Industry Roundtable: Downstate Delaware Economic Development

What are the biggest challenges and economic drivers in Kent and Sussex counties?

Parkowski: The first question I would like to ask you is what could be done for our local and statewide elected officials for them to understand the needs of the industry in southern Delaware?

Andrew: Well, first of all, I think that our statewide elected officials have to understand what we have in southern Delaware. When you drive down [Del.] Route 1, [U.S.] Route 113, or [U.S.] Route 13, you don’t necessarily see all of the resources that we have. But trying to understand what resources are available, where we can build, what kind of workforce we have, and what kind of jobs we need, and understanding
that there is a lot to offer in southern Delaware would be a great start.

Rzewnicki: I tend to agree with Bill. And I think my philosophy is that leading an organization revolves around three pillars, and it’s compromise, collaborate and communicate. I think we need to continue to take the opportunity to communicate with them the great things that are out there, like you just said. I think some things like such as the organization that you are running will help that immensely, kind of it’s bringing focus to it.

Breakie: Communication is key. We need to get the elected officials that are from outside of our area down here to visit. A lot of people do not know all the positive things we have going on in our communities, keeping the channels of communication open is extremely important.

Parkowski: How do you help businesses in the downstate area grow?

Breakie: Chesapeake Utilities, provides a good alternative fuel option for the businesses and the residents for this area. Natural gas is a proven economic driver. We have several municipalities and businesses that have been requesting natural gas, so we have been expanding our infrastructure throughout southern Delaware. Natural gas has been shown to reduce costs by up to 50 percent versus other fuels and reduces emissions. We work closely with economic development departments to bring commercial growth to the region. There are a lot of large industries that are looking to come to this area and having natural gas infrastructure available helps them make their decision.

Rzewnicki: I’m going to say, as a credit union, we are obviously in the business of loaning money, which generally helps companies grow. We are one of the few credit unions in the state that actually has a robust commercial lending program tailored mostly to smaller businesses million-dollar loans and under, which is kind of the heart and soul of any economy.

Andrew: Delaware Electric Cooperative is a member-centric organization. We look as our members or our customers are our owners, so we are always out there trying to change, to find a better way to do it, to provide the best, most reliable service, and the most cost competitive. How are we going to help our customers, our members? By providing them very cost-competitive power, which we are, which we do right now. And we are going to continue to do that in the future, but provide options for renewables, provide options on how it’s metered or how we can save our customers in the operation of their business. We also are very key on making sure that our businesses remain in business and their business continuity stays. So, we are going to work with them on the reliability of the business process. This is how we are going to help them grow. And it seems to be working.

Parkowski: What additional state resources and programs could be focused on downstate communities to drive growth?

Rzewnicki: The Delaware Division of Small Business is something that I think that can help considerably, formerly DEDO. It has gone through some changes there. They provide resources to businesses to kind of navigate the murky waters of the government processes. And they can also provide some capital assistance; so, when individuals come to us as a financial institution, we can then give them the loan so they can start their small businesses.

Breakie: The Kent Economic Partnership and the Greater Kent Committee are two avenues of getting information and helping to support growth. Also, I will become the chair of the Central Delaware Chamber of Commerce later this year and I plan to continue the work to drive growth in our community.

Andrew: Let me, if you have got a minute, I would like to approach it a little more holistically — OK? — in that we need to make Delaware, and especially southern Delaware, an easier place to do business — OK? — in that we need to be able to have —and how could the state help us?

They could help us by having executive account representatives that would come in and help our members get their business up and running, make sure the permits are established, walk them through planning and zoning, make sure they are in the right location, offer them financial assistance that may be available through grants or loans that would come not only from the state government, but from the federal government. Similar to what you would do, Linda. But we need to have a — we need to have a culture of new business in the state, and we need to develop strategies that will enhance this culture that’s missing today.

