As Indiana's commerce chief, Roob aims to 'hit on all cylinders'

January 12, 2009
Gov. Mitch Daniels last month named Mitch Roob, formerly secretary of Indiana's Family and Social Services Administration, as his new secretary of commerce.

As the successor to Nathan Feltman, now an attorney at Baker and Daniels, Roob will oversee the Indiana Economic Development Corp., which attempts to attract company headquarters and spur business growth with the help of economic incentives.

Roob recently sat down with IBJ to discuss his goals. The following is an edited transcript of his remarks.

IBJ: The economy is clearly in recession. How does that reality change IEDC's priorities and tactics?

ROOB: We want to work with our state's current employers to make sure they're taking advantage of every opportunity the state and federal government have to maintain employment.

At the same time, we need to remain proactively attracting companies, because we will not be in a recession forever. We will come out of this recession, and the governor is determined to come out faster than our surrounding states, hitting on all cylinders, so to speak.

When people are rebuilding, looking around, we want to be ready to go. So we're going to continue to aggressively market the state of Indiana externally. And inside the state, we're going to make sure we're working with our current employers to mitigate, as much as we can, what is a very difficult economic situation.

IBJ: Do companies change what they ask IEDC for when the macro economy has been so dramatically transformed?

Training is a big piece, and I think we'll see more and more demand from new employers for training dollars, to make sure that the individuals they're hiring—who may have been laid off from 20th century jobs—have the skill sets for the 21st century jobs we're bringing to Indiana.

IBJ: Any particular area where you expect to see the most need for that type of incentive? Do you expect most demand, perhaps, among laid-off auto workers?

ROOB: Transitioning people who have been laid off, for instance, in the auto industry, to some of our biotech stuff is going to require ... different skill sets. Taking somebody who used to manufacture a part and helping them to understand what needs to go into finishing a joint for a human being, it's a different skill set.

IBJ: Indiana's unemployment rate has increased to 7.1 percent, well above the nation's 6.7-percent rate. And many economists expect it to climb over 8 percent in 2009. What can IEDC do to turn the unemployment tide?

ROOB: Well, we do have new jobs coming on line. Some of the successes that IEDC had in '05, '06 and '07, those jobs now come online in '09 and '10.

For instance, we have over the course of the next 18 months, 1,200 Medco jobs coming online at a very attractive wage rate. But the skill set is different from the individuals who may have been laid off from someplace in Kokomo.

The message our employees, or our residents, need to understand is, some of the jobs aren't coming back. For better or worse, we can bring new opportunities. But they've got to walk through the door, and recognize that they need to continue to grow their skill sets as well.

IBJ: Most IEDC deals involve promises to add jobs over time. The 2007 annual report, for example, touted deals with 158 companies that were expected to create 22,600 new jobs within several years.

But many companies are now scaling back their growth plans as the recession deepens. How many of those job promises do you expect will actually be kept anytime soon?

ROOB: I haven't looked at those new pipeline jobs. Some companies are going to grow more jobs than anticipated, and others, candidly, will grow less. I think we all recognize that when we bring a company to the state of Indiana, there's no sure thing.

IBJ: IEDC relies heavily on tax incentives, such as the EDGE credit, the headquarters-relocation credit and the venture capital tax credit, to stimulate business activity. Are those tools still effective in a recession, when many companies trim their head counts and delay capital investments?

ROOB: It depends. For instance, the venture capital piece you referenced—good ideas bubble up in good times and bad. Indiana raised more venture capital last year than it had the previous year.

The headquarters-relocation piece—we're always interested in getting headquarters. That would be attractive, regardless of the economic environment. I think candidly there is a little more reticence on expansion in a down market, and that's understandable.

Fewer firms are probably looking to move. So in that respect, the incentives may be less attractive. But I don't think they're any less attractive to those who do feel they're ready to make a move.

Do you expect to do much international travel in the next year? It's obviously a focus of the governor. Does that get scaled back? Or maybe sped up because we have a recession to fight?

ROOB: I know the governor this year is traveling to Japan. I'm intending on going on that trip, and we'll continue to work internationally.

We absolutely have to continue. The efforts to in-source jobs in the state of Indiana have been tremendous, really starting with [Former Lt. Gov.] John Mutz. It's one of the reasons why our economy is doing better than those in surrounding states, because we have made an investment in attracting companies to Indiana from overseas, and we'll continue to do that.

Look at Honda, Toyota, obviously the folks up in Lafayette at Subaru—terrific employers. And we'd like to continue to attract them. You've got to go there, because other governors will look at Gov. Daniels' success. Planes fly out of other states as well. So we have to continue our efforts.

IBJ: There's a lot of talk about what the Obama administration is going to do at the national level, possibly injecting as much as a $1 trillion stimulus into the economy. How could Indiana best use its share?

ROOB: Well, one of the strategic strengths of Indiana has always been its location, being the crossroads of America.

We're ready to go with those dollars because of Major Moves, [the governor's program to lease the Indiana Toll Road and upgrade highways]. We're ready to go with projects today. They're not just on the drawing board. They've been let and ready to go. Those are probably the places where we would find the greatest impact.

And the same is true of railroad infrastructure. Rail infrastructure can be helpful. And clean coal, investments in clean-coal technology, and investments in wind. Those are things Indiana has been on the forefront of and things which are not conceptual. We're ready to go today.

IBJ: Despite Indiana's fiscal challenges, the governor hopes to include $73 million in the next state budget for the 21st Century Research and Technology Fund, providing capital to young companies with the potential to commercialize innovations. How would delays or cuts affect Indiana's entrepreneurial sector?

ROOB: It's a top priority for us to maintain the success that we've had with the 21st Century Fund. Almost everybody who looks at the successes that we've had in Indiana in growing what has not traditionally been an entrepreneurship-friendly state and turning it into one, we can mention [the fund] as kind of the point of the sword. So we would be cutting our nose off to spite our face if we were to not fully fund the 21st Century Fund.

When he announced your new job, the governor lauded your record of savings and efficiency at the Family and Social Services Administration. Do you have similar ideas to do more with less at IEDC?

ROOB: We did some remarkable things over at FSSA, which were able to allow the governor and the Legislature to flatline Medicaid and not reduce payments to physicians nor take people off the rolls. That's not something that's happened in other states.

That's really four years of hard work to get there. When I became the secretary of FSSA, we were spending $1,683 per person. Today, we're spending $1,543 per person. We've done that through a hundred little deals. But nevertheless, it worked pretty well.

That ... willingness to critically examine what you're doing is something I've brought everywhere I've gone, and will bring here to IEDC.

Even if you did away with all of IEDC, it still wouldn't compare to one year's growth of the Medicaid budget. We're not going to balance the state's budget on IEDC any more than we are the Department of Conservation. It's just not big enough. But we'll be attuned to making sure the dollars we spend deliver good value to taxpayers.
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