L EXECUTIVE OFFICE INTER-COMMUNICATION To:...
Transcript of L EXECUTIVE OFFICE INTER-COMMUNICATION To:...
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EXECUTIVE OFFICE INTER-COMMUNICATION
From: DOROTHY BARGHOLZ — To: HONO LE THOMAS H. KEAN
ADMINISTRATIVE ASSISTANT GOVERNOR
(Instttut&on or Department)Date: DECEMBER 13, 1982 RE: BRIEFING FOR TUESBAY
DECEMBER 14, 1982
I. MEETING/A.T. & T. REPRESENTATIVES/COMMISSIONERPUTNAM/REPRESENTATIVES OF BUSINESS COMMUNITY!BASKING RIDGE 9:00—9:30
295 North MapleBasking Ridge
You will be greeted when you arrive and escortedto the meeting site.
Attending the meeting will be:
Thomas Bolger, Executive Vice-President AT & T(Chief Executive Designate, “MidAtlantic Bell”)
Commissioner Borden PutnamDeputy Commissioner Henry BlekickiBruce Coe, President, New Jersey Business & IndustryRobert Ferguson, CEO, First National State BankCharles Ross, Executive Vice President, Merrill LynchRobert Smith, CEO, Public Service Electric& GasRonald Vrba, General Manager, Bozell & Jacobs
Commissioner Putnam advised that this meeting hasbeen arranged with AT & T “to encourage Bellregional operating company to establish itsheadquarters offices in New Jersey”.
The agenda, as forwarded by the Commissioner, isas follows:
1) Introductions - Commissioner Putnam2) The Commissioner will introduce you at this
point for your remarks. (The Commissionernoted that your “remarks” can be verybrief and general to express our interestin having the new company located withinthe State and offering our assistance.)
(Suggested remarks by Katherine Brokaw are attached.)
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3) Audiovisual Presentation by Commissioner Putnam
and Deputy Commissioner Blekicki. The
Commissioner noted the presentation will take
approximately 20—25 minutes. (Please see
attachmefl regarding this presentation.)
II. MEETING/CHANCELLOR HOLLANDER, PRESIDENT EDWARD
BLOUSTEIN, LINDA STAMATO, DONALD DICKERSON!
STATE HOUSE10:30—11:00
Assistant Counsel Sue Matalucci and Chris
Daggett will staff this meeting.
President BlouStein of Rutgers requested this
meeting on behalf of himself, Linda Stamato,
Chair, Rutgers Board of Governors, and Donald
Dickerson, Vice Chair.
In President Bloustein’s written request, he
noted the concern of the Board of Governors
(as evidenced by two resolutions previously
given you by President Bloustein) regarding the
1982—83 tuition increase and the 1983-84
University Budget. The concerns of the Board
also include the long—range prospects of higher
education in New Jersey.
III. SCHEDULING MEETING/SIMONE TUCHI AND TEW
THURSTON/STATE HOUSE11:00-12:30
As per your approval.
IV. SWEARING-IN GUSTAVO “GUS” MELLANDER/STATE HOUSE. .12:45-1:00
Secretary of State Burgio will administer the
oath of office to Mr. Mellander as a member
of the State Board of Education.
Mr. Meilander’S mother, Mrs. Adela Mellander will
attend as well as Chancellor Hollander, Dr. Cooperman,
___ ____
Honorable Thomas H. Kean
trustees, student leaders, administrators and facultymembers at Passaic County College. Senators Bubbaand Graves have also been invited.
A reception will be held immediately following theswearing-in at Department of Education (Board Room).You have been invited to attend, if your schedule allowstime.
V. MEETING/ADAM BRONER, DIRECTOR, OFFICE OFECONOMIC POLICY, ET AL/STATE HOUSE l:OO-l:3O
Lew Thurston and a representative of the Treasurerwill staff.