Breakie: I wholeheartedly agree with Bill. Establishing a new business into this area can be daunting for the new business owner. There are a lot of state-specific complexities, environmental constraints and DelDOT requirements for example, that make the process difficult. Having an identified office that walks them through the process would help immensely. In addition, it will help to have more locations sited up front that will support businesses so that many of processes would have already been addressed.

Andrew: And these folks or this organization would have to have top-down support so that when they need something, it does happen. And that could be everything from highway infrastructure, to planning and zoning, to permitting of everything that’s involved, whether it’s building permits or fire permits or whatever else. It’s a very, like Shane said, it’s a very difficult process.

Parkowski: What are your current workforce needs, and how do you expect them to change over the next decade?

Andrew: We are very fortunate in that we are one of the premier employers in Sussex County, if not southern Delaware, but our employee needs are changing drastically. We need engineers. We need technology folks, especially cybersecurity. I say many times that the next level of reliability is not going to be linemen in bucket trucks; it’s going to be technology. We need to make sure that we have the funding for technology, that we have the security for technology, that we have the communication infrastructure in place to utilize this technology. And when I say how does technology help me deliver electricity? It helps me deliver electricity by making sure I have the proper analytics available to me in the real time, and it helps me keep my costs low, because I can use technology to reduce my variable and fixed costs.

Parkowski: I know Chesapeake Utilities is a user of technology. Do you want to speak to that area?

Breakie: Thanks, yes I do. The natural gas industry is very similar to Bill’s and our workforce is across the gamut where we have line locators and meter readers, but we also have accountants and engineers and IT professionals. We need to make sure that our workforce is being developed and prepared, and that starts at the high school level. Chesapeake Utilities is working with the local high schools and colleges to try to put together programs to bring forward our next generation.

One of the other things that we have done recently is we have built a new campus in Dover, and we located
it next to [Del.] Route 1, because some of the talents that we look for are tough to get locally. For example, we had to reach out as far as Pennsylvania or New Jersey to recruit IT resources.

Rzewnicki: We have historically been order-taking, paper-pushing individuals in the fight into industry. So, like your guys’ industry, we are becoming much more technology-savvy, so a need more for solutions-oriented, analytical, technological-savvy individual in almost all positions.

Andrew: Our businesses have changed so much. When I look at today, we have got a data scientist that works for us. We have a vice president of innovation. And we are always trying to look at a better and new way to do it. I want to be very careful to explain, technology doesn’t necessarily mean computers. It could mean materials. It could mean processes. It could mean new products that will enable us to meet our members’ or our customers’ needs that are faster, more efficient, and more reliable.

Rzewnicki: Yes, absolutely. A lot like you, we have a chief innovation officer. And it’s processes for us right now. I mean, it’s process excellence, really. You can pick up and gain a lot of efficiencies in solid processes. You can better the member experience. You can better the employee experience. They can just become much more efficient when you do that. So, I absolutely agree that technology is very robust.

Parkowski: So, since you are in the banking industry, how do you think rising interest rates/cost to borrow
will impact your business and growth in Delaware?

Rzewnicki: We are already seeing some of the negative effects from that. The fourth quarter for us, I mean, loan demand was down on the mortgage side, on the commercial side, on the auto-loan side. I’m a prime example of that. I need a new car, and I’m not going to get one with these interest rates. I think a lot of people will hold out longer. And I would imagine that would ultimately have a negative effect in lots of different areas. I mean, not only financial institutions, but we do fuel some of the growth. People are going to stop buying houses. They are going to stop buying cars again. They stop with those capital improvements in their businesses. Just it’s becoming more expensive to do that.

Breakie: That’s interesting to hear from you — kind of worrisome, too. We are in a very capital-intensive business, we invest 15 to 20 million dollars in piping infrastructure annually into our local area. So, any rise in interest rates makes it more cost prohibitive for us to do that.

Andrew: And believe you me, one of our four strengths are to be financially sound. We are one of the few rated cooperative utilities in the nation, and our rating helps us tremendously. We are a completely independent borrower. My capital budget this year in Kent and Sussex County is in excess of $30 million just on the capital side. We are investing an awful lot of money into the community to make sure that we can serve new customers, that we can make sure that we can meet the needs of new industry, should they come in.

