 551 Management of Companies and Enterprises 3,320 14 423 Merchant Wholesalers, Durable Goods 3,051 15 238 Specialty Trade Contractors 2,961 16 522 Credit Intermediation and Related Activities 2,665 17 448 Clothing and Clothing Accessories Stores 2,491 18 452 General Merchandise Stores 2,439 19 325 Chemical Manufacturing 2,369 20 511 Publishing Industries (except Internet) 2,265 21 446 Health and Personal Care Stores 2,231 22 812 Personal and Laundry Services 2,101 23 713 Amusement, Gambling, and Recreation Industries 2,038 24 424 Merchant Wholesalers, Nondurable Goods 2,030 25 485 Transit and Ground Passenger Transportation 1,842 26 441 Motor Vehicle and Parts Dealers 1,775

A Competitive Industries Analysis of the Mercer Region in Central NJ

27 333 Machinery Manufacturing 1,704 28 531 Real Estate 1,681 29 444 Building Material and Garden Equipment and Supplies Dealers 1,573 30 517 Telecommunications 1,485 31 237 Heavy and Civil Engineering Construction 1,191 32 721 Accommodation 1,113 33 811 Repair and Maintenance 1,101 34 451 Sporting Goods, Hobby, Book, and Music Stores 1,047 35 453 Miscellaneous Store Retailers 1,002 36 236 Construction of Buildings 993 37 334 Computer and Electronic Product Manufacturing 981 38 493 Warehousing and Storage 870 39 492 Couriers and Messengers 829 40 425 Wholesale Electronic Markets and Agents and Brokers 815 41 484 Truck Transportation 758 42 443 Electronics and Appliance Stores 710 43 447 Gasoline Stations 674 44 323 Printing and Related Support Activities 671 45 221 Utilities 658 46 442 Furniture and Home Furnishings Stores 621 47 326 Plastics and Rubber Products Manufacturing 484 48 562 Waste Management and Remediation Services 467 49 311 Food Manufacturing 440 50 332 Fabricated Metal Product Manufacturing 419 Source: U.S. Census Bureau, Local Employment Dynamics *Average Quarterly Employment (2009Q4, 2010Q1, 2010Q2, 2010Q3). Other employment numbers in this report are from all quarters in 2010 or 2009 which will result in some differences. Beyond largest employers, someone interested in understanding our regional economy should quickly understand our strongest sectors which include:  (51) Information  (52) Finance and Insurance  (54) Professional, Scientific and Technical Services  (55) Management of Companies and Enterprises In these sectors, future marketing efforts can be undertaken so that our metro can become known by site selection intermediaries and among industry members in these sectors. Some regions have used “___ capital of the world” or “did you know ____” awareness branding that touts a little known but provocative fact about an aspect of a location’s economic base. Choose New Jersey touts such positioning for the state when it describes New Jersey as the “Medicine Chest of the Nation.” Today, more specific value propositions are probably needed at the regional level, as single industry or cluster domination in any one place is no longer the norm. For example, competing with New Jersey’s medicine chest metaphor is metropolitan Boston with its research institutions and vibrant venture capital activity in this field, even winning

A Competitive Industries Analysis of the Mercer Region in Central NJ some former New Jersey firms to their locale. The target of such positioning need (and usually should) not be the general public. It should be focused on the needs of the industries we seek to grow and be stated in terms they use and reflect what they consider valuable. Announcements in specialty press can also be used to keep Central New Jersey on site selector’s radar, such as a recent press release from Middlesex County’s Palatin Technologies, a Cranbury biopharmaceutical company, which recently received $1.1 million in tax credits from the NJ Economic Development Administration. One exception to the idea that our region may not have a unique industry or cluster concentration to promote might be Educational Services, as described in section II above. Noting the presence of large national companies in your region can quickly anchor a site selector’s thinking. Johnson & Johnson, Educational Testing Services or Princeton University immediately conjure thoughts among those searching for sites that Central NJ might also be a location for them. This does not mean our region is uncompetitive as a location for facilities from other sectors too, but in general, economies grow “more of what they got” because the factors of production and comparative advantages offered by a location tend to be relevant to similar firms. It is difficult to grow a sector from scratch because most sectors have unique needs and if the relevant assets had already existed in the region, there is a reasonable chance the sector would have already discovered the location’s benefits and located companies here. It is more likely success will come by building on the region’s existing strengths than trying to appeal to regional searches from any and every industry. This report’s categorization of sectors and subsectors enables regional advocates a lens with which to focus their efforts and finite resources on Winning and Slipping categories first, and to understand which Emerging elements are most promising to assist. Tools developed for our most competitive Sectors will also be available to be used more broadly. For example, building a response capability for RFIs from Finance and Insurance inquiries enables responses to RFIs from other sectors with little added cost and effort. At the subsector level, the region should differentiate itself from its competing metros in specific ways. Finance and Insurance is proving to be an alternate to the more traditional locations of NY, northern NJ, and Philadelphia. Recent experiences with companies such as Miami International Holdings and its move to Princeton (in part due to offering talent in Philadelphia a shorter commute than New York City) should be promoted. So too should the existence of companies like Dow Jones Data Center be made better known to solidify in people’s minds our region’s areas of specialty. Exit 8A is a geography with particular specialty in Transportation and Warehousing with large, nationally marketed light industrial sites like Matrix’s 1.5 million square foot “Business Park at 8A” in South Brunswick, in Middlesex County. Other geographic specialty areas are Einstein’s Alley and the I-287 high tech corridor in Hunterdon County, which is adjacent to related firms in Somerset and Mercer Counties. Chemical Manufacturing is a less obvious subsector to promote and more information is needed in the short term to characterize its presence in Central NJ in ways the desired target audiences will understand. It may be that this strength in industry is related to pharmaceutical manufacturing—which is a far more intuitive label to understand our regional strength than the government issued “Subsector 324 Chemical Manufacturing” moniker. If Chemical Manufacturing is really comprised of pharmaceutical manufacturing in Central NJ, such a strength could be efficiently conveyed by mentioning our region as home to drug makers like Bristol Meyers Squib, Glaxxo Klein Smith, Johnson &Johnson, Novo Nordisk and similar firms. Further facts that could be assembled through conversations among our business base would allow us to characterize our strengths in terms of a compelling state or national statistic. Brand name products can also help localize site selector attention. Strengths in Printing and Publishing can also be trumpeted. Well known company names like McGraw Hill and Princeton University Press may be helpful here. Sectors that should be avoided for economic development targeting include those that are not part of the region’s economic base—the business services that support base activity and secondary economic activities like