Participants at this meeting include:
Dr. Joseph Seneca, Chairman, Economic PolicyCouncil (Professor of Economics, Rutgers)
Dr. William Freund, Member, Economic PolicyCouncil (Senior Vice President & ChiefEconomist, New York Stock Exchange)
Dr. Dwight Jaf fee, Member, Economic PolicyCouncil (Professor of Economics, PrincetonUniversity.)
Dr. Jong You, EconomistOff ice of Economic Policy
Mr. Broner advised that this meeting was requestedto discuss the 1983 outlook for the U.S. andNew Jersey economics. (Mr. Broner noted that ata future meeting, they would like to discuss thegeneral role of the EPC.)
A copy of your Economic Report for 1982 isattached which was forwarded by the EPC.
Following your meeting with this group, theywill meet briefly with members of the press.
VI. MEETING/LEW THURSTON/CARY EDWARDS, GARY STEIN,TREASURER BIEDERMAN AND REPRESENTATIVES OFBUDGET AND ACCOUNTING/STATE HOUSE 1:30-3:00
Re: 1984 Budget
REMARKS OF GOVERNOR THO1AS H. KEAN
AT&T MEETING - BASKING RIDGE
VDECEMBER 1L 1982
WE WANT TO SELL NEW JERSEY TO YOU AS A LOCATION FOR THE
MID-ATLANTIC REGION HEADQUARTERS OF THE BELL SYSTEM.
NEW JERSEY IS IDEAL FOR CORPORATE HEADQUARTERS FOR SEVERAL
REASONS:
• IT IS CLOSE TO BOTH NEW YORK AND PHILADELPHIA.. BOTH
MAJOR CENTERS FOR COMMUNICATION.
IV
IT IS ALSO CLOSE TO THE OTHER MID-ATLANTIC STATES
WHILE PROVIDING EASY ACCESS TO NEW YORK.V
O NEW JERSEY IS KNOWN FOR THE HIGH LEVEL OF SKILLS
IN ITS LABOR FORCE.V
• THE STATE ALREADY HAS MANY NOTABLE RESEARCH FACILITIES,
BOTH PUBLIC AND PRIVATE.V
• NEW JERSEY WELCOMES TECHNOLOGICAL FIRMS AND WILL DO
ALL IT CAN TO HELP THEM1 THE GOVERNOR’S OFFICE OF
POLICY AND PLANNING HAS A VERY FAVORABLE REPORT ON
THE FUTURE OF TELECOMMUNICATIONS INDUSTRIES INV
NEW JERSEY1V
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O THE ECONOMIC DEVELOPMENT AUTHORITY PROVIDES LOW-COST
FINANCING FOR BUSINESSES WHICH MOVE TO NEW JERSEY
OR EXPAND THEIR FACILITIES IN THE STATE1
• FORTUNE MAGAZINE RATED OUR STATE AS THE MOST LIKELY
LOCATION FOR CORPORATE HEADQUARTERS1
• SEVERAL COMPANIES HAVE BUILT NEW HEADQUARTERS IN
NEW JERSEY:
MIDLANTIC BANKS) IN EDISON1
BENEFICIAL MANAGEMENT CORPORATION,IN PEAPACK-GLADSTONE.
SONY CORPORATION’S HEADQUARTERSFOR OPERATIONS, IN PARK RIDGE4
MANY OTHER COMPANIES HAVE FOUND HOMES IN NEW JERSEY) SUCH
AS PRUDENTIAL AND JOHNSON JOHNSON1
THERE ARE SEVERAL OUTSTANDING CONFERENCE CENTERSIN THE STATE,
LIKE THE NEW HYATT-REGENCY COMPLEX IN NEW BRUNSWICK THE PARSIPPANY
HILTON,
NEW JERSEY’S TAXES ARE VERY COMPETITIVE WITH THE TAXES OF THE
NEIGHBORING STATES WHICH WOULD BE THE OTHER CANDIDATES FOR MID-ATLANTIC
HEADQUARTERS
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COMMISSIONER PUTNAM, AND THE MEMBERS OF HIS STAFFJIM HUGHES OF THE ECONOMIC DEVELOPMENT AUTHORITY, HARRY CALLAGHANOF THE DIVISION OF ECONOMIC DEVELOPMENT --- ALL STAND READY TOTELL YOU MORE ABOUT THE ADVANTAGES OF LOCATING IN NEW JERSEY1
I’M SURE YOU WILL FIND THEIR PRESENTATION VERY HELPFUL.I HOPE YOU WILL PLACE YOUR HEADQUARTERS IN NEW JERSEY. ITREALLY IS THE BEST CHOICE.