Parkowski: Are there areas you believe all your organizations should focus on in order to improve themselves in 2019?

Andrew: When I think about Delaware, I see such a lack in strategic planning. My state government basically doesn’t do strategic planning, especially on the business side. I think that it would be great to get some of the innovative business leaders down here who are strategic, who have a strategic mindset. Our economy drives everything. And I can give you an excellent example. I used this as an example the other day, and I called it the “Amazon scenario.” And people looked at me, and they said, “Amazon scenario? What are you talking about? Amazon is in Washington, D.C., and New York City.” And I said, well, do you think those folks in Washington, D.C., and New York City that are 1 percenters are going to want to sit in Washington, D.C., and New York City during the weekends and in the summer and for their vacations? No, they are going to come to Delaware, because Delaware has the best recreational area on the East Coast right now.

Rzewnicki: I do agree with that. I think we need to focus on innovation for our organizations. All organizations are changing. We have lots of different generations driving them at this point. So I think we have to become more cognizant and better of a multigenerational workforce. I certainly think the culture of organizations is becoming increasingly important, especially as the economy has kind of heated up. The competition for talent is out there.

I think you have to create a dynamic workplace. People aren’t going to come to work if they don’t enjoy doing their work.

Parkowski: One party now controls all statewide offices and also the Delaware federal delegation and both houses of the Delaware General Assembly. What does this mean for your business?

Breakie: Our Company has been around for over 100 years. We have been through many different administrations, and we have been successful through those years. The current Congress has a lot of new faces so I’m not sure of the direction it’s going to go. We work with our appointed and elected officials to keep the environment positive for business. We just have to keep the communications going. They need to hear what the businesses need.

Rzewnicki: As a general rule, I don’t think any party controlling all offices in everything is a good thing at all. As far as our federal delegation goes, I still have a lot of hope for them. Keeping communication open with them is something that we must commend them for. All three of our legislators kept an open line of communication with us and ultimately took our concerns seriously when voting in favor of Senate Bill 2155 [Dodd-Frank reform bill] last year, which was really a great thing for our economy and for lots of financial institutions like us.

Andrew: I agree with both of you to a point. I don’t know that it’s a one-party issue. Let me first say that the hardest part of my job is going to Legislative Hall, because I speak business. OK? I don’t speak politics. They need to trust in their business leaders to provide them with direction and ideas.

Parkowski: So how would you rate the progress and impact of the Delaware Prosperity Partnership, and are you all familiar with that organization which is a spinoff from the split of DEDO into the Division of Small Business and into the Delaware Prosperity Partnership?

Andrew: Well, I would say that the Delaware Prosperity Partnership has done a really, really good job for New Castle County. And I would say that it’s very natural for them to work in New Castle County, because the majority of the folks that sit on that board are from New Castle County. I don’t think they know about southern Delaware. We have to get our message out there, and they have to believe our message on what we really
have available and what we really need to change and how fast we can get to market. Unfortunately, we do
not have a lot of shovel-ready sites, but we have a lot of sites that could be shovel ready with a little bit of strategy and planning.

So, I think that Kent and Sussex County have to take a leadership role and a very active role in the
development of any type of commercial or industrial businesses.

Breakie: The Partnership has been very open for communications and responsive to some requests that we have had. But as a business, we are very results oriented, and we would hold that standard to them, too. We would like to see some positive results in this area. Like Bill said, we’d like to have them focus more on Kent and Sussex.

Parkowski: So do you think that Kent and Sussex have the infrastructure in place to attract new businesses? And, if not, what should be done to address that problem?

Rzewnicki: I mean, it depends what industry. It depends what time of year. I mean, I don’t believe some of our roads can take a whole lot more. I mean, I think most of us in the summertime have driven down [Del.] Route 1. And you bring in big industries and bring in big people, and it’s just going to be more of a nightmare. It comes to strategic planning. I mean, you just have got to think some of these things out.

