City's Bragging Rights Challenged Commerce Dept. Stats Create Credibility Gap For Some Execs

Posted: May 02, 1990

Although many business executives are not applauding, some city Commerce Department officials are bowing.

The director of the city's international business division wants her unit to go down in history for its efforts in attracting foreign investment and sending Philadelphia products overseas. She's distributed an "accomplishments and results" fact sheet giving her division credit for $140 million worth of Philadelphia products sent abroad and 3,500 new jobs created in the area.

The statistics look great. The only problem, according to interviews with executives of companies listed on the sheet and area trade experts, is that the city takes credit for others' hustle while exaggerating its own accomplishments.

The fact sheet was released as angst was building over which city departments would come out winners in the current budget process. Gerri H. Walker, commerce department director, has told City Council members that the international effort was one of several marketing initiatives that could get the ax if her department takes a hit.

City Council faces a May 31 deadline for the budget for the fiscal year beginning July 1.

The fact sheet was compiled by Birtan Aka Collier, the deputy commerce director in charge of the international action. It lists 14 companies. Two- thirds of them are Philadelphia-area companies that Collier claims landed export contracts or began overseas operations as a result of hustle by her unit, set up in 1984. The reat are foreign companies that set up shop in the Philadelphia area, likewise because of her team's hustle.

But executives with three companies were surprised to learn of their inclusion because they say the city has played virtually no role in their business decisions.

Five other companies say the city deserves some credit, but other players deserve as much or more.

One of the international joint ventures touted on the fact sheet never got off the ground because of frustration with red tape, while another one bit the dust when its Philadelphia partner went out of business.

Only one company official readily praised the city's Commerce Department. Three companies could not be reached for comment.

Asked last week by a reporter for a fair way to measure the success of her division's work, Collier, a former Philadelphia National Bank vice president, dispatched a copy of the fact sheet, dated April 16.

"We've sown a lot of seeds," she said. "Without us accompanying them (business executives) on trips (overseas) and giving them contacts and doing the legwork, it would have taken years for them to do this on their own - or they might not have been able to do this at all."

Confronted this week with the discrepancies, Collier suggests that some company executives who downplay her group's work may be "confused." She also suggests that some companies may be reluctant to publicly discuss the secrets of their exporting success for competitive reasons.

But she also acknowledges: "It's very difficult to say, black and white, whose help did what . . . You always have the case of different people saying, 'I did this. I did that.' It's never that clear cut a case."

At its height, Collier's unit comprised four "trade specialists" and two secretaries and had a $350,000 annual budget. Cutbacks last year have pared the effort in half.

Collier's crew has sponsored dozens of how-to sessions and has leaned on the area's congressional representatives to use their influence to steer visiting foreign trade delegations to the Philadelphia area. The fact sheet says 69 such foreign delegations have visited the area.

And on several occasions, Collier and her staff have met potential foreign investors on their home turf. City officials logged trade missions to Africa and the Middle and Far East.

Collier's international economic SWAT team, to be sure, has had its successes.

The city's effort won a commendation for trade promotion from a quasi- public Japanese group based in New York, and Robert Kistler, who directs the regional office of the U.S. Department of Commerce, gushes, "They helped to put the city on the map."

But they didn't help Ed Hiergesell, president of H-B Instrument Co., one of the firms on the fact sheet.

He says his company has sold relays and traffic-signal equipment in Latin America and in the Pacific Rim since the mid-'70s thanks mainly to ''crackerjack people" in the federal Commerce Department, who helped him locate overseas distributors. He also credits "real pros" who work for the state Commerce Department.

"I never had real success with the city," Hiergesell says. In fact, he moved his 50 jobs from North Philadelphia to Collegeville, Montgomery County, last year to protest his dissatisfaction with declining city services and rising inner-city crime.

Most people involved in the business of generating exports and foreign investment agree that affixing credit is a tangled whodunit. American companies that export and foreign companies that invest here rarely deal with just one agency.

"Honestly, how do you separate whose accomplishment is whose?" asked Hans H.B. Koehler, who since 1982 has directed the Philadelphia Export Network, affiliated with the Wharton School. "The city did some good, but there were a lot of other organizations in town that helped."

He says the city's effort involved "a lot of hoopla" and "thunder" that occasionally caused friction with the other agenices.

Consider the pharmaceutical plant SmithKline Beecham runs with the Chinese in Tianjin, and its neighbor, a rug-making factory owned by the Chinese and two Philadelphia brothers, Richard and Roy Maloumian. Both the pharmaceutical plant and the rug factory are included on Collier's fact sheet.