THANK YOU1
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OBJECTIVE: Convince the Mid-Atlantic Region to
locate its headquarters in New Jersey.
New Jersey is in competition with other locations within the
geography of the Mid-Atlantic Region. Accordingly, this pre
sentation will intentionally be competitive. . .polite, but
definitely competitive.
We know we have the best product. It is our task to prove
that assertion and lead the Mid-Atlantic Region to conclude
that their headquarters should be located in New Jersey.
The presentation is divided into five sections:
1. An opening overview.
2. The logical reasons for selecting New Jersey.
3. The emotional reasons for selecting New Jersey.
4. New Jersey’s commitment to the Mid-Atlantic Region.
5. Questions, answers and discussion.
We began preparing our presentation by spending a lot of time
projecting ourselves into the position of key decision-makers
fo the Mid-Atlantic Region. We wanted to understand what
would be their professional and personal needs? What factors
would be important tà them in the selection of a site for
their regional headquarters?
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We began with a review of FORTUNE MAGAZINE’s 1977 research
survey on “Facility Location Decisions.” We also reviewed
information from the Harvard-MIT Joint Center for Urban
Studies. Anothersource of pertinent information’ came from
across the country, specifically a December 1981--study by -
the Asociation of Bay Area Governments which cited the
most important location factors for high tech firms.
Not surprisingly, time-proven criteria appeared in survey
after survey. These included such factors as:
1. Nearness to markets.
2. Labor force supply, quantity and cost.
3. Availability of suppliers.
4. Transportation systems.
5. Quality of life amenities.
‘Then, a few weeks ago, we came across another source document
that helped us better assess anticipated needs of the Mid-
Atlantic Region. That source was the Bell System’s own maga
zine. Specifically, the Special Edition titled, “The End of
the eginnin’g.”
Clearly, the world of AT&T is. changing. The neatly organized
pre-divestiture Bell System will become two distinct organisms
after divestiture. The regional companies face iinpcrtant
strategic decisions regarding their post-divestiture organiza
tion. As “The Shape of Things to Come” article points out:
“Four alternative organization models present them
selves on a spectrum ranging from highly decentral
ized to highly centralized: ‘ -
Model 4tl - HIGHLY DECENTRALIZED
Current operating company line and staff units
would remain decentralized and, in place. A
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small regional planning and financial staff
would be formed as a regional headquarters to
guide, direct, and coordinate activities within
the region.
Model # 2 - PARTIAL CENTRALIZATION OF STAFFS
“Corporate” staff functions (finance, planning,
legal, regulatory, public relations/public
affairs) would be regionally centralized,
leaving operational staffs decentralized.
Model #3 - COMPLETE CENTRALIZATION OF STAFFS
All staff units would be regionally centralized.
Model #4 - HIGHLY CENTRALIZED
All line arid staff units would be regionally
centralized.”
Now, we don’t know which form of organization the Mid-Atlantic
Region will adopt, but we do know (as our. own underlining
shows) that personnel considerations will be key to any struc
ture that evolves. This importance of staffing is highlighted
again in the same article cited before:
“Another organizational requirement (for the
regions) will be the replacement of staff
functions -- ranging from financial and techni
cal planning to supplying central administrative
services —- formerly supplied by the General
Departments under the License Contract Some of
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these support functions will be assumed by the
regional staffs, while others will be delegated
to the operating companies’ central staff unit.”
