(Editor’s note: The following are highlights from news stories in 2014 as reported by the Business Bulletin and the Delaware BusinessDaily.com website. For further information, check out our archives on the above website.
Work on this year in review and perhaps others had to be quickly revised as DuPont released a surprising announcement just before Christmas.In late December, DuPont announced it would relocate its corporate headquarters to the Chestnut Run campus in July of 2015.
The company had been reducing its presence in Wilmington for years as large businesses, such as nylon, were sold and recent acquisitions, like Pioneer, kept their headquarters presence elsewhere.
The company softened the blow by announcing that its Performance Chemicals spin-off Chemours would move its staff to the landmark DuPont Building in downtown Wilmington.
The job transfers for each company would range between 800 to 1,000.
Sharp-eyed observers were quick to note that the city would lose wage taxes from the six and nine-figure DuPont executives heading to the suburbs.
Chemours, which will be spun off as a public company, will later decide on the site of its permanent headquarters. City and state officials were quick to put the best face on the move in hopes that Chemours would Wilmington as its home base.
Should Chemours shop for incentives from other states with deeper pockets, Delaware would face an uphill battle.
New Jersey, for example, pays dearly to retain employers, the most recent involving the move of Subaru America to Camden.
The DuPont announcement added an uncertain note to a year that saw an uptick in the slow recovery of the state’s economy from the deep recession of 2009. Federal figures indicate the economy was picking up momentum, with the U.S. standing out in terms of economic performance as the year ended.
Airlines – Frontier’s disappointing move
It was a disappointing year for airline service out of New Castle County Airport as Frontier Airlines cut its schedule after new owner Indigo Partners overhauled its route system.
By the end of the year, twice and three-time-a-week service had been dropped from New Castle (Wilmington ILG) to a number of cities, with the exception of Tampa and Orlando.
The carrier partially discarded an earlier strategy of using smaller airports near bigger cities, one example being New Castle. Aiding Frontier and all carriers were lower jet fuel prices. That reduced the impact of higher landing fees in Philadelphia and other busy airports.
Data center opponents win
After a fierce controversy, the University of Delaware terminated the lease for the proposed $1.1 billion project. A coalition of neighbors and environmental activists protested the project in meetings and even demonstrated when prospective University of Delaware students were visiting the campus. A UD panel determined the project, which included a large natural gas powered power plant, did not fit in with the mission of the STAR campus, the former Chrysler Assembly plant that was razed after UD bought the property.
Amy Roe, a longtime community activist and city hall critic, led the no power plant movement. Roe also rolled out a website and social media presence that outflanked the start-up Data Centers hit-or-miss efforts to tell its story.
After losing a narrow race to Mayor Polly Sierer in 2013 and in the wake of her victory in the Data Centers battle, Roe started another website, The Newark Residents Alliance.
The site has rolled out critical coverage of the mayor and City Council with the help of other contributors. The larger question is the effect of the opposition on future business growth in the Newark area, especially when it comes attracting out of state companies.
The STAR Campus had one piece of good news when SevOne, a home-grown company that monitors the health of complex information technology systems, agreed to lease a large block of space.
Heffron becomes president at State Chamber
The group that saw the abrupt departure of former New Jersey Chamber chief Joan Verplanck in 2013, named long-time staffer Rich Heffron to the post of president of the Delaware State Chamber of Commerce in January.
Heffron agreed to take the post for two years with a goal of setting the stage for the next generation of leadership.
Heffron also planned to work with Chairman Mark Stellini on making the organization more relevant in a changing state economy where many of the state’s top employers have reduced their staffs or changed ownership.
Economy
A funny thing happened during the recovery.
More people decided times were better and re-entered the workforce.
At least that is what happened in Delaware as the labor participation rate rose after declining in recent years. While no one was satisfied with the pace of an economic recovery that has continued since 2010, it was clear that Delaware was growing jobs at a rate faster than the national average.
The state even broke into the top 10 when it came to job growth.
However, the job growth could not quite keep up with the influx of workers. As a result, the unemployment rate, after falling below 6 percent stayed around that mark into November.
