More than 400 jobs in the coveted health and biotechnology industry are coming to Gaithersburg, a huge win for the city of 60,000 residents in Montgomery County.
But the jobs — split between pharmaceutical company Novavax (300 employees) and Adventist HealthCare (111) — do not represent a net gain for the county. Both businesses are moving from Rockville.
In a still-challenging economy, a healthy competition has grown between the two Montgomery County cities, with each jurisdiction earning some wins, but Gaithersburg apparently in the lead during the most recent round.
“There’s always been healthy competition, particularly between Rockville and Gaithersburg,” said Tom Lonergan, Gaithersburg’s director of economic development. “It’s a tough economy, and the competition is cutthroat, particularly here … where multiple areas are trying to make themselves the center point of the high-tech corridor that we’re in.
“Gaithersburg wanted to distinguish itself. This is just one of many that we believe puts us heads and shoulders above the rest.”
In addition to Novavax and Adventist, Lonergan said the city is working on luring a third Rockville company — and its 300 employees — to Gaithersburg. Lonergan declined to name the company because the deal had not yet been struck.
Officials from Novavax and Adventist did not respond to requests for comment.
Gaithersburg has been able to lure companies because of the creation of the Economic Development Opportunities Fund, which was formed through a one-time, $2 million appropriation from the city’s general fund in 2012.
The money was set aside to help accommodate large businesses interested in moving to the city. Gaithersburg has a separate fund — the $190,000 Economic Development Toolbox — for smaller businesses either looking to expand or move. Money from both funds goes toward building out and making improvements to space for companies that successfully apply.
Companies applying for money from the toolbox can be reimbursed up to $50,000 after moving to the city. Both Novavax and Adventist are slated to receive more than $100,000 after their moves.
“It’s rare for municipality to offer funding such as this,” Lonergan said. “It’s typically done at the state or county level, but [not] the municipal level. … We’ve always kept our financial house in order. We’re able to dedicate funds to attract business rather than paying off debt.”
Lonergan said Gaithersburg wasn’t picking on Rockville — “We’re not trying to rub anything in anybody’s faces” — and said the city courted companies from outside of the county and the state, too.
It just so happens the most recent examples of business success for Gaithersburg come from the city to the south.
Amanda Wilson, communication and events manager for Rockville Economic Development Inc., said the moves of Novavax and Adventist were not signs that the city was losing its businesses to Gaithersburg.
“We don’t see it as a trend,” Wilson said. “We see companies moving back and forth all the time. … It’s just kind of business. Companies come in, companies go out.
“We did think that it was unfortunate to see those two companies go, because they of course have a long history [here]. But we’re always excited to hear about new companies [coming to Rockville].”
Steven A. Silverman, director of economic development for Montgomery County, said as long as businesses were staying in the county, it didn’t matter if they moved from one city to another.
“It’s very helpful for the county that both Rockville and Gaithersburg support … job creation and business attraction,” Silverman said. “We’re agnostic on them moving from one area to another.”
He also said the battle between cities was not one-sided. Meso Scale Discovery, which analyzes array-based biological measurements for research in life sciences and for biodefense, recently agreed to move to Rockville from Gaithersburg.
“It’s not terribly unusual, and not a reflection on either city,” Silverman said. “It’s more of a reflection on the bottom line of what someone is going to have to pay for rent.”
Both cities can claim proximity to Washington, access to mass transit and an educated workforce when making their pitches to businesses.
But Gaithersburg, with its economic development funds, has given itself a leg up on the competition. Wilson said that Rockville has provided some funding incentive for businesses on a case-by-case basis in the past, but there is no formal program in the city.
Silverman downplayed the importance of those incentives, however.
“Business deals are sweetened by financial incentives, but it has to make business sense for the company to make the move in the first place,” he said. “Adventist was looking in the area for new space and, at the end of the day, they found a building that made economic sense to them.
“It happened to be in Gaithersburg, and the support they got from Gaithersburg was in effect part of the bottom line that made the transaction make sense.”
Lonergan, the Gaithersburg economic development guru, said the city would continue to promote itself as a place for local businesses to move. Most businesses, he said, are looking to relocate “within a relatively close proximity.”
So when a business is ready to move, Lonergan wants to make sure Gaithersburg is at the top of the business’s list of locations.
“We have a very good reputation for business here,” he said.