So here we have an important point of distinction regarding
the needs of the Mid-Atlantic Regional headquarters. Not
unexpectedly...and,to our delight. ..it’s. the PEOPLE factor.
The Region will need a readily available pool of qualified
professionals in such disciplines as finance, legal, public
relations, marketing, and the like.
The state of New Jersey has those professionals. They’re
here.. .now They’re part of our quality of life.. .now
They’re happy and settled.. .now We don’t have to recruit
them, and the Region doesn’t have to ask them to move or
pay for such a move.
The very next article in this special issue of BELL TELE
PHONE MAGAZINE is titled, “How Now, Dow Jones (et. al.) .“
A quote from that article clearly delineates anàther impor
tant point of distinction regarding Region needs:
“On their own for the first time in nearly 100
years, the (operating) cQmpanies will be competing
for capital in the same arena with General Motors,
Genentech, and former parent AT&T - with the Iigh
fliers and the bluest of the blue chips. As tele
communications analyst Harry Edelson of First Boston
Corporation says bluntly; ‘The first thing those
regions need is a feel for the stock market, because
they’ll need to increase their stock price. That’s
the principal reason for talking to analyst,and -. --
those companies will have to do a lot of that.’
But talking to analysts isone of the activities
least familiar to most of the operating companies.”
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And, Harry Edelson is a New Jersey resident. We want to
make sure he’s s-neighbor of the Mid-Atlantic Region, as
well as one of its more important stock analysts.
So, as we set forth, to put together our presentation on the
merits of.New Jersey as a site for the Mid-Atlantic Region
headquarters, we were mindful of our need to addres.s such
time-proven criteria as transDortation systems, quality of
life amenities, and the like. At the same time, we were
very conscious of the importance of addressing those factors
particularly pertinent to the Region’s situation -— namely,
availability of professionals from specific disciplines; and,
establishment and maintenance of strong relationships with
the financial markets.
Let’s now talk about our product:for awhile.. .New Jersey.
Ben Franklin affectionately referred to New Jersey as
“a barrel tapped at both ends.” An apt analogy, for we are
truly a barrel full of delights and surprises. We’re also
very proud of our two best known suburbs.. .New York City
and Philadelphia. Both contribute much as the taps at
either end of the barrel.
Our strategic location, right smack in the middle of the
“Northeast Corridor,” has contributed to our success in
attracting major corporations to New Jersey. Affordability,
accessibility, and hospitality to business have made New Jersey
a to.p choice as a headquarters location. And that’s not puffery,
that’s fact. A FORTUNE MAGAZINE survey of the top 1,000 corn
panies showed that New Jersey was named as “the most likely
choice” for corporate. headquarters.
To provide an overview of business in New Jersey, let’s take
•a short tour and see some of the neighbors the Mid-Atlantic
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Region will have upon locating its headquarters here in
New Jersey. -.-.-. -
‘(A/V segmnt on Corporate New Jersey)
That provides an overview; now let’s probe a little deeper
regarding some of the logical.. .or should we say hard-nosed - -
business reasons why the M1d-Atlantic Region should select
New Jersey. Let’s begin where all business, indeed all
human effort, begins.. .with people.
New Jersey provides nearly 3½ million trained, productive
workers, Of particular interest to the Mid—Atlantic Region
is the concentration of high technology personnel and trained
people for virtully every general business support discipline.
Unlike other regions of the country.. .or, areas within the
Mid-Atlantic Region.. .the New Jersey talent pooi is riot
clustered around one industry, such as steel, or one disci
pline, such as the military/industrial complex. Our own
diversity combined with that of those two large “suburbs” at
each end-of our tapped barrel inure that we have available
• . .here in New Jersey. . .leaders in virtually every profes
siona’l disciline. Many of the denizens of Wall Street are
New Jersey residents. Ditto for Madison Avenue.’ The iriven
tive mind of Thomas Edison and the telecommunications industry’s
own genius, as typified by Bell Labs, has given New Jersey a
rich heritage and continuing’ commitment té research and tech
nology.