The Delaware Department of Labor cautioned that the figures are volatile and revisions to lower jobless rates were possible.
The question that remained centered on the quality of jobs and growing evidence that blue collar workers were being left behind.
State Labor Department figures showed that wages remained stagnant, although he number of hours worked each week increased.
Manufacturing employment also remained stagnant with any growth balanced out by closings and downsizings of smaller plants.
Reasons for the sluggishness in the sector that now accounts for a smaller chunk of the economy were the subject of debate.
Some critics, led by the Caesar Rodney Institute public policy group, saw a less-than-inviting tax and energy environment as a big factor.
Others pointed to the overall sluggishness in the region when it came to blue collar jobs and indications that jobs were being created in a variety of categories and pay grades.
Construction did see an upturn, but no one was predicting a return to the boom times the state saw in the past few decades.
Stronger growth took place in professional and business services a broad category that also reflects the trend toward outsourcing services, ofen with fewer benefits.
Troubled by the state of the economy was New Castle County Executive Tom Gordon, who ordered an economic development blueprint for the county.
Political ally Wilmington Mayor Dennis Williams joined Gordon in the effort. City officials, based on a press conference announcing the initiative, seemed to be fairly happy with their own economic development efforts.
Not part of the discussions was the state,
The Gordon administration has also indicated the county might purchase the former GM Boxwood plant as chances fade for its use as an auto assembly site.
The initiative earned praise from the business community, which has become worried by an anti-growth attitude that was on full display with the now-scuttled Data Centers project could be used, along with incentives, to lure companies out of the county.
Gordon, unlike Gov. Jack Markell, did not take a position on the Data Centers. Markell supported the effort.
The business community was also hopeful that reforms could be made to the county’s Unified Development Code, which critics claim slows down the timetable for even developments that are supported by the community.
One success story this year was Incyte Inc. The pharmaceutical company and its 550 staffers moved to the former Wanamaker building near Wilmington. The company, whch had been located at the DuPont Experimental Station, scored a beakthough with a new classs of cancer-fighting drugs.
Energy
Generous supplies of natural gas in Pennsylvania aided the Delaware economy, leading to stable electricity prices and cleaner air as coal-fired plants were retired.
Coal generation still accounts for more than 40 percent of the power consumed in the state. However, the market share of natural gas was growing. A short drive from the Delaware line, Old Dominion, the cooperative supplying Delaware Electric and other member-owned utilities, started work on a large gas fired plant near Rising Sun in Cecil County, Md. In Dover, Calpine continued work on a gas-fired power plant that will help power the regional electrical grid.
Lower natural gas prices also lowered costs for PBF Energy’s Delaware City Refining Co. The refinery also profited from a newly completed railroad unloading facility near the refinery that allowed PBF to better take advantage of lower prices for crude oil from Canada and North Dakota.
The safety of crude oil by rail became a big issue, with federal regulators order lower speeds for older cars and other changes. Norfolk Southern continued to improve the line that runs from Newark to the refinery. As the year ended, prices at the pump plunged as crude oil prices dropped, due to rising U.S. production and a decision by Saudi Arabia to not cut production. Delmarva Power continued to beef up its system to improve reliability, but ran into opposition from a Delaware Public Service Commission, which cut a rate increase request.
The PSC questioned whether the investments were reaching a point of diminishing returns after major gains in reliability in the past several years.
Delmarva parent Pepco agreed to be acquired by much large Exelon. Exelon will retain the local identities of acquired utilities, including the Delmarva headquarters near Newark.
The debate continued over alternative energy mandates in the state, with critics claiming state policies led to higher energy prices that are holding down economic growth.
Delaware ranks in the top 10 among the 50 states in solar energy generation per 1,000 residents. The costs of solar are dropping and solar supplier SolarCity announced plans to add an office in the Newark area. Solar City uses a lease arrangement for solar installations that involves no up-front costs from the customer.
Education
The University of Delaware’s College of Health Sciences moved some of its programs to the first phase of the STAR campus at the site of the former Chrysler assembly plant’s administration building.