A Competitive Industries Analysis of the Mercer Region in Central NJ retail and housing which respond to base growth, but in and of themselves cannot induce base growth. These include all or most of the service providing Super Sectors of Trade, Transportation, and Utilities (42, 44, 45, 48, 49, 22) and Leisure and Hospitality (71, 72). The return on time invested in these areas will not drive as much benefit as focusing on sectors whose business activities bring in new money to the regional economy from beyond it. So targeting the base is the most efficient way to assist companies in non base sectors and industries. These kinds of businesses at the very local level may provide amenity and quality of life benefits and assisting them is something best left to local governments and private associations like BIDs, Main Streets and private affinity organizations and trade groups.

B. State Government’s Economic Development Directions; Implications for Us

1. State priority sectors and how our region reflects those Under Governor Christie and Lt. Governor Guadagno, New Jersey has undertaken a new approach to development and redevelopment described in the emerging State Strategic Plan. It targets “Sectors of Statewide Importance” and “priority industry clusters” related to those. The state will organize its investments around an industry cluster based strategy shaped by five guiding principles: 1. Predictability 2. Spatial Efficiency 3. Leveraging Assets 4. Sustainability 5. Institutional Change (within state Government) Source: “Proposed final draft State Strategic Plan: New Jersey’s State Development and Redevelopment Plan – 10/11/2011/Summary”

New Jersey’s Priority Industry Clusters of the Sectors of Statewide Importance include: 1. Bio/Pharmaceuticals and Life Sciences Industry Cluster 2. Transportation, Logistics, Distribution Industry Cluster 3. Finance Industry Cluster 4. Advanced Manufacturing Industry Cluster 5. Technology Industry Cluster 6. Health Care Industry Cluster 7. Green Economy Industry Cluster 8. Leisure, Hospitality and Retail Industry Cluster 9. Food Production and Processing Industry Cluster The State uses the term “clusters” which mix different NAICS levels. Some clusters include sectors or subsectors (2 and 3 digit NAICS codes) and others include industry groups (4 digit NAICS code) or combinations thereof, grouped into topical themes, such as Bio/Pharmaceuticals and Life Sciences, which do not always correspond to NAICS terminology. The State’s priority industry clusters with the most relevance to Central New Jersey’s competitive business mix are detailed in the tables below.

A Competitive Industries Analysis of the Mercer Region in Central NJ

2. Finance Sector of State Importance and Central NJ Strength Table 15

NAICS Industry Description 52 Finance and Insurance 521 Monetary authorities - central bank 522 Credit intermediation and related activities 523 Securities, commodity contracts, investments 524 Insurance carriers and related activities 525 Funds, trusts, and other financial vehicles

This is our region’s strongest sector and we are aligned with the State’s priorities. Three of our subsectors are Winning or Slipping, and one is Emerging (we have no significant number of firms in Subsector 522 Credit Intermediaries). The cluster represents 8.82% of the jobs in our region and 5.9% of the New Jersey jobs in this cluster, representing a total of $41.7 billion in state GDP in 2010.

3. Advanced Manufacturing Cluster This Cluster includes 32 targeted industries. Of those, the following are also strengths for our region, including: Table 16

325 Chemical manufacturing 3251 Basic chemical manufacturing 3252 Resin, rubber, and artificial fibers mfg. 3253 Agricultural chemical manufacturing 3254 Pharmaceutical and medicine manufacturing 3255 Paint, coating, and adhesive manufacturing 3256 Soap, cleaning compound, and toiletry mfg. 3259 Other chemical product and preparation mfg.

The Chemical Manufacturing subsector is the only Winning subsector in the Advanced Manufacturing cluster for our region. Two others (Machinery Manufacturing and Furniture Manufacturing) are Emerging. Of those, only Machinery Manufacturing is a state priority cluster. It is composed of the industry groups listed in the table below.

