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2005: Moving forward

Friday, Dec. 30, 2005

Click here to enlarge this photo Gazette file photo Federated Department Stores of Cincinnati bought May Department Stores Co. of St. Louis, owner of the Hecht’s chain. Officials said they would close Hecht’s in Wheaton and Macy’s stores in Glen Burnie, Owings Mills and Perry Hall and convert other Hecht’s stores to Macy’s. A Macy’s opened in Wheaton (above), the first in Montgomery County. Click here to enlarge this photo Gazette file photo Faced with warnings of bird flu, researchers at Synbiotics Corp. in College Park developed a fast-acting diagnostic kit using a recombinant protein from the H5N1 virus.

But the year was also punctuated by the costliest natural disaster in U.S. history, which rippled through the nation’s economy, sending the price of fuel, seafood and building materials to record high levels; the growing specter of an influenza pandemic, prompting drug companies to step up their vaccine-development efforts; and the biggest round of military base closings and realignments in a decade, under which Maryland came out a big net winner.

Throughout it all, the state’s economy remained on an even keel, performing at about the same level as in 2004. The state added almost 49,000 jobs from November 2004 to last month, about the same as the previous year. The unemployment rate remained at 4.2 percent in November — the same as a year ago. Jobless rates in Frederick, Montgomery and Prince George’s mirrored the state’s relatively low averages.

Typically, business concerns occupied lawmakers in Annapolis. In January, the General Assembly overrode the veto by Gov. Robert L. Ehrlich Jr. (R) of a medical malpractice reform bill it passed in a special session that Ehrlich had called.

Next month, lawmakers will vote on overriding Ehrlich’s veto of the so-called “Wal-Mart bill,“ which would require major employers to pay at least 8 percent of their payroll on medical insurance for employees. The General Assembly will also consider overriding Ehrlich’s veto of a bill raising the hourly minimum wage to $6.15. Also, funding for stem cell research was killed, but will be reintroduced next session. And the high-tech community wants lawmakers to expand the tax credits for investments in biotech companies they adopted this year.

Building booms

Among the companies undertaking or completing major expansions were two hospitals.

Holy Cross Hospital in Silver Spring finished some $90 million in improvements that included a 520-car parking garage and a four-floor physicians specialist building.

Shady Grove Adventist Hospital in Rockville broke ground on a $99 million project that will add 144 private rooms and other upgrades. The expansion, expected to be finished in 2009, is projected to add about 200 full-time equivalent positions by 2010.

Work continued on many housing developments, including a 268-acre town-center project in Clarksburg that hopes to also have 110,000 square feet of retail and office space. But that development came under fire when it was revealed that almost 600 homes violated construction height or setback restrictions. The county issued a temporary building permit freeze targeted at Clarksburg that was opposed by many business and development officials.

The state’s biggest airport, Baltimore-Washington International Thurgood Marshall Airport in Linthicum, grew significantly with the completion in May of its 350,000-square-foot A⁄B terminal. The entire $1.8 billion expansion project is scheduled to be finished by late 2006.

Comings ...

Among the companies moving into Maryland was 250-employee satellite radio company WorldSpace Inc., which shuffled some 140 local jobs from Washington, D.C., to Silver Spring.

New banks popped up in 2005, including Monument Bank in Bethesda, formed by H.L. Ward, who helped start EagleBank. Sovereign Bancorp, the Wyomissing, Pa., parent of Sovereign Bank, opened its first Montgomery County branches.

Suburban Maryland also welcomed numerous new hotels in 2005, including a 179-room Courtyard by Marriott in Silver Spring, a 119-room TownePlace Suites in Bowie and a 104-room Hampton Inn & Suites in Frederick. A 188-room Marriott Residence Inn in Baltimore developed by Urgo Hotels of Bethesda also opened.

If plans are carried through, Maryland will add more than 3,000 new hotel rooms to the market by 2008. Projects in the works include the 1,500-room Gaylord National Resort & Convention Center, part of the $2 billion National Harbor project in Fort Washington; the 752-room Hilton convention center hotel in Baltimore; the 210-room Courtyard Gaithersburg Washingtonian Center; and three new hotels in the Hagerstown-Washington County area.

Genomics pioneer J. Craig Venter started Synthetic Genomics Inc. of Rockville, which will engineer modular DNA systems in bacteria that will then be used to produce, among other products, ethanol and hydrogen for fuel.

The University System of Maryland opened two biotechnology centers. The Sloan Biotechnology Industry Center in College Park will explore biotech’s business side and analyze issues affecting the sector’s competitiveness. Also, the University of Maryland, Baltimore, opened the first of 10 planned research buildings for the $300 million medical BioPark.

... And goings

Among the private companies leaving the area was 234-employee Optimus Corp., an information technology business that relocated from Silver Spring to McLean, Va. A major reason cited by company officials: highway gridlock in Montgomery County.

Bethesda hotelier giant Marriott International also closed a reservation call center in Gaithersburg that left 150 people searching for new jobs.