The building now includes research, physical therapy and a nurse managed health center.
The State Department of Education launched efforts to turn around schools in Wilmington, a move that led to fierce oppositions in a number of quarter. Critics included some members of the legislature.
A related issue was charter schools in the city and elsewhere in the state. A complaint filed with the federal government by the American Civil Liberties Union and Community Legal Aid claimed said the charter schools were bringing de facto segregation into the education system.
Charter schools receive start-up funding from private sources, but receive state funds once the institutions are up and running.
Critics claim the schools “skim the cream” from motivated students and parents. Supporters say the schools introduce competition into the public education system and offer options for less affluent families that cannot afford private schools.
Finance
Employment in the key sector of the Delaware economy rose in 2014, led by growth at JPMorgan Chase. (See real estate section of this story).
One question mark was Capital One, which turned down state assistance in return for additional jobs. However, the bank giant continued to hire at operations that included the former INGDirect business it acquired earlier.
Now known as CapitalOne360, the business maintained the savings and mortgage focus of its predecessor, easing fears that the captital one credit card culture would prevail.
With jobs scattered around downtown, rumors abounded about Capital One seeking one site for its operations. Capital One remained tight-lipped about its plans.
Job totals at other banks appeared to remain steady to slightly higher.
The aftermath of the downfall of Wilmington Trust continued as indictments are handed down in cases related to insider loans and concealing information from regulators.
So far, the indictments have involved former officials of two other banks as well as former Wilmington Trust officials. Wilmington Trust was acquired by M&T after massive loan losses.
The question that remains in the ongoing investigation is whether other officers face indictments. M&T, while not responsible for the losses, did a pay a multi-million dollar regulatory penalty related to the disclosure problems.
Fisker
One chapter in the sad saga of the hybrid vehicle maker ended in U.S. Bankruptcy Court in Wilmington, as two deep-pocketed Chinese investors battled for the remains of the company.
The winner of Fisker and the former GM Boxwood plant was parts maker Wanxiang. Wanxiang, which makes hybrid buses and auto parts, plans to resume production of the Fisker Karma luxury vehicle and resume development of the Atlantic, which was to have been developed in Delaware.
In late December, production lines that had been built the Karma in Finland, were being dismantled according to reports in that country. In the bankruptcy settlement, Delaware is out of most of the $20 million that was part of a financial package for the auto maker.
Chances of auto production resuming in Delaware are rated at 50-50 at best, according to some observers
Gaming
The good times are over for the industry, thanks in part to aggressive expansion by neighboring Pennsylvania and Maryland.
The question that faces the state is how to keep the industry alive without forcing spending cuts or tax increases in bailout efforts.
Delaware opted during the financial crisis of 2009 to levy one of the highest “take” rates among the states for casino revenue.
That came as the industry was struggling with a sluggish economy and the opening of casinos in the two neighboring states.
Revenues have dropped in a regional slump that has led to the closing of a number of Atlantic City casinos. Figures from the Delaware Lottery, which controls gaming in the state, show monthly revenues running about $27 million, compared to as much as $60 million in 2007.
Dover Downs, Gaming and Entertainment gained some breathing room by renegotiating its debt agreement. However, the one-casino company seems likely to post a loss for the year.
Detailed results for the state’s two other casinos are not disclosed, although similar trends are believed to be in place.
Maryland has been especially aggressive with the Baltimore-Washington market seeing two new casinos in recent years with a third $1 billion casino slated to open in 2016.
The General Assembly has found millions of dollars in aid for the industry in the past two sessions, but no long-term deal has been worked out.
Any long-term relief will be hard to find as the state faces financial challenges from higher Medicaid costs and sluggish revenues from other sources. Also worrisome is the effect of the financial problems on the state’s horse racing industry. With lower casino winnings come smaller purses at the state’s three tracks.
Government
The General Assembly faced a tough fiscal environment as revenues remained on sluggish side, due in part to a declining piece of the action from the state’s casinos (see above section).
Another factor was rising health care costs for the poor under the state’s Medicaid program. As noted in the health care section, costs for medical services are high in Delaware.