The hand-maiden of this well trained, up-to—date. talent pool
is a highly developed and involved educational system. Our
major universities, Princeton and its Institute...f.or Advanced
Studies, where Einstein did much of his outstanding work,
and Rutgers, are orld renowned for producing outstanding
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scientific, business arid political leaders. The universitiesoffer extensive research capabilities to industry, ad Rutgers,by itself, has five research units within its three—campus,23—college system. -
Within the state itself, New Jersey boasts five universities,21 four-year colleges, 22 two-year colleges, a state collegeof engineering and architecture,a state medical and dentalcollege, and seven theological seminaries. Add the taps toour New Jersey metroolex barrel, and.we lay claim to threeof the eight ivy league schools, two of the top ten schoolsfor business and three of the nation’s nine best schoolsfor law. No other section o •the country can offer such aconcentration of academic excellence.
0± the logical considerations the Mid-Atlantic Region mustweigh in choosing a site for its headquarters, people andeducation are fundamental. The Region needs a diverse poolof trained, motivated people. It requires an educationalsupport system to insure a steady flow of new talent as wellas the means ofupdating and improving the skills of thosealready employed. New Jersey quite simply outdistances anycompetitive location when it comes to the quantity, qualityand diversity of its labor pool. And, we have the educationalmuscle to insure that we maintain that leadership.
Now, let’s tackle today’s hottest buzz words: high technology.
High technology. . .the magic words that promise to lead usfrom the 20th century to the 21st century. Greats Here inNew Jersey we’re ready. In fact, we used “high tech” toget the 20th century off its duff and moving.
We can cite the accomplishments and memories of Edison andDuPont; Hyatt and Baekeland in plastics; Weston in electrical
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rnachinery;VDumont in television; Einstein in mathematicsand physics; -and,a host of others. But that’s yesterday. V -
What about today? - V -
O.K., let’s talk--today. “High tech” is the child of-two
letters, “R” and “P”, •which stand for Research and Develop—ment. That’s where it all begins, in R&D, and that’s where V
New Jersey is a clear leader. An astonishing number of ourtotal work force is engaged in R&D. More than 85,000
people work in an estimated 500 R&D labs throughout the
state. Capital investment in R&D buildings and equipment
in New Jersey exceeds $800 million. It’s estimated that
the state’s induEtrial and academic R&D labs are sperding
roughly $4 billion annually in the pursuit and delivery
of “high tech.”V
V
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Our position at the so-called “cutting edge” of technology
is appreciated when one realizes that in terms of dollars
spent, New Jersey leads the nation in privately funded V
research. Nearly 10% of the nationls total R&D dollars
are spent in New Jersey. And, unlike some other locations
that might he considered, 90% Of those funds come from pri
vate ‘industry. Not bad, the leader in R&D and a bastion of
freeenterprise.
VV
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Two situations cited in the November 1981 issue of the
NATIONAL GEOGRAPHIC, which featured New Jersey, serve to
punctuate the high tech environment of our state:
1. “Though there is not a single oil well in the
state, one of the world’s largest petroleum
research centers, Exxon Research and-Engineering VVV -
Company, sprawls along Route 1 at Linden. HereV
scientists are studying how to stretch the world’s
remaining crude oil reserves, and what to do when
we run out.”
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2. “This is a shopping mall, of technology,”
explained Lee Thomas, a specialist in VLSI -‘
(verylarge-scale integrated) circuits.
‘Every scientific discipline you can imagine
.is. repxesented..here.. People work night and
day and on holidays. I love it.’ He (Thomas)
was born in Texas, bu says he’ll never leave
New Jersey. ‘The best brains in the nation
are here.”
