Business infighting weakens Md. clout


Four decades ago, leaders of commerce and industry formed the Greater Baltimore Committee and forged an alliance with the city and state governments to set in motion the massive Charles Center and Inner Harbor urban renewal projects.

When they went up, these projects transformed Baltimore's urban landscape.

But today, in office towers with breathtaking views created by the GBC's vision, executives wonder how they lost their clout.

They acknowledge that Maryland's business community has become splintered and often ineffectual in influencing economic growth policy.

"Definitely, there has been a feeling that there is a need for the state business community to sort out its priorities, agree on one widely accepted agenda and pursue it by speaking with a single voice," said Champe C. McCulloch, who became president of the Maryland Business Council and the state Chamber of Commerce earlier this year.

Years of disunity and frustration mean that the business community, far from leading Maryland's economic development, has become part of the problem.

Now, confronted with powerful national forces that are sapping Maryland's industrial base and dismantling big chunks of its defense industries, the state is without the kind of comprehensive, joint government-business strategy that virtually everyone agrees is essential to revive and sustain the economy.

The divided reaction to the 1990 Linowes Commission report, which called for overhaul of the state's tax system, is an example of the disunity the business community must overcome, said former U.S. Attorney General Benjamin R. Civiletti, chairman of the Maryland Business Council.

"The GBC came out early and strong for the Linowes recommendations. Other major business organizations opposed them, and some couldn't reach an opinion. So the Legislature in effect ignored them all and picked and chose what it wanted out of the report," Mr. Civiletti said.

What happened to a business community that once was the virtual definition of Maryland's power structure?

For decades the GBC rested on the laurels from the Charles Center and Inner Harbor projects, according to former and present staff members, including the organization's president, Donald P. Hutchinson.

Then in the mid-1980s, as the GBC began to seek new challenges, it discovered that much of the governmental money and authority to deal with economic development problems had shifted from the city to the state.

In an attempt to make itself felt at the state level, the GBC created a new entity, Maryland Economic Growth Associates (MEGA).

ecision backfires

But that decision backfired.

Maryland already had two statewide business-promotion organizations that did not always work together well -- the Maryland Chamber of Commerce and Maryland Business for Responsive Government. The new group made it three.

Worse, the new entity ended up splitting the GBC itself -- which for years had been the core of the metropolitan Baltimore business community -- into a dysfunctional alignment known to this day as the "Upstairs" and "Downstairs" groups.

The upstairs group, meeting at Economic Growth Associates' new headquarters on the 22nd floor of the Legg Mason Tower opposite the inner Harbor on South Calvert Street, were senior business leaders who focused on such cost-of-business issues as taxes and regulation.

Many of those were self-described conservatives who thought the state should weaken organized labor by eliminating prevailing-wage laws and banning union shops under a right-to-work law.

Downstairs, at GBC headquarters on the 15th floor of the same building, was a more or less middle-of-the-road Republican group that concentrated on building the state's education and infrastructure.

And just two blocks away, on the seventh floor of the USF&G; Building, is Maryland Business for Responsive Government, founded 10 years ago as the business community's counterweight to labor, consumer and environmental advocacy groups.

Publicly, Business for Responsive Government has become best known for its annual "report card" on Maryland legislators' voting records on business-related issues.

But within business circles, it is equally known for its combative president, Robert O. C. "Rocky" Worcester, who runs it as a rock-conservative outfit and has made it a relentless critic of Economic Growth Associates and its handling of millions of dollars in corporate contributions.

Last year, GBC leaders essentially gave up on Economic Growth Associates and agreed to fold it into the state Chamber of Commerce under a new umbrella organization, the Maryland Business Council.

But that decision, which left Mr. Worcester's Business for Responsive Government outside the "umbrella," opened the way December to an internecine struggle that participants say is typical of the infighting that saps the unity and effectiveness of the business community.

When word got out that Economic Growth Associates and the state chamber were about to name Mr. McCulloch, a former telephone company lobbyist, to head the new business council, an opposing faction, centered about Mr. Worcester's outfit, fired off a last-minute letter that was to become a cause celebre

within the business community.

The letter sought to block the appointment by warning that it could further "split" Maryland's already-fragmented business community and might prompt many senior executives to withhold their firms' contributions to business organizations.

The letter also challenged Economic Growth Associates' "accountability for an investment of approximately $8 million [in corporate contributions] since 1986."

22 sign letter

The letter, which has been made available to The Sun, was

signed by B. Larry Jenkins, president of Monumental Life Insurance Co., and carried the typewritten names of 21 other senior Maryland business figures.

The fissures that came to light by that letter are not yet healed, Mr. Jenkins says.

"Nobody has pulled back support yet, but a lot of senior executives are still taking a wait-and-see attitude, to see how Champe McCulloch does," said Mr. Jenkins. "He comes from the telephone company and understands business, but his boss [Mr. Civiletti] is still a trial lawyer, and not the first trial lawyer in such a position, and the head of the GBC [Mr. Hutchinson] is a former politician, and not the only former politician high in the business community. And a lot of people wonder whether we don't need more leaders with real business experience," he said.