Breakie: Having the shovel-ready sites is extremely important, but you have got to have the community support also. That type of collaboration is happening in Frederica and Little Heaven. There the community is getting involved. But we have seen some stumbles as well. Facilities like the old Vlasic facility where Allen Harim tried to move. There you would think is a site that’s ready for some sort of revitalization. Yet as soon as an industry tried to move in, there was not much support from that community which delayed the process significantly.

Andrew: And it is an enterprise-wide process. I think that southern Delaware has a lot more agility to meet the needs of our businesses because we are not as highly populated, and I think we have a lot of different resources that people don’t know about. We have low-cost power. We have great gas systems. We can improve our transportation systems. I would like to see a [U.S.] 301 corridor that comes from the Bay Bridge to the Harrington area instead of running from the Bay Bridge to New Castle County again.

Parkowski: So, if you had control of the state government, what changes would you make to improve the business climate?

Rzewnicki: Modernize the tax code would be my very first thing. I think that is the first thing that starts leading to a really stable operating environment, which I think is needed.

Breakie: And a very basic thing is that we are very dependent on the unclaimed property revenues that come in, which you cannot predict what that is going to be. Unclaimed property, in its definition, is property that can be claimed at some time by somebody. Here we are recognizing it as a revenue stream when really it’s just somebody else’s money that we are keeping. So, the dependence on that and not knowing the stream associated with it causes such large variations. We need to pull away from our dependence on that.

Andrew: And they are right on target. They are business leaders who worry about the sustainability of their revenues, of their costs, of their business to move forward. We need to spread that across the entire Delaware enterprise. We do that every day. And I say “we” as being the group of us sitting at this table. Many times, it’s the first thought we have in the day, is how do we maintain our sustainability, how do we assure that we are going to have revenues, and how are we going to meet the needs, and how are we going to
grow our businesses?

Parkowski: I don’t think many people realize that the utility companies and financial institutions are large contributors to the economy. Maybe you could explain how your businesses contribute to the economy in southern Delaware.

Breakie: There are several different ways. One, we have a strong, growing employee base. We have a lot of employees living in the area that support the local economy. Secondly, we are providing a product that can help businesses reduce costs which allows them to add payroll and spend more locally. And also we pay a lot
in taxes. Including public utility taxes, gross receipts taxes and property taxes. All of our infrastructure that goes into the ground, people may not realize, are assessed a property tax. And finally, we give back to
our community, from contributions to schools and various non-profits to volunteering and mentoring.
We truly take pride in our community.

Andrew: We talked about a lot of the fixed costs and infrastructure that we build into the system. And how does that help? Shane has explained that very well. We pay taxes on what product we put in, we have along the road, whether it be poles or pipes or wires or meters. That’s one way of doing it. But at the same time, when you look at the three largest costs of a business, OK, you have the workforce, the product and the utilities. So, we are the top three costs for a company to do business. And when we can make that a very cost competitive and efficient operation that’s reliable in meeting the needs of our members, then we can
bring people to southern Delaware to do business.

Fay Steiger: I actually have a question for you, Linda. You had mentioned there are specific industries in your plan that you are trying to go after and attract downstate. For a company that may be reading this in Delaware Business Times that is not here but considering, what are those industries that we are missing?

Parkowski: Our first industry that we are going to attract — that we are going to attempt to attract — is warehousing logistics and cargo. We are really fortunate that we actually have the Dover Air Force Base, which has a really long runway, one of the longest ones on the East Coast. And so we see an opportunity there to get into the air cargo warehousing distribution industries. We had a study done, which is a realist economic analysis study done for Kent County, and they identified three targeted industries.And the first one was warehousing distribution and logistics, because at present we have the workforce in Kent and Sussex in order to fulfill that industry. The second industry should be no surprise to anybody because of our population base within Delaware.  It’s health care. And health care will be the second industry that we will actually target. And then the third one is business and legal services, a lot of the tech kind of industries that your companies need now. The study really looked at what is being imported from out of the area and how can we develop those industries within the area. So that’s something that, you know, you can hopefully hear more about in the future.

