"Pennsylvania is someplace that deserves a second look," said Richard Kosik, national sales manager for Itoh Denki USA in Wilkes-Barre. "Don't overlook the area because of past misconceptions of [the state as] an old mining area."

In fact, myth and reality are very much at opposite ends of the spectrum in the Keystone State. Pennsylvania has aggressively addressed the stereotypes of the past and has made strides in diversity, technology and pro-business legislation.

Itoh Denki, maker of the electric motors located inside conveyor-belt rollers, had been servicing customers from its headquarters in Japan. In January 1997, Itoh Denki USA leased a 7,500 square foot manufacturing and distribution facility in Hannover Industrial Estates; it shipped its first Itoh Denki USA-made product in April.

The company's Japanese executives looked at locations in North Carolina and South Carolina and, in fact, almost had a deposit on a site in South Carolina. But an acquaintance of the head Japanese project manager suggested taking a look at Pennsylvania before signing any papers.

They were glad they did.

"It was difficult finding a building under the 10,000 square foot size, but everyone here was willing to help as best they could, even though it's a small operation right now," Kosik said. "They had the foresight to see the potential, and that's what we liked about Wilkes-Barre and Pennsylvania, in general. We got exactly what we wanted for a lot less than we expected to pay. Compared to some areas we looked at (in the South), it was 20 to 25 percent less in Pennsylvania."

Tax cuts by the numbers

Over the past three years, the state has reduced workers' compensation insurance rates, approved grant and loan programs to attract businesses, deregulated electric utilities, cut taxes, and implemented regulatory reforms to balance environmental protection with economic growth.

A research and development tax credit and the elimination of sales tax on computer services have been key in attracting high-tech industry to the commonwealth. By the end of the year, the cost of doing business there will have been reduced by $3 million, projections indicate.

One of the most widely used incentives to attract and retain business is the Opportunity Grant program, passed last year.

The $35 million program provides the state the flexibility to customize financial assistance to meet the specific needs of jobs projects. Grants can be used for job training, infrastructure, land and building improvements, machinery and equipment, working capital, and environmental assessment and remediation.

Projects that receive Opportunity Grants must offer a "substantial" economic impact for the state as a whole, or for their particular region. Since its inception, the program's $25 million investment has brought more than $948 million in private investment, retained more than 15,500 jobs and created nearly 9,400 jobs.

Job tax credits

Another highly effective financial incentive has been the Job Creation Tax Credit, which was signed into law in 1996 as part of a plan to make Pennsylvania more competitive in job retention and creation.

Of the total $15 million program, 25 percent of the credits are set aside for small businesses (employing 25 people or fewer). However, the program is available to all businesses, regardless of size or industry. This incentive program allows companies to receive $1,000 in tax credit for each full-time job added; credits are given only after the jobs are created, and the credits can be applied against a variety of business taxes.

This past summer, AT&T opened a new National Telecommunications Relay Center in New Castle. The state committed $1.4 million in financial assistance to the project in the form of Job Creation Tax Credits, customized job training and site-preparation funds. In addition, AT&T qualified for the city's Enterprise Zone fund by setting up operations in Towne Mall in the center of the city.

The new telecommunications operation provides telephone services to individuals who are hearing and/or speech impaired.

"Pennsylvania is a significant and increasingly important market for AT&T and great from a business standpoint because of the strong work ethic and large, available labor pool," said Susan Hobart, general manager for the company's Accessible Communications Services division.

Pennsylvania's work force totals more than 5.9 million. Worker absenteeism is lower than the national average, and length of company service is above the national average, according to a recent report by the Bureau of Labor & Statistics' Employment & Earnings publication. Further, Pennsylvania workers are the sixth most productive in the country. Work stoppages decreased over the past 25 years, as well, from more than 600 in 1974 to fewer than 50 last year.

Itoh Denki USA was impressed with the turnout for its initial jobs.

"There's a work force ready to work," Kosik said. "In fact, we had a lot of people applying for jobs that we didn't even have ready yet."

Technologically motivated

Pennsylvania ranks eighth in the number of high-tech companies and eighth in the number of workers employed by high-tech firms, according to the American Electronics Association's "Cyberstates" study.

Encouraging high-tech advances is Technology 21, one of the state's newest strategic plans for industrial development. Technology 21 calls together a statewide board of industry and academic leaders to identify and support the needs of high-tech businesses.

