Mascoma Corporation is a start-up in a hot market (alternative energy) that opened a research and development facility in Lebanon in 2006 and grew to 60 employees in about a year. Its lease at the incubator was nearing the end and it needed more space. The courting then began: Vermont offered an incentive package that included reimbursing $1.6 million in payroll taxes over five years and financing assistance for a new building. But in the end NH won, and Mascoma will remain in the Granite State, leasing a new 33,000- square foot space starting next year and eventually growing to 80 or 90 employees.
So what was the state's secret weapon? Michael Bergeron, the business development manager, whose job is attracting new businesses to NH and helping existing businesses remain and expand. In his 11 years on the job, Bergeron has recruited or retained 155 businesses ranging from small entrepreneurs to companies with 500 employees. That equates to more than 4,600 jobs and about $6 million in property taxes.
His job is confidential by necessity, but a look behind the scenes reveals an affable, mild mannered man with a firm grasp of the facts, ready access to state officials and a mastery of the personal touch. Rarely in his office, Bergeron's day often starts in a parking lot waiting to meet a client and tour potential sites. His arsenal includes a laptop loaded with a PowerPoint of the advantages of NH and a comparative cost analysis of doing business in the Granite State versus other states that clients are considering. Other days, as with Mascoma, he's on location working clients through local planning board processes. In between, he places key e-mails or calls to expedite a needed traffic study or permit.
Wooing New Business
Courtship is never easy, especially when business is involved: The need for employees, suitable space, taxes and quality of life for employees are among the issues businesses examine. Luckily, Bergeron says, NH makes an attractive suitor. He often finds himself battling against lush tax breaks and incentives from other states. While NH has some tax incentives (see sidebar), Bergeron pushes its lack of an income or sales tax, skilled workforce and its high quality of life. He reminds companies NH doesn't offer lavish tax breaks because it has a low tax base to begin with. We tend to be on the savings side-8 to 12 percent over five years-against other New England states, Bergeron says. We're less competitive against southern states.
Bergeron's case to Mascoma was both financial and personal. First he explained that Vermont's offer of reimbursing $1.6 million in payroll taxes couldn't rival NH since NH has no payroll taxes. The payroll tax would have taken a big bite out of [employees'] checks, says Joanne Donoghue, operations manager for Mascoma. Bergeron encouraged the developer to respond to the company's request for proposals. He facilitated the state's permitting process and attended local planning board meetings to ensure all requirements could be met. Bergeron's work with Mascoma was relatively quick, but others take years. Bergeron initially cold called Chamberlain Machine, a third-generation successful family business in Vermont, a decade ago. Seven years later, in 2005, a company executive approached Bergeron at a trade show. The company was growing and thinking about relocating, and was interested in NH.
Bergeron worked with the company for three years to find the right site and navigate the permitting process. As workforce training was a key concern, he connected Chamberlain with machinist training programs in Newport and Claremont. The end result: After more than 60 years in Vermont, the company is building a 50,000 square foot facility in Walpole (scheduled to open in January) and expects to add to its 50-person workforce. Company officials say both NH's tax structure and Bergeron's work sealed the deal. Vermont only offered incentives after they found out we were leaving, says Chris Miller, manufacturing engineer for the company who was in charge of the move. The company has organic growth of about 5 percent a year and Miller anticipates maintaining that. He says half of its workforce are NH residents, but Vermont's income tax made recruiting in NH difficult.
Those successes aside, Bergeron is not a magician and some deals fail. During the past year, those included a start-up solar company that was trying to create a bidding war among states for the best cash incentives and tax breaks. Another was a Massachusetts technology company that, due to the economy, decided to stay at its current location rather than invest in a move.
The Art of Sales
Donoghue of Mascoma gives Bergeron major points for his helpfulness and knowledge, which includes work as a leasing broker in Boston's commercial real estate market for 13 years and earning a law degree. But Bergeron also deserves credit for another sales secret: finding the right fit. Other states put out more incentives to attract large companies, he says.
They expect multi-million dollar incentives and New Hampshire does not compete in that market.
Instead, NH pursues growing companies in the small- and medium-sized market that are attracted to the state's stable tax structure, trained workforce and quality of life. It's been a fact that New Hampshire has been consistent [on tax policy], Bergeron says. Companies want certainty. The worst thing a state can do is vacillate on tax policy. And he does not see NH's lack of tax incentives as a negative. Some companies are thinly financed, he says, and NH has done itself a favor by not financing start-ups. We shouldn't finance [potential] bankruptcies on the backs of taxpayers.
Given the state's limited recruiting budget, it carefully chooses its marketing efforts. That includes holding confidential dinner events targeting specific industries or business types. At those events, the state brings in CEOs of companies that moved to NH and found success. The state also exhibits at trade shows that attract real estate brokers and site consultants. It does all this with a staff of three people.
The state has also developed private/public partnerships to supplement its efforts. A key, long-standing one is with Public Service of NH. PSNH invests $50,000 to $100,000 annually in its joint economic development efforts with the state. It's in our mutual best interest. We cover three-quarters of the state, says Patrick McDermott, economic and community development manager for PSNH. The only way we can grow our business is for businesses in our service territory to grow and do well. And while the current economic turmoil has resulted in fewer businesses looking to relocate, Bergeron says they are still out there and he is busy looking for them. I'm not judged on how much money I make. It's how [I] can help companies relocate to the state.
A Sampling of NHs Incentive Programs
- Citizens Bank loan program: Up to $40,000 for every newly created job up to a total of $10 million. Loan rate is 1% below prime.
- Energy Efficiency equipment loan: Through Ocean Bank, loan rates 1% below prime for buying energy-efficient equipment.
- Job Training Program: Creates customized training programs and covers 50 percent of the costs. Funded with $1 million a year.
- Economic Revitalization Zone credit: Up to $40,000 in tax credits annually to companies to a maximum of five years or $200,000 used against the business profits tax and business enterprise tax.
- Research & Development tax credit: Up to $50,000 annually in tax credits for new related R&D added to the payroll.
- Coos County Job Creation tax credit: A $1,000 credit for any new, full-time, year-round jobs created in Coos County.
- NH International Trade Resource Center: Programs to assist with export needs.
Source: Michael Bergeron, NH DRED
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