Parkowski: Is there anything else that you would like to add or talk about?

Andrew: From a business standpoint, if we have a plan and something changes, we can adjust our plan. And it’s a whole lot easier to adjust a plan than it is to make a new plan; because, if we don’t have a plan, we always are starting at the beginning and working our way instead of being at the end and moving forward. That’s how we approach our business on a day-to-day process.

Rzewnicki: I think that fit plan for business leaders such as us also creates some more of that stability that I think is necessary. If you go into a state that has mapped out what they see their future being, and you are an organization that can align with that, I think it has that potential to bring some of those businesses in.

Breakie: And the plan needs to support multiple business types, those that create sustainable jobs. From the service industry to industrial, agricultural and agribusiness. We shouldn’t rely on a single business type for our employee base, we need to diversify. This will give us our strong foundation for the future.


Future roundtable topics include Healthcare Innovation, Cyber Security and Diversity & Inclusion. If you’re interested in sponsoring a future roundtable, please contact advertising@delawarebusinesstimes.com

MEET THE PANELISTS

BILL ANDREW
President and CEO
Delaware Electric Cooperative

Bill Andrew is the president and CEO of Delaware Electric Cooperative, located in Greenwood. His utility experience covers 40 years and he has been associated with all aspects of the utility business from gas to electric, operations to design, and core business to subsidiary operations. Andrew joined Delaware Electric Cooperative in 1998 as vice president of engineering and operations and was promoted to his present position in January 2005. In addition, he is the chairman of the Board of Directors for Old Dominion Electric Cooperative. He is a board member of The Virginia, Maryland, and Delaware Association of Cooperatives, ACES Power Marketing, The Federated Rural Insurance Company, The Harrington Raceway and Casino and the Delaware State Fair Inc.

Chaz Rzewnicki
President/CEO
Dover Federal Credit Union

Chaz Rzewnicki was born and raised in the suburbs of Detroit. A lifelong Michigan native, Chaz, wife Crystal and two children moved to Delaware in late 2014. Chaz is a passionate credit union advocate, starting in the credit union movement when he was 16 through his high school co-op program. Working for credit unions is his dream job as credit unions collectively have a mission of “people helping people” which is something most other industries have abandoned. Members are partners, friends, family and not just a numbers
Chaz is a millennial CEO who strives for collaboration, communication and cooperation. As a CEO, he focuses on Culture, Community, Financial Literacy and Legendary Service! His favorite quote, by Everett Dirksen, does a lot to describe him – “I am a man of fixed and unbending principals, the first of which is to be flexible at all times.”

 

Shane breakie
Assistant Vice President
Chesapeake Utilities Corp.

Mr. Breakie is the Assistant Vice President of Chesapeake Utilities his responsibilities include strategic initiatives as well as the day-to-day activities of Chesapeake Utilities (in Delaware and Maryland) and Sandpiper Energy. In his previous role as Director of Energy Services for Chesapeake Utilities, Mr. Breakie was responsible for developing and directing natural gas expansion efforts on the Delmarva Peninsula. He has also held the positions of Director of Consumer Services, Director of Operations, Customer Service Manager and Accounting Manager. Mr. Breakie has over 25 years of service in the utilities industry. In addition to his accomplishments in the industry, Mr. Breakie is currently the First Vice Chairman of the
Central Delaware Chamber of Commerce and President of Chesapeake Emergency

Linda parkowski (moderator)
Executive Director
Kent Economic Partnership

Linda is the Executive Director of the Kent Economic Partnership which is the economic development agency for Kent County Delaware. Linda is charged with business attraction and business retention and expansion in Central Delaware along with business assistance for Kent County.

Prior to taking her position at the KEP she was the Acting Director of the Division of Small Business for the state and prior to that position she was Director of Tourism for the State of Delaware implementing many forward-thinking and results-oriented programs to grow the industry from a $1.5 to $3.3 billion industry.

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