The commonwealth recently instituted a $142 million tax relief package that included eliminating a 6 percent tax on computer services. This may explain why Pennsylvania is so attractive to operations that rely on computers. Among them is Pittsburgh-based Reese Brothers.

On the northwest side of the state, Oil City landed Reese Brothers' newest telecommunications call center, which created about 300 jobs for Venango County. Operational in March, the new center will primarily serve the insurance and non-profit industries.

The Governor's Action Team secured $238,000 from the Opportunity Grant and Job Creation Tax Credit programs to help with this most recent expansion. In addition, the city committed $15,000 in grants.

Telecommunications central

In the Scranton area in northeastern Pennsylvania, telecommunications is booming. According to Austin Burke, director of economic development at The Scranton Plan of the Greater Scranton Chamber of Commerce, more than a thousand local jobs in the past year have been tied to telecommunications."We have the infrastructure, fiber optics, computer education and skilled labor force that is attractive to those types of companies," said Burke. "We're in the right place at the right time for telecommunications growth."

In September 1996, AT&T announced that it would open a call servicing center in downtown Scranton. It created about 500 full- and part-time customer service jobs. AT&T began operations early this year.

Scranton created an incentive package that includes training programs at local colleges to prepare new hires. The area's labor availability, low crime rate, existing telecommunications and transportation infrastructure, and training assistance were key to attracting AT&T.

Liberty Business Information Inc. opened a market research center last February in Lackawanna County's Dunmore, a southern suburb of Scranton. Approximately 150 jobs were created.

"We considered numerous cities throughout the country, but found what we were looking for in Lackawanna County," said Jeffrey Neistat, vice president and chief financial officer of Trout Run-based Liberty. "The Scranton area's labor availability, work ethic and telecommunications infrastructure were key factors in our decision, he said.

FiNet Technologies, a high-tech manufacturer of opto-electric components for telecommunications customers, leased a 20,250 square foot building in Scranton's Enterprise Zone near Montage Mountain. Initially, 40 new jobs were created, but as many as 125 workers will be hired within five years. FiNet chose the area for its proximity to customers, according to John Nadaskay, chief financial officer.

"Scranton is close to our product developers and piece-part suppliers," he said. "It offers us the flexibility we require for high-volume manufacturing, as well as quality of work force nearby."

The state's Opportunity Grant and Job Creation Tax Credit were key components of FiNet's incentive package, which totaled more than $900,000.

Recycled property

For companies interested in access to waterways and international markets, the former U.S. Navy Yard just south of Philadelphia is worth considering. When the U.S. government closed the ship yard, Philadelphia Industrial Development Corp. (PIDC) received the rights to lease the 1,100-acre site for business and industrial use. Last year, its first year of availability, 11 corporate residents signed on at the Philadelphia Naval Business Center.

Second in size only to the Long Beach shipyard in California, the Naval Business Center encompasses more than 5 million square feet of space; furthermore, almost half of the site is undeveloped. Industrial buildings, a shipyard, a distribution center and a commerce center -- complete with 5,000 square foot historic residences featuring hardwood floors, oversized windows and marble foyers -- are immediately available for commercial lease.

"By all criteria, this is an ideal place for office, industrial or maritime operations," said Bill Hankowsky, PIDC president.

About 45 percent of U.S. manufacturers lie within a 500-mile radius of Philadelphia, as do 41 percent of the country's domestic trade and service industries. More than 60 percent of Canada's population lies within those parameters, as well. At or near the Naval Center, two interstate highway interchanges, three railroads, a container terminal and the Philadelphia International Airport provide one-day access to a third of the country's population.

Various funding programs, including a $50 million flexible loan fund, and technology services are available to encourage development of the former military base.

"The location is superb," added Hankowsky. "Philadelphia Naval Business Center is at the heart of a network linking sea, air, rail and ground transportation facilities."

Access to customers

Just north, Transilwrap Co. chose the greater Allentown area in 1988 when it moved into a 33,000 square foot converting plant in the lower Nazareth township. In November 1997, the manufacturer and converter of plastic film will complete an expansion and move into a new 50,000 square foot facility in the Lehigh Valley Industrial Park about five miles west. Situated on six acres, the new plant can be doubled in size to accommodate future growth.

"We looked primarily at the ability to run our business economically and distribute over night to any market in the northeast or mid-Atlantic," said John Brolsma, operations manager of the films division for Chicago-based Transilwrap. "Freight factors are obviously an increasing consideration in the cost of doing business."