4. Machinery Manufacturing Cluster of State Importance and Central NJ Strength Table 17

333 Machinery manufacturing 3331 Ag., construction, and mining machinery mfg. 3332 Industrial machinery manufacturing 3333 Commercial and service industry machinery

A Competitive Industries Analysis of the Mercer Region in Central NJ

3334 VAC and commercial refrigeration equipment 3335 Metalworking machinery manufacturing 3336 Turbine and power transmission equipment mfg. 3339 Other general purpose machinery manufacturing

5. Transportation, Logistics and Distribution, Sector of State Importance and Central NJ Strength In the State’s Transportation, Logistics and Distribution Sector of State Importance (composed of NAICS Sectors 42 Wholesale Trade and 48-49 Transportation and Logistics), our region tracks well with state priorities in the subsectors within Sectors 48-49, all of which are Winning, Slipping or Emerging for us. Though Sector 42 Wholesale Trade is generally Slipping for our region, there is one bright spot: Subsector 423 Merchant Wholesalers, Durable Goods, which is Emerging. It is included at the end of the list below. Central NJ’s Emerging strength in Subsector 423 Merchant Wholesalers, Durable Goods includes the state- identified priority industry groups listed in Table 18 below. Table 18

423 Merchant Wholesalers, durable goods 4231 Motor Vehicle and Motor Vehicle Parts and Supplies 4232 Furniture and Home Furnishing Merchant Wholesalers 4233 Lumber and Other Construction Materials Merchant Wholes 4234 Professional and Commercial Equipment and Supplies Merchant 4235 Metal and Mineral (except Petroleum) Merchant Wholesale 4236 Electrical and Electronic Goods Merchant Wholesalers 4237 Hardware, and Plumbing and Heating Equipment and Supplies 4238 Machinery, Equipment, and Supplies Merchant Wholesalers 4239 Miscellaneous Durable Goods Merchant Wholesalers

Central New Jersey’s various strengths in Transportation and Logistics subsectors contain the following state- identified priority industry groups in the table below. Table 19

(48-49) Transportation and Logistics, all Subsectors 4811 Scheduled Air Transportation 4812 Nonscheduled Air Transportation 4841 General Freight Trucking 4842 Specialized Freight Trucking 4851 Urban Transit Systems 4852 Interurban and Rural Bus Transportation 4853 Taxi and Limousine Service 4854 School and Employee Bus Transportation

A Competitive Industries Analysis of the Mercer Region in Central NJ

4855 Charter Bus Industry 4859 Other Transit and Ground Passenger Transportation 4881 Support Activities for Air Transportation 4882 Support Activities for Rail Transportation 4883 Support Activities for Water Transportation 4884 Support Activities for Road Transportation 4885 Freight Transportation Arrangement 4889 Other Support Activities for Transportation 4921 Couriers and Express Delivery Services 4922 Local Messengers and Local Delivery 4931 Warehousing and Storage

6. Technology Cluster of State Important and Central NJ Strength The State’s Technology cluster touches several of our region’s subsectors, but we have significant strength in our Sector 52 Information which is composed of three relevant subsectors (two Winning: 511 Publishing, 517 Telecommunications, and one Slipping: 519 Other Information Services). The relevant six of the State’s 25 industry groups within this cluster include: Table 20

5112 Software publishers 5171 Wired telecommunications carriers 5172 Wireless telecommunications carriers 5174 Satellite telecommunications 5179 Other telecommunications 5191 Other information services

Other Technology industry groups in which we might have strength include our 325 Chemical Manufacturing and 333 Machinery Manufacturing from our Manufacturing sector if upon further regional analysis at the 4 digit level, our regional subsectors include representation in any of these three state-targeted industry groupings (which they likely do): Table 21

3251 Basic chemical manufacturing 3254 Pharmaceutical and medicine manufacturing 3332 Industrial machinery manufacturing

A Winning and large employment subsector for our region, 541 Professional and Technical Services, might contain some of the following state-targeted Technology industry groups: Table 22

5413 Architectural and engineering services

A Competitive Industries Analysis of the Mercer Region in Central NJ

5415 Computer systems design and related services 5416 Management and technical consulting services 5417 Scientific research and development services

The Scientific Research & Development Services industry group (5417) in this subsector is also in the State’s Pharma/Life Science Cluster.

7. Health Services In Health Services, all 14 of the State’s industry groups are contained within our region’s Emerging Health Care sector with our Winning Subsectors 621 Ambulatory Health Care Services and 622 Hospitals and Emerging Subsector 623 Nursing and Residential Care Facilities. Table 23

Health Services NAICS4 Industry Sector/NAICS Title 6211 Offices of Physicians 6212 Offices of Dentists 6213 Offices of Other Health Practitioners 6214 Outpatient Care Centers 6215 Medical and Diagnostic Laboratories 6216 Home Health Care Services 6219 Other Ambulatory Health Care Services 6221 General Medical and Surgical Hospitals 6222 Psychiatric and Substance Abuse Hospitals 6223 Specialty (except Psychiatric and Substance Abuse) Hosp 6231 Nursing Care Facilities 6232 Residential Mental Retardation, Mental Health and Substance Abuse 6233 Community Care Facilities for the Elderly 6239 Other Residential Care Facilities

The State has not yet defined what strategies it will employ within its Leisure, Hospitality & Retail Trade industry list. While our 44-45 Retail Trade sector has several strong Emerging subsectors within this cluster, it is likely that state government will focus its efforts on these industry groups in places where they represent a more robust tourism economy (such as the Jersey Shore). It is unlikely that state investments will benefit this sector in our region because they do not contribute to our economic base, unless significant historic tourism is present in the region and corresponds with state priorities to be further defined in this cluster.