In Frederick, Eastalco, unable to find what it considered affordable electricity rates, began shutting down its aluminum smelting plant this month, eliminating more than 600 jobs. The company’s decade-long contract with Allegheny Power of Greensburg, Pa. — under which Eastalco bought power at about half the current market rate, according to Allegheny — expires this week.

Dobson Communications Corp. of Oklahoma City, which provides cell phone services in rural markets, including Western Maryland, closed its Frederick call center July 1. About 150 employees were given help finding new jobs or had the option of relocating to other company call centers.

Giant Food sent shock waves through Prince George’s in May when it announced intentions to close its manufacturing operations and its headquarters building in Landover. The move affected 500 workers — including about 400 drivers and warehouse workers laid off — as Giant’s parent, Royal Ahold of the Netherlands, continued to consolidate operations of the longtime regional grocer with another Ahold holding, Stop & Shop of Quincy, Mass.

There is no buyer for Giant’s 115-acre campus, and company officials say they do not know if they will stay headquartered in Prince George’s County.

Also, the Prince George’s Chamber of Commerce had a tumultuous year. Chamber officials spent months finding a replacement for Wendi M. Williams, who resigned as CEO and president after five years. But Kathleen M. Smith of Eldersburg left after only four months on the job. Williams has since returned as a consultant until the 850-member organization finds another chief executive.

And just a few weeks ago, Phillip Singerman, the only executive director that the Maryland Technology Development Corp. has had in its six-year history, resigned — a resignation that some said was not entirely voluntary and may have been politically motivated.

Major expansions

In November, biotechnology company MedImmune Inc. of Gaithersburg announced it would expand its Frederick manufacturing operations, doubling its workforce there to about 450. Up to 840 jobs could be created statewide when MedImmune completes its expansion plans in 2008.

Also in Frederick, BP Solar expanded its operations, adding 82 jobs. Parent BP Amoco PLC of England plans to expand further into alternative energy, which officials say will mean more jobs in Frederick.

In September, Human Genome Sciences Inc. of Rockville opened its long-anticipated, $230 million large-scale manufacturing facility, billing it as a major milestone in the company’s 13-year quest to commercialize biotechnology medications.

In October, just a half-mile away from HGS, MacroGenics Inc., founded in 2000, introduced a small-scale drug manufacturing method based on baggies. The relatively cheap, disposable bags are used to produce compounds that hold promise to treat juvenile diabetes and a number of autoimmune disorders including rheumatoid arthritis.

BRAC

This year’s Base Realignment and Closure plan from the Pentagon was its biggest ever. The plan is expected to add about 6,400 employees to bases in Maryland when the smoke clears by 2011.

Fort Meade in Anne Arundel County will see the largest gain, about 5,400 positions. About 1,900 employees would transfer from the Walter Reed Army Medical Center in Washington to the National Naval Medical Center in Bethesda under the plan.

The National Geospatial-Intelligence Agency headquarters at 4600 Sangamore Road in Bethesda is targeted for a move to Fort Belvoir in Fairfax County, Va.

Also, the Pentagon announced in February that it would build a new research lab at Fort Detrick in Frederick, which would mean hundreds of new jobs.

More acquisitions

2005 continued the trend of increased mergers and acquisitions. More than 10,000 deals occurred across the nation — about 1 percent more than in 2004 — and the value of such activity increased by some 32 percent to $1.2 trillion, according to FactSet Mergerstat, a Santa Monica, Calif., merger data company.

Bethesda defense and aerospace giant Lockheed Martin Corp. was a big player with five acquisitions in 2005, after an average of two annually in the previous three years. Among those purchases was 1,700-employee Rockville information technology and government contractor Aspen Systems Corp. Lockheed also landed a coveted contract this year: $1.7 billion to build the next generation of presidential helicopters, a deal that could be worth up to $15 billion.

MobilePro Corp., a Bethesda broadband telecommunications services company, slowed down its pace of purchases with five in 2005, 10 fewer than the previous year.

Other significant acquisitions:

*Host Marriott Corp., a Bethesda hotel real estate investment trust, agreed to buy 38 hotels from Starwood Hotels & Resorts Worldwide of White Plains, N.Y., for about $4 billion.

*Rockville defense contractor BAE Systems North America purchased Arlington, Va., defense company United Defense Industries for $4 billion.

*JDS Uniphase Corp. of San Jose, Calif., bought Acterna Corp., a 1,770-employee Germantown developer of testing equipment for telecommunications and cable operators, for $760 million.

*CDP Capital-Financing Inc., a subsidiary of Montreal investment manager Caisse de dépôt et placement du Québec, agreed to acquire Rockville commercial mortgage company Criimi Mae for $328 million. A shareholders vote is set for Jan. 18.

*Cincinnati retail giant Federated Department Stores bought May Department Stores Co. of St. Louis, owner of the Hecht’s chain, a fixture of the region’s retail scene for decades. Officials said they would close the Hecht’s store at Westfield Wheaton, as well as Macy’s in Glen Burnie, Owings Mills and Perry Hall in 2006. Other Hecht’s stores in Maryland are expected to be converted to Macy’s.