Despite the difficulties of getting anything done in an election year, Gov. Markell rolled out ambitious proposals to raise the gas tax by 10 cents and levy a surcharge on property taxes to help clean up the state’s polluted waterways.
Both proposals failed. Legislative leadership, some facing tough re-election battles, did not want to back either plan, as tax increases are always unpopular.
There was also some criticism of the administration being unwilling to compromise.
Legislators cobbled together a plan to keep the Transportation Trust Fund from immediately running out of money, but a long-term funding gap could eventually affect not only new projects, but also maintenance.
In retrospect, the gas tax increase would have been relatively painless as the price at the pump dropped sharply toward the end of the year.
On January 1, Virginia will join the nearby states of Maryland and Pennsylvania in increasing the gas tax. With gas prices dropping below $2.45 a gallon, chances were decent that a gas tax, which had been endorsed by a coalition of business groups, would pass.
Republicans managed to gain a seat in the Senate, giving the party more clout in drafting a state budget.
After the abrupt decision by State Treasurer Chip Flowers, a Democrat, to not seek re-election after a continuing scandal over a former assistant and credit card use, Republican Ken Simpler won the post on the pledge of sticking to the statutory duties that had been a launch pad for the political careers of Jack Markell and Tom Carper. Simpler won out over veteran and former Markell aide and Sean Barney.
Other incumbents were re-elected, including U.S. Sen. Chris Coons and State Auditor Tom Wagner.
Matt Haley
The owner of restaurant, management and catering companies in Sussex County died last year after a motorcycle accident in Nepal. He was in that nation as part of his wide-ranging philanthropic activities.
Haley’s work in building businesses while giving back to the community became well known on the national culinary scene as he won the James Beard Award for his efforts.
He also spent time in Delaware in telling a compelling life story that included bad behavior, drug addiction, coming to Sussex County and getting a chance at a new start, thanks to the opportunity to work in a restaurant. He was known to drop everything to help those dealing with the challenges he faced.
Haley’s highly regarded coastal Sussex restaurants, by all accounts, did not skip a beat. A strong management team had been in place as part of a succession plan that went into effect too soon.
Health care
A construction boom in health care will continue as plans are made for a massive project in Milford.
Bayhealth will build a new $200 million health care campus to replace Milford Memorial Hospital. Bayhealth also operates Kent General Hospital in Dover. The campus aims to provide a hub for health care services in the fast-growing area that is attracting many retirees.
The project comes after the recent completion of the nearly quarter of a billion dollar expansion of the Nemours Hospital for Children near Wilmington and the near-completion of the $200 million-plus Wilmington Hospital project.
At Christiana Care, Dr. Janice Nevin is taking over from Dr. Robert Laskowski as CEO of Delaware’s largest employer.
She will continue a transformation of the health care system from a fee-driven system to a model based on outcomes and bundling of treatment options
The goal is to improve the overall health of Delaware residents in a state with high rates of chronic disease and related conditions such as obesity.
Delaware health care costs also rank among the highest in the nation. That was one reason why the state received a $35 million grant aimed at finding efficiencies and processes to reduce those costs.
Media
The News Journal continued to restructure its operations to reflect lower print advertising revenue and more people gaining news from online sources.
Following the loss of a couple of dozen jobs in 2013, another 14 or so jobs were trimmed this year.
Exact numbers were difficult to determine as the company would not comment on the number involved and launched a process that required all staff to reapply for positions.
A number of staffers chose not to reapply or found other positions and left the News Journal. That included the publication’s two business reporters.
Delaware did see the launch of its first print business journal, The Delaware Business Times. The Business Times is published every two weeks and includes a website and email newsletter. The Mid-Atlantic technology news and events site, Technical.ly, added a Delaware presence.
Poultry industry
The driver of the state’s agribusiness sector expanded during the year.
Allen Harim purchased the former Vlasic pickle factory near Bridgeville, but faced a fight with neighbors over converting the site to a processing plant.
Neighbors cited truck traffic and possible water pollution as reasons to reject those plans.