8. Green Economy Industry Cluster The State’s Green Economy Cluster has 20 very specific 6 digit NAICS codes which appear to be involved in the supply chain of renewable energy activities (wind, solar, perhaps batteries). They track with three of our gross regional subsector strengths of Chemical Manufacturing, Machinery Manufacturing, and Professional and Technical Services, but knowing for sure requires almost firm-specific research.

A Competitive Industries Analysis of the Mercer Region in Central NJ

Table 24

325 Chemical Manufacturing 325199 All Other Basic Organic Chemicals 325998 Other Miscellaneous Chemicals Mfg 333 Machinery Manufacturing 333412 Industrial & Commercial Fans & Blowers 333611 Turbine Generator & Generator Set Units 333612 Speed Changer, Drive, and Gear Mfg 333613 Mechanical Power Transmission Equipment 541 Professional and Technical Services 541711 R&D in Physical, Engineering & Life Sciences (Bio) 541712 R&D in Physical, Engineering & Life Sciences (Non-Bio)

9. Bio/Pharmaceuticals and Life Sciences In the Pharma Life Sciences too, more detail below the region’s subsector level is needed to determine alignment with State cluster priorities. Our regional strength in Chemical Manufacturing, if it includes pharmaceutical manufacturing, is potentially a regional strength. The two industry groupings within the State’s Pharm/Life Science cluster include: Table 25

3254 Pharma & Medicine Mfg. 3256 Soap, Cleaning Compounds, & Toilet Prep Mfg.

The other two industry group candidates for our Winning subsector strength include: Table 26

5417 Scientific Research & Development Services 6215 Medical & Diagnostic Labs

Clearly more regional intelligence is needed at the industry group level to determine whether and how much our region’s Chemical Manufacturing and Professional, Scientific and Technical Management strengths represent discrete industry groups the State is targeting. State support for tourism will need to be detailed over time and its relevance to Central New Jersey determined, as it is likely more relevant to (and presumably intended for) the economies of New Jersey’s shore communities. Overall, Central New Jersey’s existing business composition mirrors almost all of the State Priority Industry Clusters. Our region’s Competitive Mix should provide a regional focus by which to act on those priorities.

A Competitive Industries Analysis of the Mercer Region in Central NJ

C. Alignment of State Priorities and Central NJ Strengths

The following table summarizes the highlights of alignment and potential alignment between our regional strengths and the State’s targeted economic growth priorities. The table below shows our Competitive Mix (W/E/S/T) within the most relevant Statewide Priority Clusters. Table 27

Sector number Employment Description Subsector (3 digit NAICS) LQ_2010 LGS_2010 (2 Digit NAICS) E_2010 325 Chemical manufacturing 2,752 2.35 1,592 333 Machinery manufacturing 391 0.94 305 423 Merchant wholesalers, durable 42 Wholesale Trade 3,155 0.78 278 goods Transportation and 48-49 481 Air transportation 27 0.04 1 Warehousing 484 Truck transportation 876 0.47 260 485 Transit and ground passenger 1,479 2.37 -294 transportation 488 Support activities for transportation 118 0.15 21 492 Couriers and messengers 955 1.23 274 493 Warehousing and storage 828 0.88 680 511 Publishing industries, except 51 Information 2,379 2.11 199 internet 517 Telecommunications 2,109 1.57 284 519 Other information services 295 1.4 -520 Finance and 522 Credit intermediation and related 52 2,938 0.78 305 Insurance activities 523 Securities, commodity contracts, 6,321 5.3 2,944 investments 524 Insurance carriers and related 4,427 1.45 -22 activities 525 Funds, trusts, and other financial 145 1.13 78 vehicles Professional, 54 Scientific, and 541 Professional and technical services 20,352 1.83 557 Technical Services Management of 551 Management of companies and 55 Companies and 3,227 1.17 1,345 enterprises Enterprises Health Care and 62 621 Ambulatory health care services 8,995 1.01 1,261 Social Assistance 622 Hospitals 8,555 1.24 256 623 Nursing and residential care 4,112 0.88 489 facilities