Tht last quotation is from an employee discussing his job
at Bell Labs in Holmdel, New Jersey. Of course, Regional
people know more about Bell Labs than we do. They are
probably also aware that such high tech firms as Siemens
Corp., RCA, Perkin-Elmer, Western Union, Phillipe, and many
others are actively engaged in New Jersey. Indeed, the
fruits of technology are found in the fact that one-tenth
of all U.S. patents are issued to New Jersey inventors and
that we count 11 Nobel Prize winners among our citizenry.
Even as we move from pure research, through high tech R&D
to specific telecommunications related applications, we
find New Jersey out in front. As the table shows, New Jer•sey
holds a significantly larger share of the nation’s employment
in telecommunications related SIC’s than the state’s overall
non-farm employment share -- 3% -- would suggest:
SIC k Description US (000’s) NJ (000’s) % of US
3661 Telephone & TelegraphApparatus 141 12.6 9.0%
3662 Radio & TV Communications Equipment 415 23.9 5.8%
4811 & 21 Telephone & TelegraphCommunications 1,106 49.2 4.4%
3671 — 79 Electronic Components 520 19.3 3.7%
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As we’ve indicated, we here-in New Jersey welcome the growing.importance.of “high tech.” ,We’ve been involved in the advance— -- -
ment of technology for a long time. And, our involvement is -
diverse. It’ s not dependent on federal tax money or the onedimenional focus of national defenseneeds.
All in all, we think” the Mid—Atlantic Regions: need to be animportant part of an aggressive, diverse high tech societycan best be met in New Jersey. In our opinion, this is clearlyanother logical reason for placing the Region’s headquartersin New Jersey.
Now, let’s turn to what we perceive as probably the singlemost compelling reason for selecting New Jersey...Wall Street.
Yes, we mean Wall Street.. .Wall Street, New York City, wherepeople very important to the Region’s future work;.and WallStreet, New Jersey,- where many of those same people live andplay.
The importance of Wall’ Street, New York City, to the Mid—Atlantic Region cannot be overstated. It’s estimated thatfully- 90.7% of the access to money in this country is throughthe New York and American stock exchanges. Dealing with -
those who represent and/or influence those exchanges willclearly be critical.
,
Earlier, we quoted from the recent BELL TELEPHONE NAGAZINEarticle regarding post-divestiture financing. We’d like toquote a little further from that same article:
“When the companies are divested, they-can--expectto be peppered with inquiries from analysts on -
such particular aspects of the business as unitvolume growth, revenue growth, the level and kind
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of operating exoenses, the dividend policy, and
the dividend payout ratio, in addition to routine
requests_for annual reports, quarterly reports, - -
and th ‘10K financialreport filed at year—end withSf the Securities -and Exchange Commission.” -
“Analysts’ questions will cover the broader -spec-
trum of the busIness as well —- such as the effects
of continuing deregulation. and competition on
operating company operations, the ramifications
of new technology on the usefulness of current
plant, what new markets the operating companies
plan to enter, arid how the companies think they’ll
fare against their competitors. Those financial
specialists within the companies who find them
selves on the other end of an analyst’s call are
- expected to be ‘conversant with the issues and --
above all —- straioht forward,’ says research
analyst Eileen Poisky of Argus Research Corporation.”
The underlining is ours. It points up the importance of
establishing rapport and building confidence between the
Regions.and the financial community. The goal, of course,
to insure a steady flow of capital •with wlüch to’ develop and
expand the Regions’ business. And here’s where Wall Street,
New Jersey-, enters the picture. -
In preparing for this meeting, we did’ a little financial
research study. We found there are 32 so-called “hard—core”
telecommunications analysts in the U.S. These are the close
followers of the telecommunications industry in general and
AT&T in specific. They’re watching all the Regions very
closely.. .and they’ll be critically important to each- Region’s -
future in the days and years ahead.