Before the merger was finalized, a 200-employee Macy’s store opened in Wheaton, Montgomery County’s first Macy’s.

*Wireless company Stratos Global of Bethesda merged with rival Xantic B.V. of the Netherlands.

Tsunami and Katrina

Businesses big and small responded to natural disasters that prompted global relief efforts.

As of early January, BP Solar, with global headquarters in Frederick, had donated $3 million to tsunami relief efforts in Southeast Asia.

Brenda Thompson, a public affairs officer at Bechtel Corp., with several divisions in Frederick, said her company’s annual community outreach efforts, which collects employee contributions for local charities, forwarded those donations in January to tsunami relief efforts. The contributions were matched by the Bechtel Foundation.

In the wake of Hurricane Katrina in August, the business community came together again, organizing blood drives, raising money and donating equipment and supplies — including tents, water, chain saws, generators and communications gear — to Gulf Coast survivors and relief workers.

Some companies, including Bechtel, won contracts as part of the relief effort.

Most businesses were squeezed by higher costs for everything from gasoline to crabs and oysters. Gas prices that shattered the $3-per-gallon barrier especially hurt delivery businesses and landscapers, among others. Prices spiked for building materials such as PVC pipe, sheet metal and wood.

Some companies, including Marriott and Lockheed Martin, were forced to shut down facilities on the Gulf Coast.

Pandemic preparations

New technologies emerged to detect bird flu at Synbiotics Corp. in College Park, where researchers developed a fast-acting diagnostic kit using a recombinant protein from the H5N1 virus, produced and patented by University of Maryland researchers. The U.S. Department of Agriculture has approved the test on animals and it also detects bird flu in humans.

Meanwhile, biotechnology companies including MedImmune are working on vaccines to protect against avian flu, which is so far responsible for the deaths of millions of chickens, turkeys, ducks and wild birds, as well as about 60 humans.

This fall, federal officials issued guidelines to help businesses cope with a widespread flu outbreak.

Biotech ups and downs

Moving up were MedImmune and United Therapeutics Inc. of Silver Spring.

At United Therapeutics, record sales of its lead product, Remodulin to treat pulmonary arterial hypertension, led a 65 percent increase in revenues and a 152 percent leap in net income for the third quarter of 2005, compared with same quarter in 2004. Its stock began the year at $43 and ended near $70.

MedImmune shares dipped early this year below $25, but by year-end were closer to $40 following a strong second half. The company achieved preliminary success in phase 3 clinical trials on its more desired, refrigerated version of FluMist nasal vaccine and signed several new partnerships with leading pharma companies.

Meanwhile, Advancis Pharmaceuticals Corp. of Germantown and Nabi Biopharmaceutics of Rockville had setbacks in phase 3 clinical trials.

Nabi officials said they were ‘‘shocked” when their vaccine to protect hospital patients from deadly staph infections failed. Advancis’ patented Amoxicillin Pulsys, a slow-release version of the popular antibiotic, failed to achieve a desired 85 percent control of strep in children, following similar results in June to control strep in adults.

Avalon Pharmaceuticals Inc. of Germantown raised $26.9 million in an initial public offering, making it the first Maryland biotech with an IPO in more than five years, according to state officials.

New programs

Montgomery County officials approved a new small-business reserve program that will set aside 10 percent of the value of contracts for small companies. The county also unveiled plans to open two more business incubators in Wheaton and Silver Spring targeting small service companies and non-technology businesses.

In other incubator developments, the Frederick Innovative Technology Center Inc. incubator at Hood College opened in February and is now full with a waiting list.

Maryland officials formed an alliance with business and government leaders from Virginia and Washington to work on increasing opportunities in nanotechnology, the science of developing devices through manipulating small molecules. Among the entities involved are the Universities at Shady Grove in Rockville and the University of Maryland, College Park.

On the legal front

The Prince George’s County Council imposed stricter regulations on businesses, including liquor stores, big-box retailers, restaurants and tow-truck companies — and drew protests from those industries.

The county’s 119 liquor stores now close at midnight, rather than 2 a.m. Starting today, smoking is banned in all bars and restaurants. Tow-truck operators now work under tighter rules, including lower towing and storage fees. The county’s big-box stores 125,000 square feet and larger may no longer sell grocery food items.

Entrepreneurs blasted Johnson and the council last week, calling Prince George’s County an anti-business community. County officials rebutted the claims, and touted their relationship with the business community.

The saga of bankrupt Gaithersburg nonprofit credit counseling agency AmeriDebt continued to wind through various courts. A Federal Trade Commission case alleging fraudulent activity against Andris Pukke, a former AmeriDebt executive, is slated for trial in January.

An AmeriDebt-affiliated business called Debtscape agreed to pay $570,000 in penalties and restitution for overcharging clients in a settlement with the Maryland Attorney General’s Office.