A Competitive Industries Analysis of the Mercer Region in Central NJ

1. State Strategic Directions, Regional Connections In addition to the State Strategic Plan’s goal of targeted economic development, are two land use goals of effective planning for vibrant regions and preservation and enhancement of critical state resources. These will be accomplished largely through the creation of “priority growth investment areas” to be defined through “criteria based identification” beginning with the already discussed Priority Industry Clusters. According to early state drafts of the plan, added to that will be geographic criteria such as “urban centers as identified in the 2001 State Plan, Designated Centers (past and present), Port Areas, Existing Communities or growth areas designated by regional or County Master Plans [emphasis in original], municipally designated redevelopment areas, TDR receiving areas, and areas designated by future federal or state public investment programs.” The following Garden State Values, to be adopted by the State Planning Commission (SPC), will guide state discretionary investment through an eventual scorecard system: 1. Concentrate Development and Mix Uses 2. Prioritize Redevelopment, Infill and Existing Infrastructure 3. Increase Job and Business Opportunities in Priority Growth Investment Areas 4. Create High Quality Livable Places 5. Provide Transportation Choice and Efficient Mobility of Goods 6. Advance Equity 7. Diversified Housing Opportunities 8. Provide for Health Community through Environmental Protection and Enhancement 9. Protect, Restore and Enhance Agriculture, Recreational and Heritage Status 10. Make Decisions within a Regional Framework In the next 6-12 months, state agencies will undertake internal reviews to tactically align their policies and programs with these goals. Other levels of alignment will be undertaken across regional authorities (such as the Pinelands, Meadowlands and Highlands Commissions) and various state regulatory and legislative elements. The State Planning Commission will use the Garden State Values to incentivize corresponding regional and local alignment with this plan. The Office of Planning Advocacy (OPA) intends to prepare maps of existing conditions including utilities, sewer service areas, transportation assets, and other elements.

2. Alignment of Opportunities In our region, identifying Priority Growth Investment Areas really involves identifying the best-serviced, most competitive and attractive site selection areas. OPA’s mapping is essentially a compilation of business location criteria, as discussed elsewhere in this report. This alignment could not be happening at a better time for our region. Our economic planning efforts are going to be met with complementary physical planning brought about by the State Strategic Plan. i. Somerset County In Somerset County, planning officials have translated the Garden State Values into a set of logical “screens” that categorize various places in the county as candidates for growth areas. They include spatial characteristics such as: 1. State’s core locational criteria (Centers and Designated TODs, Existing Communities and County and Identified Growth Areas, Redevelopment Areas, Industry Priority Clusters, and others (employment nodes, commercial corridors, emerging centers, etc.).

A Competitive Industries Analysis of the Mercer Region in Central NJ

2. Competitive criteria such as proximity to 69KV electric lines and fiber optic lines, access to highway and freight rail, and support retail, housing and amenities. 3. Measurable growth potential (acres in underutilized parcels, acres of potentially developable vacant land, etc). They also include State core “character criteria” (promotes compact, mixed use infill, encourages rehabilitation and reuse, and complements community historical, cultural, architectural, recreational character). Source: Somerset County Planning Board draft document “PGIA Pre-Screening Criteria” 21-Nov-11 In early December 2011, the County Planning department piloted a set of countywide maps assigning an easily compiled GIS data layer to each of the criteria (such as types of utility lines, highways, rail, etc) and combined all the layers in a countywide parcel map. The result was a criteria-driven initial definition of priority investment growth areas. These preliminary maps were then taken to each of the municipal Planning Boards for detailed “ground truthing.” Reviews would involve parcel-specific reactions and comments as to whether the resulting criteria-determined boundaries made sense with the realities on the ground. The maps allowed a set of conversations to begin between the County and its municipalities and over a short period of time, local and countywide consensus can emerge. The State’s Office of Planning Advocacy would welcome such proactive, regionally-articulated, criteria-driven mapping in other regions, and would adopt the results as state priority growth areas instead of imposing their own analysis as they would have to do in counties slower to conduct such work of with less GIS mapping capacity. Given this, Somerset is most likely to be the first region to be fully “development ready” in terms of having a clear signal to the private marketplace as to where development is most encouraged and having a clear indication of where state resources would be most available to support new redevelopment or development. ii. Municipal Fiscal Health Study – Implications for Central NJ region Current MLUC staff economist, Tony O’Donnell, developed a methodology for assessing municipal fiscal health while working for the Pinelands Commission. Though the data are from 2005, O’Donnell’s map from this unpublished study shows how each of New Jersey’s municipalities compares to one another across a number of themes of interest to prospective businesses (e.g. tax burden, ratable base, municipal services, housing and population base and income characteristics of residents, among others). It is possible that the State might use this or a similar study as an approach to need-based discretionary funding or the assignment of economic development resources. The map and methodology give some indications as to the competitiveness of the 13 municipalities in Mercer County for site selection. It also provides one starting place for a long term agenda of inter-municipal cooperation to portray the region as “boundaryless,” meaning when a company’s search has progressed to its final phase and it may be considering more than one municipality in each of its finalist regions, this region will strive to be seamlessly coordinated. The region’s officials assisting the company will focus on the company’s (not any particular municipality’s) needs first. Their collective goal must be to land the company in our region, not lose it to a competing region. Maps such as this fiscal health study remind us that economies and markets do not follow local governmental boundaries and that such divisions often present barriers to company site selection. Conversely, local municipalities within Central NJ need to recognize that the benefits of development will spread out beyond the final site a company chooses, to generate benefits within commute sheds, and to existing firms within the region in its service and supply chains. The study (that could easily be updated with 2010 data) can also signal areas in need of economic development to equalize the desirability of certain stressed locations within the region (e.g. parts of Trenton, Ewing and elsewhere) by bringing their considerable locational assets to market more effectively.

