Interstate wars turn dirty during recession

Intersate Wars

The recession has inspired some rather desperate behaviour from companies trying to win much needed business. Now it appears neighboring states are turning to dirty tactics in an effort to steal business from each other.

At the centre of the battle to win business are everything from start-ups to well established companies. Whereas states have always been able to vary sales and business taxes, the economic downturn has led to a more aggressive approach as states compete against each other in the fight to convince businesses to relocate and invest in them.

The BBC reports how California have accused Nevada of stooping to a "new low" with its $1 million year-long advertising campaign, which mocks California's $26 billion budget deficit and uses the slogan, "Keep your business in California and Kiss Your Assets Goodbye."

The ad compares California's legislators to monkeys, and the state budget to flying pigs. The campaign caused a furious row between Nevada and California, which has responded with its own multimedia drive of pro-California ads proclaiming, "What happens in Vegas stays in Vegas, but what happens in California makes the world go 'round."

Furious California assemblyman, Jose Solorio, slammed the Silver State for going "too far."

"Why would anyone want to go there anyway?", he said. "They have very high unemployment, construction has gone bust and there aren't the opportunities there that there are in California."

Philip Kotler, professor of marketing at Northwestern University's Kellogg School of Management in Illinois, sums up thought process behind the campaigns, "it's a very simple strategy of 'I win, you lose', he said.

You can find similar cases across the US: in New Hampshire, economic development officials drive into Massachusetts to pick up business owners at the border under an initiative dubbed "New Hampshire Open Invitation", reports the BBC.

Development officials then give potential investors the full VIP treatment and drive them around in limousines while pitching to them about why they should switch state.

The same "sales trips" are also made in Indiana, where businessmen travel to Illinois, Ohio and Michigan in search of disillusioned firms and investors.

Despite their contraversial nature, the method is proving to be very effective in some cases, "one third of our new jobs in recent months have come from businesses consolidating and concentrating their business from other states into Indiana," says Indiana secretary of commerce Mitch Roob.

However, there is a concern that instead of focusing on their own state's "USP" and competitive advantages, businessmen are giving too much attention to the failings of other states. There is also the danger of alienating well established firms and investors who are put off by states that revert to such "dirty tricks."

One state that has chosen to concentrate on its own positives rather than another state's negatives, is New Jersey. Without down-talking anyone, New Jersey has promoted the advantages of relocating to the state, such as the cost-savings to be made from moving from New York, with its higher taxes and rents.

Desperate times, do indeed call for desperate measures, but some states are finding it difficult to differentiate between "desperate" and "dirty"; illustrating that when the going gets tough, the states of America can be anything but "united."

Source: BBC.co.uk, October 4, 2009

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