The giant pharmaceutical company and the family-owned Maloumian Oriental carpet business both had decades of global dealing behind them when they looked toward China. SmithKline set up an office in Tianjin in 1979, the year Philadelphia set up a sister-city relationship there. The Maloumians began talking to the Chinese in the late '70s about the rug factory. Both companies used former Mayor William Green's influence in negotiating with Chinese officials.

But because foreign joint ventures often take years to put together,

neither company's Tianjin deal was signed until after Goode, who was Green's managing director, took office in January 1984.

"All the cake needed was the icing," says Richard Maloumian, adding that Goode's administration was "very involved" in "final touches."

To some degree, the city's economic SWAT team can take credit for the eight butcher shops in Japan owned partly by Colonial Beef of South Philadelphia. Colonial president Ron Davis got the idea for the shops during a city- sponsored trade mission to Kobe, Japan, in 1986. On the last day of a trade fair there, he sold 15,400 pounds of beef to Japanese consumers - enough to convince him he could make money with retail stores.

But the city's economic team didn't introduce him to the partner who helped him finance the shops. Davis, whose company has exported beef worldwide since 1976, opened the stores with Naigai Beef Co. Ltd., one of Colonial's long-time commercial customers.

At Sonobond Ultrasonics in West Chester, another company on the fact sheet, company president Ronald Mazik says that six weeks ago he wrapped up a "very large sale" for equipment for the Chinese automotive industry using contacts developed through a city-sponsored Chinese trade mission to Philadelphia.

But credit for a state export award won by the company in 1988 - an award cited on the fact sheet - goes mostly to the company itself, Mazik says. ''We're aggressive and we've been international a long time," says Mazik, who has worked four years in Europe himself, and whose vice president has 15 years' experience working in Japan.

Goldenberg Candy Co. of Philadelphia also appears on the fact sheet, alongside another company with this notation: "2 companies we worked with very closely."

"They talk a good game," laughs Ed Goldenberg, company president. He says the city has brought some foreign trade groups to his factory, "but it has not been productive for us."

Goldenberg says fans of his Peanut Chews in Israel, Kuwait, Spain, Panama, Italy, Japan, Australia and elsewhere can thank the state Department of Agriculture, which runs export-promotion programs.

Another who questions whether Philadelphia is justly taking credit is Maria Louisa Maccecchini, whose Swiss firm, Bachem Bioscience, set up an American beachhead in the University City Science Center in West Philadelphia in 1987.

Maccecchini, a Bachem vice president, says credit belongs to a ''wonderful" state commerce official, who chauffeured her throughout the Philadelphia area over several days.

On one occasion, she recalls, they were accompanied by a city official. Then, shortly after she signed a lease, "somebody from the city Commerce Department came over and shook my hand and gave me a Liberty Bell."

Vincent Genovese, a vice president of Augusta Aviation Corp., an Italian company, had a different experience. His company built a $5 million office building and hangar for assembling helicopters at Northeast Philadelphia Airport in 1986 largely because he was so impressed by the city's hustle.

Genovese's firm had been renting offices in Trevose, Bucks County, a warehouse in Trenton and a hangar at the airport. When the company decided on more permanent American quarters, Genovese first turned to Trenton officials to help him find space.

But Charles Pizzi, a former Comerce Department director who now heads the Greater Philadelphia Chamber of Commerce, heard about the company's Jersey overture and called Genovese before he had a chance to sign a deal on the other side of the Delaware.

Pizzi opened talks brashly: "We offer the best possible services in terms of facilities and accessory services and manpower," according to Genovese.

Pizzi delivered: $2.7 million in low-interest financing from the Philadelphia Industrial Development Authority, a quasi-public agency, and a $600,000 federal grant.

"If he had not come to us at that time, I do not know whether we would have gone to Philadelphia," says Genovese, whose firm employees about 150 people here.

Collier's boss, Chris Cashman, first deputy director of commerce, cautions against measuring the city's efforts "in dollars and cents." He says Collier ''got companies thinking about what's going on overseas and broadened Philadelphia's overseas exposure with what was from the beginning a very limited budget."

Among those who aren't sure that the city's international team would be missed is Lee Stull, an ex-diplomat who retired in 1988 as managing partner of the non-profit, business-backed Greater Philadelphia Investment Network.

"However regretable it is, I do not think it is tragic (if the effort ends) because there are other organizations . . . who are quite effective and are willing and ready to cooperate," says Stull, who was instrumental in landing the Swedish Ikea home-furnishings store in Plymouth Meeting in 1985.

Adds Colonial president Davis: "It will not be irreparable damage if the city scales back. The sad part is they were heading in the right direction."

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