A Competitive Industries Analysis of the Mercer Region in Central NJ

Figure 8

A Competitive Industries Analysis of the Mercer Region in Central NJ iii. Mercer County Workforce Analysis Report The table below shows the relevance of the Workforce Investment Board’s 2011 study compiled by EMSI to this report. It reveals the opportunity for alignment between the region’s workforce needs and its existing occupational skill sets. Sectors employ workers from across a variety of occupations. For example, all businesses use some Office and Admin Support occupations; some may use Sales and Related occupations, others may not. Our region’s business mix uses more than twice the national average of computer and mathematical skills, even more than NJ as a whole. Competitive regions ensure the occupational skills required by their industry groups are present in their region’s workforce. Site selectors look for them. Table 28

Largest Employment Sectors SECTOR Mercer % NJ % US % 1 Education & Healthcare Services 18 23 14 2 Professional & Business Services 15 15 13 3 Trade, Transportation & Utilities 12 21 19 4 Financial Activities & Utilities 7 7 6 5 Leisure & Hospitality 6 9 10 Largest Occupations OCCUPATION 1 Office & Admin Support 19 17 16 2 Bus. & Fin. Operations 11 5 5 3 Sales & Related 8 11 11 4 Management 7 6 6 5 Computer & Mathematical 5 3 2 Source: NJ Department of Labor

The EMSI study looks at the relationship between the region’s top employment sectors and the top occupations in the regional workforce. Their analysis starts with some of the same data used in this report to understand the regional economy from a sector and industry group perspective, and then details “the specific occupations within those industry groups that provide exceptional employment opportunities due to their strengths in projected job growth, earnings, and average annual openings.” The study further looks at data centered on the worker: average wages and the common knowledge, skills, and abilities (KSAs) required to succeed in the identified fields. Such skills would be related to things like “customer and personal service, English language, education and training, and mathematics (…), reading comprehension, critical thinking, and oral expression.” From an occupation and skills standpoint, EMSI identified seven target industry groups for Mercer County on which to focus its training efforts:  Biotechnology & pharmaceutical manufacturing  Computer systems design & network management  Finance & insurance  Various business services  All other manufacturing

A Competitive Industries Analysis of the Mercer Region in Central NJ

 Transportation  Healthcare These industry groups are important to the regional economy; they have experienced high growth in the past decade, and contribute 35% of county’s total exports. The study provides an example of how something like a Location Quotient can be interpreted in terms focused on the worker, not on the company, which was the focus of our study. “Biotechnology & pharmaceutical manufacturing, in particular, represents a significant opportunity for economic and workforce development. The industry group’s location quotient of 3.62 shows that there are 262% more jobs in these industries than would be expected based on national per capita averages. These businesses create jobs for workers in middle-skill positions such as chemical technicians and high-skill positions such as chemists.” For those types of jobs, the study identified 35 middle-skill and 45 high-skill occupations that are needed in those industries to fill the 2,071 annually projected job openings. Using the same data the implications are different, but related, for intermediaries assisting workers and those assisting companies. Tying the demand occupations to skill building efforts is one of workforce development’s contributions to an overall regional economic strategy. Companies will need particular skills, and the region will need to ensure its physical and business site location assets are matched by industry group-relevant human capital assets. Many of these skills are best gained while still in high school, reserving post high school training for more industry- specific training. So, this gives the Growth Partnership a stake in regional education issues identified by the Workforce Investment Board, because the Partnership will also be marketing the region’s talent pool to businesses, just as it is marketing the region’s real estate and proximity to business assets of nearby major metros. Finally, the Workforce Investment Board can contribute to the Growth Partnership’s agenda of helping attraction and retention efforts by deploying customized and other training to Slipping subsectors or particular development deals. This is one of several reasons that key County staff should play roles on regional “deal teams” described elsewhere in our report.

D. What Can We Do Now to Strengthen Existing Business Base and Strategically Attract More?

1. Showing Up Knowing site selection occurs in phases, strategies are needed to ensure Central NJ shows up more often on site selectors’ long lists. We are 138th in terms of size of the 366 Metropolitan Statistical Areas, and as a single county MSA, we’re one of over 3,000 other counties in the US. Several smaller MSAs, like Savannah, Ann Arbor and Boulder, have greater national name recognition than we do. Finally, the geography of the Central New Jersey is not widely understood or easily identified, so it is harder to see during the initial phases of a search being conducted from a site selector’s computer.

2. Develop “Hooks” While the “hiddenness” of our MSA initially may be daunting, linking our region to well known names like Princeton, Trenton, positioning it as the headquarters of Educational Testing Services, Bristol-Meyers Squibb Pharmaceutical Research Institute, and aligning its recognizable consumer brands such as Dow Jones and Arm & Hammer to our geography can help hook site selectors in particular industries to want to learn more. The effort to collect stories and brand the region should focus on site selectors, C-level decision makers and their professional service providers (architects, attorneys, accountants) through industry-specific targeting.

A Competitive Industries Analysis of the Mercer Region in Central NJ

Initially this can start with our region’s existing businesses promoting themselves in their trade and general media strategies and linking their brand or specific news items to our region, by simply including a Princeton location name or a Trenton byline. So, the first round of information can come from membership. These same stories can be used by the Growth Partnership and Choose NJ as specifics to augment a more general locational pitch for the region.

