Top 2013 news: Local economy affected by sequestration, shutdown -- Gazette.Net


With the federal government playing a substantial role in Montgomery County’s economy, the biggest business stories of 2013 focused on sequestration and a shutdown.

The 16-day government shutdown in October put many of Montgomery and Frederick counties’ roughly 51,000 federal workers out of work. That came after earlier sequestration budget cuts had furloughed many employees.

The Bethesda-based National Institutes of Health cut 5 percent, or $1.55 billion, of its fiscal 2013 budget, awarding about 640 fewer research grants. Other government agencies and private contractors were affected.

Bethesda defense giant Lockheed Martin furloughed about 2,400 employees companywide during the shutdown, with executives directing them to use vacation time. The shutdown cost the company about $40 million, but sequestration cuts were not as bad as originally expected, with the impact about $400 million, CFO Bruce Tanner said.

Rockville information technology business Terrapin Systems laid off about 170 employees after losing a contract with the National Cancer Institute.

Some contractors were not heavily affected. Fisher BioServices, which has about 330 employees in Maryland, including 260 at its Rockville lab, had enough work through its private segment that the lag in government business did not require the company to lay off employees, said Dennis Barger, vice president and general manager of the company. “We were fortunate,” he said.

Private sector picks up

While the federal segment stalled, the private sector in Montgomery and Frederick counties picked up steam, adding about 11,000 jobs in the past year, according to federal labor figures. That was the most jobs created in the two counties since 2000.

Among those adding workers was Wegmans, which opened its first grocery store in Montgomery with about 550 employees.

Future jobs are expected to come from Gaithersburg biotech MedImmune, whose parent company announced it will establish a global research and development center at MedImmune’s headquarters.

Marketing and specialty care commercial functions will be centered in Gaithersburg, with about 300 jobs moving there from Wilmington, Del., by 2015.

Construction on the $2.2 billion Purple Line, a 16-mile rail line that would connect Bethesda and New Carrollton, could start in 2015, as officials expect to start acquiring right-of-way property this year. Six private-sector teams have submitted statements of qualifications that they hope will lead to work on the long-proposed project. Officials hope to choose a partner and recommend the final agreement to the state Board of Public Works within a year.

Officials also hope the $120 million Silver Spring Transit Center, which has been plagued by construction delays and cost overruns, will be completed this year.

The first phase of Pike & Rose — one of the region’s largest mixed-use development projects, replacing Mid-Pike Plaza in North Bethesda — is expected to be completed this year. The first phase includes some 170,000 square feet of retail, 80,000 square feet of commercial office and 493 residential units.

The apartment units should open by May, with an iPic movie theater, 32,000-square-foot Sport & Health fitness club, a park, offices and restaurants such as Del Frisco’s Grille, Roti and ShopHouse Southeast Asian Kitchen to follow by next fall, said Evan Goldman, vice president for development of Rockville-based Federal Realty Investment Trust.

Rain tax, health insurance marketplace opens

Last year also saw a proposal to expand the annual storm water management fee — which some dub a “rain tax” — to more property owners. The Montgomery County Council passed a storm water program that extends the fee to most businesses, while officials said most homeowners will see a reduction in what they currently pay.

The fee — fueled by a state law passed in response to an order by the U.S. Environmental Protection Agency to clean up the Chesapeake Bay — will be phased in over the next three years. The fee could be quite hefty for some such as auto dealers and shopping center owners that have large parking lots.

In October, Maryland’s new health care exchange system, a key part of the federal Affordable Care Act, opened and individuals started shopping for health insurance. The small business program was delayed until April.

Maryland is one of 16 states, along with Washington, D.C., operating their own exchanges.

Last year was a big one for numerous business leaders, including Rachel K. King, CEO of Gaithersburg biotech GlycoMimetics. King was named board chair of the Biotechnology Industry Association, or BIO, the industry’s leading national trade group. The Tech Council of Maryland also honored King with its 2013 Executive of the Year award, and GlycoMimetics filed to go public.

The housing market continued to recover in 2013 from its doldrums during the Great Recession. Montgomery and Frederick saw sales of existing homes post gains in most months from a year earlier, including a 26 percent rise in Montgomery and 15 percent increase in Frederick in October. Prices also rose accordingly.