Today, the search for an effective structure for Maryland's business community continues.

Economic Growth Associates is dead although it is not yet buried, for its board of directors has never been disbanded.

Its staff, which once numbered as many as 15, has gradually dispersed into the woodwork of the economic development business, finding jobs at the GBC, the state chamber, the Department of Economic and Employment Development, and county and regional development agencies.

"MEGA as an entity has come to an end," Mr. McCulloch acknowledged.

Which leaves the Maryland Business Council, invented to be an umbrella, with only the state Chamber under it.

And it leaves the merged business structure with three boards of directors still in existence -- MEGA's, the Business Council's, and the state chamber's -- a jerry-built apparatus that Mr. McCulloch says cannot be allowed to last much longer.

Can Maryland's business community shape itself into a coherent force, even at this late date?

Mr. Civiletti says that is the job Mr. McCulloch was hired to do, but both Gov. William Donald Schaefer and the GBC's Mr. Hutchinson, the former head of Economic Growth Associates, say it won't be easy.

In the GBC's glory days in the 1950s and 1960s, "you had five big banks and four big retailers and a handful of other major players, and they all went shooting together and were members of each other's boards . . . and they had easily identifiable self-interests in what they were doing. Today, there is one big local bank left, and one medium-sized bank, and not a single one of those retailers, and many of the biggest banks and companies are owned out of town," Mr. Hutchinson said.

"The local managers are sent here, by and large, and they may or may not know something about Maryland. . . . Any of them can be transferred at any time, and then the new one has to be brought up to speed on what this state is about and what it needs to do, so continuity is difficult. It's just not the same situation it once was, where everyone had grown up in Maryland."

But since the GBC's glory days, a second economic core has arisen in the Washington suburbs.

Both Mr. Schaefer and Mr. Hutchinson say that forming a genuinely statewide business organization today is a formidable task because the Washington and Baltimore business communities have no record of working together.

"The truth is, the Maryland Chamber of Commerce has shown it cannot do the job," the governor added.

String of failures

Lacking a unified business community, and with strained communication between the state government and critically important elements of the business community, Maryland has never developed a comprehensive, joint business-government strategy to promote economic growth.

There have been attempts at developing such a plan, but the only result has been a string of failures.

The most ambitious attempt, in 1990, was stillborn when its conclusions about a declining electronics industry -- later borne out by events -- proved too "negative" to be tolerated by the Schaefer administration.

Another attempt, sponsored by Economic Growth Associates and drafted by PHH Fantus, the business consultancy arm of Hunt Valley-based business-services giant PHH, has been kept under wraps ever since being delivered more than a year ago. Even before its details could be published, it, too, came under intense fire from the Schaefer administration.

What the next governor will find waiting in January, far from coordination, will be competing agendas.

One of those is essentially a legislative agenda, drafted and backed by the state chamber. It calls for tax cuts and eased regulations and proposes a range of business-oriented reforms but stops well short of attempting a comprehensive economic development strategy.

The other, yet to be seen, is now being worked up by a "task force" of state officials and business leaders Governor Schaefer named last summer.

But the question is whether the business community can put its differences aside to help fashion an economic plan with the state.

"It's very hard for business to achieve the influence that it needs. When I say that business needs to speak with one voice, I don't necessarily mean that one person or one entity has to address all issues. What I mean is that it is important that the various business voices not conflict and compete, and that they not be either at odds or redundant in their efforts," Mr. Civiletti said.

TOMORROW: Where the candidates for governor stand on reviving Maryland's economy.


For the past decade, Maryland's business community has been split into three groups that have not always spoken with a single voice. Key figures in this alignment have been:

MARYLAND ECONOMIC GROWTH ASSOCIATES: H. Furlong Baldwin, CEO, Mercantile Bankshares Corp.; Benjamin R. Civiletti, former U.S. attorney general, and chairman, Venable Baetjer & Howard; Jack Moseley, former CEO, United States Fidelity & Guaranty; Charles Cole, former CEO, First National Bank; the late Bailey Thomas, CEO, McCormick & Co.; J. Henry Butta, former CEO, Chesapeake & Potomac Telephone Co.; George V. McGowan, former CEO, Baltimore Gas and Electric Co.

THE GREATER BALTIMORE COMMITTEE: Mathias DeVito, chairman, The Rouse Co.; Raymond A. "Chip" Mason, CEO, Legg Mason Inc.; Decatur H. Miller, chairman, Piper & Marbury; Frederick D'Alessio, president, Bell Atlantic-Maryland; Frank P. Bramble, Sr., CEO, First National Bank; George V. McGowan, former CEO, Baltimore Gas and Electric Co.

MARYLAND BUSINESS FOR RESPONSIVE GOVERNMENT: Robert L. Tate, CEO, Tate Engineering Systems Inc.; Bernard C. Trueschler, former CEO, BGE; J. Stevenson Peck, vice president, Signet Bank; B. Larry Jenkins, CEO, Monumental Life Insurance Co.; the late Bailey Thomas, CEO, McCormick & Co.

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