3. Cultivate Evocative Stories This report’s assessment of the data has provided a differentiating regional story that sets it apart from its primary competition—other NJ locations and the NY and Philadelphia metros. The next step is to use the human intelligence network represented by Central New Jersey’s companies themselves to add on the ground specifics to our region’s story. Particularly valuable are those stories or sound bites that can coalesce a lot of industry- specific value into a short phrase or fact that evokes broader value to a prospective company in a particular industry. The data tell us our region is Concentrated and has Competitive Advantage in the Finance and Insurance sector, but a local story is more compelling. Consider the financial services firm Miami International Holdings which set up its headquarters in our region because, in the words of its President Tom Gallagher it “gives us access to leading financial services industry software developers and engineers (…) also equidistant from the major exchanges in Philadelphia and New York, which lets us attract talent from both areas." Stories that reveal other locational assets of our region should be sought and publicized.

4. Industry & Cluster Councils Augmenting data with human intelligence can efficiently be done by convening Industry or Cluster Councils. Initially, this should be done for the Wining and Slipping subsectors and our region’s strongest state-defined clusters. One goal should be to collect information from firms about specific locational benefits they enjoy because of being in our region and real world examples of these benefits to their company.

5. Identify Issues & Opportunities Councils should also be asked to identify the most pressing issues and opportunities for our key regional industries. This information would form a regional action agenda as to how to support and remove the barriers to further growth. Actions might include policy or regulatory changes, beneficial capital or infrastructure projects, or programmatic support systems the private sector might develop to assist growth in the region. This firm-level feedback, grouped by industry and sector, has not occurred in any significant way in New Jersey and is a logical next step to the state defining target clusters. By having those industry types with the most Comparative Advantage due to local/regional conditions articulate an agenda, the State will have a list of actions most likely to lead to job growth and private sector investment. One of the first things for each council to consider is the geographic distribution of the firms within their industry across the region. Seeing these plotted from the interactive map would enable a conversation of locational assets grounded in particular firm locations. The maps would also suggest who else to invite to the council discussions. Once issues and opportunities are identified, those with spatial dimensions could be added to the interactive map, enabling them to be easily conveyed to the state, and even to prospective businesses, as evidence of the work underway to further improve the local business conditions for their industry. From within these initial councils there might arise cross-cutting topics of interest such as education and training, the need for specific infrastructure, the desire for government alignment, and/or opportunities for industry-specific promotion, among others.

A Competitive Industries Analysis of the Mercer Region in Central NJ

6. Get in the data game Some of the most impactful conditions for site selection include:  Proximity to markets and suppliers  Redundant/dual feed (electric via 2 substations, telecom via 2 central switching offices)  Labor characteristics (qualified, stability, cost)  Multi modal transportation options  Highway access (limited access 4 lane) Some of these data are spatial and able to be mapped. Some spatial data (such as electrical and fiber) are not easily obtainable or even publically available. Some become can be more difficult to obtain the more detail that is required (e.g. general labor data vs. by occupation or industry specifics). Beyond this initial list there are literally hundreds of data sources that might be considered as part of a site selection decision. The research for this report has created an initial “Data Warehouse” for internal use to support company inquiries. It includes a first round of the most important data sets fully populated, and a listing of the next 20 the Partnership will want to obtain over time. Such a phased approach can enable the eventual collection and maintenance of the 1,200 recommended data sets for any community serious about supporting site selection according to the industry standard setting International Economic Development Council. These recommended data tables are also listed in the Data Warehouse. As additional support, spatial data is represented on the associated interactive map provided as part of this report. It is a tool that provides Growth Partnership staff with some of the power of Geographic Information Systems (GIS) without needing GIS software or the technical skills to administer it. Its primary benefit is the ability to map the region’s businesses by searchable industry type, throughout zip codes in Central New Jersey (beyond Mercer County only). Information layers such as land use/land cover, local zoning, population and other data relevant to first round site location decision making are accessible from the site. As with any data tool, both the Data Warehouse and the online system have gaps. The warehouse can be augmented over time as the organization’s capacity grows. The online tool is designed as a preliminary system with basic, publically-available, easily-obtainable data (some private sector proprietary data like utility location may never be available). Because of such gaps, the team approach recommended in this report will be useful in being able to be responsive to a company’s information requests, as no single system will ever have the range of information that might be requested. Over time, working together with different data partners (particularly the County’s Workforce Investment Board and County planning and economic development staff), it will become apparent which data different partners can provide and which data, if any, would be useful to purchase. Initially, however, the Data Warehouse and interactive map should allow a quick start for the recommended sector and cluster conversations and as team background information when responding to company requests.

E. Recommendations

The following high leverage activities are recommended as an initial 12-18 month agenda to establish a regional practice useful to the existing business base and supporting its growth:

1. Website From its initial search, through its long list and final culling to a short list, a company is far more likely to visit a region’s website than make a phone call. So, our region needs a single place to find the most important site

A Competitive Industries Analysis of the Mercer Region in Central NJ selection data. It should show up as one of the top web search results for key words typically used in site selection. It should also provide easy access to the most relevant and current data using the data sets initially compiled, and ultimately recommended, in the Data Warehouse. Formats should include not only static PDF files, but allow for the choice of Excel file formats, in case the site selector wants to cut and paste, or otherwise manipulate, the data as part of their comparisons. Flash should not be used, as it renders its content invisible on web searches. The design and accessibility should keep the customers’ needs at the forefront. Site selectors or C-level company officials should be able to find what they seek quickly. Data should be in format comparable to what they are finding from other potential metro areas. Access should be free and anonymous at this point because barriers will simply drive inquiries away. A single point of contact should be prominently listed and all information should be consistent and focused from the initial exposure onward. Finally, feedback from site selection professionals in our own region should be sought before the site goes live.

