Black & Decker sale not a comment on Maryland
Coming on the heels of the state's intervention in EDF Group's attempt to invest $4.5 billion in Constellation Energy, the sale of Black & Decker to rival Stanley Works is another commentary on Maryland's dubious business climate, many are suggesting.
I don't think this is the case. There are plenty of things to discuss about how Maryland deals with its business citizens, but the Black & Decker case doesn't seem relevant. It's a business deal pure and simple. Black & Decker boss Nolan Archibald has no love for Maryland's business environment. And I assume he was appalled by the Constellation/EDF developments. But there is no evidence the Maryland's business climate had anything to do with Black & Decker's sale. Company spokesman Roger Young said it was not a factor.
And Connecticut, to where the corporate headquarters and power will pass, is hardly the rule-free business playground that corporate America sometimes suggests it would prefer. It does, however, have both personal and corporate income tax rates that are lower than Maryland's.
Here's today's column on Black & Decker. Read the whole thing here.
It was the first thing analysts asked Black & Decker boss Nolan D. Archibald about the Maryland company's sale to The Stanley Works."Why now?" James C. Lucas of Janney Montgomery Scott in Philadelphia queried during a Tuesday conference call. "What drove this transaction today as opposed to any time in years past?"
Archibald had an answer, which I'll get to. But the real answers seem obvious.
After one of the longest reigns in history for a Fortune 500 CEO, Archibald is old enough to retire and ready to relinquish power. That's the first answer. The second: Both Stanley and Black & Decker are probably worried about the economy.
Comments
Just like breaking off a difficult relationship, Black & Decker is giving Maryland the George Costanza “It’s not you, it’s me” line. Come on Jay – do you think any business would fight for the privilege of doing business in this state if they were given the opportunity and choice to move elsewhere?
Posted by: mikez12 | November 4, 2009 9:49 AM
Well, mikez12, there are hardly any businesses of size that couldn't take their HQ to another state. The opportunity to move is pretty much always there.
Posted by: Tim S. | November 4, 2009 11:39 AM
Jay, I wish I could believe your conclusion that Maryland's business climate is not a factor. This state and particularly the greater Baltimore region desperately need to attract businesses and particularly those that will yield significant employment opportunities. But we just are not seeing it happen. Over the last 25 years, we have seen increasing hostility in terms of regulation and taxation with regard to our business environment. We have seen the departure of many, many significant business players starting with MBNA in reaction to real or perceived anti-business political agendas. In that time, we can all point to the losses but I can't point to any gains we've made. What new significant private sector gains have we seen? I really am fearful about what our private sector is going to look like in the next few years.
Posted by: Garfield Rogers | November 4, 2009 2:34 PM
Jay--Maryland's and Connecticut's tax rates are about the same:
For 2007, Maryland ranked 35 in State and Local tax revenue as a percentage of individual income. Connecticut ranked 21. See http://www.taxadmin.org/fta/rate/07stl_pi.html.
In 2004, the most recent year for which I've been able to obtain statistics, Maryland ranked 19 ($0.55 per $10.00 of GDP) and Connecticut ranked 18 ($0.54 per $10.00 of GDP-This is a state tax calculation only and does apparently not include local taxes). See http://www.statemaster.com/graph/eco_tol_tax_bur_pergdp-total-tax-burden-per-gdp
Posted by: Stuart Levine | November 5, 2009 1:40 AM