Allen Harim, which purchased Delaware mainstay Allen Family Foods when it got into financial difficulties, said the project would also address existing pollution issues at the site.
The company initially plans to use the plant site for warehousing.
Perdue realigned its operations on Delmarva as it worked to integrate organically grown poultry businesses in Pennsylvania with its facilities in that state and Delmarva.
Delmarva Poultry Industry decided to drop its annual Chicken Festival, as of 2014, citing the need to concentrate on other issues facing the industry that include regulations and proposed legislation.
Real estate
The big story in commercial real estate was JPMorgan Chase. The financial services giant added to its 7,000-employee workforce, rivaling the head count at DuPont, the state’s largest for profit employer
The largest private employer is Christina Care, a nonprofit health care system.
In 2014, Chase signed an agreement to purchase the South Campus of AstraZeneca near Wilmington for a reported $44 million.
JPMorgan Chase also signed a lease totaling more than 90,000 square feet at the White Clay Corporate Center near Newark.
Chase is adding staff across a number of areas and recently dropped plans to build a new headquarters in New York City, after the state and city balked at a package of financial incentives.
JPMorgan Chase would not comment on its plans, but speculation in the press centered on jobs moving from the city to New Jersey and perhaps Delaware. The recently acquired AstraZeneca site also has land for expansion.
The Delaware office leasing market, aided by a lack of new construction, was running out of large blocks of Class A office space. That could limit efforts to bring larger white collar employers to the state.
At the same time, downtown Wilmington struggled with large blocks of Class B office space without amenities such as convenient parking. The Wilmington Riverfront continued to build on its success, with the opening of a new Westin hotel attached to the Chase Center on the Riverfront.
New apartments were also going up in the area as Navient, the spin-off from student lender Sallie Mae agreed to take space in the Pettinaro-owned Star Building in downtown.
Meanwhile, redevelopment continued in downtown with a number of projects in the works, with the emphasis on bringing residents to center city and neighborhoods. Perhaps the largest residential project involved a $100 million transformation of what is known as The Flats, a 450-unit complex west of downtown that had become run-down over the years. Banks and others also invested in housing on The east side of the city.
Home-building in the state continue to stage a slow recovery, with growth coming in all three counties. Showing strength was the Middletown-Odessa-Townsend area.
Sussex County had the strongest market for existing homes during the year.
Home prices increases remained modest, perhaps a reflection of a slower economic recovery in the state and region.
Retail
Growth continued in the Christiana Mall area as the Cabela’s outdoor goods store and the Cinemark theater complex opened near the boundaries of the mall.
A separate project, the Fashion Center at Christiana was under construction near the mall. The only announced tenant is the Nordstrom Rack off-price operation of the fashion department store at the mall.
Late in the year, a Pennsylvania developer announced plans to develop the Cavaliers Country Club property into a mixed use residential and retail project.
No plans have been yet been formally submitted to the county.
The project quickly drew opposition, with foes citing traffic and plenty of existing development in the area and launching a petition drive.
The Tanger outlet complex in Rehoboth did not expand. However, major façade improvements amounting to $10 million were undertaken at one of the three centers.
Meanwhile, Kmart continued to close stores in the state, with locations in Dover and Claymont closing their doors as the parent company continued to post losses from its Sears and Kmart stores.
Chances of retail development of the former DuPont Barley Mill site were reduced when the State Supreme Court upheld a Chancery Court decision on a County Council vote on zoning for the site. Stoltz, owner of the site, has the option of resubmitting plans, although it remained quiet on its future plans.
Wilmington
The city saw a mixed bag of news in 2014 as investments on the riverfront and neighborhoods were often overshadowed by the city’s record homicide rate and the late December announcement by DuPont Co. on moving its corporate offices out of the city.
The homicide rate was the topic of a Newsweek piece with the sensational headline Murder Town USA.
Mayor Dennis Williams criticized the story, which “went viral” as the story was shared by Delawareans via. social media.
The state’s chief prosecutor Kathleen Jennings told the News Journal she could find no errors on the piece
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