2. Messaging and Marketing Using regional firm input, develop industry “hooks” to showcase regional strengths as described above. Share these stories with Chose NJ, the Business Action Center to help transition leads from broad geographic considerations to our region. A social media strategy should be developed to maximize national visibility through low-cost efforts such as story amplification, trade press coverage, guest interviews and columns, and other unpaid public relations. Social media content should be developed for target industries, most likely out of the sector council structure and engaging their member firms’ existing communications staff. Seek public relations (unpaid) outlets through story placement in local and hyper local media (e.g. Route 1 publication) and amplify those with social media reposts, tweets and ‘Likes” from employees within firms in particular industries. Website search engine optimization (SEO) and positioning strategies should be employed, including establishing links with all possible starting points for site selectors—e.g. the County and 13 municipal governments, state data sites (if allowed), and placements sought in Wikipedia and similar information and reference sites. The relationship with Select Greater Philadelphia will require some thought for its website implications. Over time, a marketing budget should be assembled for the region perhaps funded, in part, through deal flow.

3. Aligning levels of government “On the Ground” With the initiation of the State Strategic Plan, there are a number of next steps that can be taken at the regional, county and municipal levels guided by what would constitute an effective response to the phased site selection process. Today, no region in New Jersey has undertaken such a compliment to the State’s alignment and capacity building in this area. Once state levels of assistance have been outlined, the state needs capable regional partners to hand off leads for the final stages of particular site selection. Alignment and capacity need to be developed at the regional level. This will require the education at the municipal, and perhaps county, level as to how site selectors see and deal with the region and what they look for at the municipal and site level. Evaluating and improving the ease of navigation (from the perspective of the customer) at each step should be undertaken now, to compliment the state’s emerging capacity in generating leads. One way to do this is to rate how “development ready” our region is right now by assessing the state and qualify of local municipal Master plans and other regulations. Measuring

A Competitive Industries Analysis of the Mercer Region in Central NJ the “time to permitting” as well as guaranteeing the predictability and certainty of the process will set a region apart. Fast tracking permits has become commonplace, so not fast tracking puts a municipality at a disadvantage. Predictability has taken an even greater step in some locations where they can provide a company timetables for approvals in a specific number of days. Further, municipalities that have undertaken Form Based Codes, for example, can establish “by right” development climates, in which all the community expectations for site approvals are built into the code. This means the bar is set proactively and transparently for new businesses and approvals can be made administratively rather than requiring appearance before municipal planning and zoning boards. Short of such exceptional development-ready strategies, municipalities can implement more business friendly tactics such as providing a single reachable and responsive point of contact for questions, and provide staff comments prior to plan submission. For Mercer county’s 13 municipalities, and municipalities in adjoining counties, an assessment should be undertaken to understand baseline responsiveness and ease of siting an expansion or relocation. A cooperative action agenda among the region’s municipalities could be articulated with the goal of continually improving the navigability of our permitting processes everywhere within the region. Finally, the most successful regions have established a practice of “co-optition”(a term coined to describe the practices of high performing regions that maintain the existing competition among their localities but add to it the necessity of working together for the region’s benefit). In the final rounds of a company’s site decision it might adjust its site preference across a municipal border. Competition should be tempered by a clear understanding of how the locational assets meet company needs within and compared to each municipality. Seeing locations from a company’s needs perspective may reveal an actual lack of competitiveness for certain industries in certain municipalities. If the sites in nearby locations are not competitive with each other in how they meet the company’s needs, municipalities shouldn’t compete. Rather, they should cooperate in meeting all other location needs of a company, particularly those that span geographic areas beyond municipal borders— such as workforce and talent pools within commute sheds, potential synergies with firms in supply or service chains, countywide issues, among others. The goal of all regional players should be to land the company somewhere in the region first and celebrate that as a success for all.

4. One Stop Shopping, Single Point of Contact The collection of site data for the multiple locations it is considering can be time consuming and even frustrating for a company. Our goal should be to make it as easy as possible to collect information about, and do business in, our region. We should provide exceptional customer service by understanding site selection needs and delivering value. This starts with a website geared to providing what we know site selectors want, in the ways that they will want it. This approach should extend across all our efforts in a private sector-led, interdisciplinary, interagency enterprise. Business “deal teams” for growing existing or landing new business are a proven and nimble method to assemble the right talent tailored to meeting a client’s site selection needs. With the Growth Partnership as the convener, membership typically would include knowledgeable persons representing or providing access to workforce and talent, sites, utilities, permitting and regulation, and peer companies. Along with convening, the Partnership would want to take responsibility for client communication and providing a single point to the company. As teams are created and gain experience in responding to the needs of prospective businesses, capacity gaps can be articulated and action agendas developed to remedy them over time. Successes should be widely celebrated within the region to further encourage this important collective work.