Just seven weeks after signing a $2 million contract with a global public relations firm to resuscitate Indiana’s battered image, state officials have canceled the agreement.
Recent corporate investment and job creation announcements are evidence that the state doesn’t need New York-based Porter Novelli’s continued services, said Chris Cotterill, the Indiana Economic Development Corp.’s executive vice president.
Cotterill on Friday also cited an "ongoing focus on cost management" for the decision to beef up existing marketing efforts in place of ongoing guidance from the consultants.
The decision was described as a "knee-jerk reaction" by political rivals.
The state paid $365,000 to break the contract, a fee that covers strategy sessions IEDC officials already had with Porter Novelli staff.
It was mid-May, after national fallout from a controversial religious freedom bill that looked as if Indiana officials were sanctioning discrimination against gays, before state and Porter Novelli officials signed the official contract, which was retroactive to April 1. The termination agreement was dated June 30.
State and PR officials emphasized the decision was amicable.
"We are appreciative of Porter Novelli’s initial guidance that will enable us to redouble our efforts to attract business and tourism to Indiana through current initiatives with local agency support as needed," Cotterill said in a statement that endorses the agency.
Brad MacAfee, Porter Novelli’s president for North America, said his firm respects the IEDC’s decision and knows the state agency will continue work on Indiana’s global brand reputation.
"We hope that the framework developed by Porter Novelli, which sets forth the best practices for future efforts, proves useful to our trusted colleagues in the IEDC," he said in a statement included in the IEDC’s announcement.
The IEDC released copies of the contract termination agreement. In it, both parties agree not to make negative statements about the other at the risk of being sued.
In the April hiring announcement, Victor Smith, Indiana’s secretary of commerce, said the goal is to "remind the country that Indiana remains a great place to live, work and visit."
Elected officials had already hustled to approve a follow-up to the Religious Freedom Restoration Act, making it against the law in Indiana to refuse to serve customers based on sexual orientation. Pressure from various organizations, including the National Collegiate Athletic Association, made it critical that the issue be resolved before the NCAA men’s Final Four basketball tournament in Indianapolis.
But damage to the state’s reputation was already done. And it’s unclear whether it has fully been undone.
Chris Gahl, vice president of the Indianapolis tourism group Visit Indy, this week told the Associated Press that the controversy created by the Religious Freedom Restoration Act still hovers over his organization and efforts to attract conventions.
The final effect may not be known for years because trade shows and conventions are planned well in advance, the AP reported.
In Thursday’s announcement, the IEDC’s Cotterill also mentioned Indiana’s placement on a recent ranking as proof the state is doing well.
Indiana recently placed No. 1 in cost of doing business on CNBC’s ninth annual list of America’s Top States for Business, he noted.
Cotterill didn’t include the Hoosier State’s full report card, however. Indiana ranked 13th overall, a performance driven by its relatively low cost of doing business and No. 4 ranking in cost of living. But quality of life was given an abysmal 46th-place ranking, and workforce finished 42nd.
Quality of life scores were based on crime rate, anti-discrimination protections and overall population health. The workforce scores reflected the quality and availability of workers, including average education levels and relative success of the state’s workforce training programs in placing participants in new jobs.
John Zody, Indiana Democratic Party’s chairman, on Thursday afternoon issued a statement critical of the contract termination. He described it as a "knee-jerk decision" that is evidence of mismanagement by Republican Gov. Mike Pence’s administration.
IEDC officials are focused on good economic development news, which included Smith Brothers of Berne’s announcement last week that it plans to create up to 266 jobs in the next six years.
The Adams County furniture-maker invested $5 million to build a two-story expansion onto its existing 215,000-square-foot factory, work that was completed in November. Now it will expand operations to occupy the 110,000-square-foot addition.
Pence led the announcement at the company, which now employs more than 420.