David Alan Rech (Scribe) Testimony Before City Council, February 16, 2005

At the public hearings held by City Council to consider the legislation to eliminate the job-killing Business Privilege Tax, many individuals came forward to tell their stories.  Perhaps the most compelling came from a model citizen who runs a model firm.  Unfortunately, this Philadelphian will be moving good jobs from the City of Brotherly Love if City Council does not act to reduce the high cost of doing business in Philadelphia.  At the request of Philadelphia Forward, David Rech, President of Scribe, a publishing services company located in South Philadelphia, agreed to make his testimony available in this format.

I am David Rech, president of Scribe, a publishing services company located in South Philly.

I am here to urge you to do what you can about the high cost of doing business in Philadelphia.

The point of my testimony today is not to remind you 
*small businesses are the backbone of Philadelphia's economy
*of the high commercial vacancy rates in Philadelphia
*that small business carry more than our fair share of the tax burden
*or that the loss of businesses and population in Philadelphia is astounding.

You are aware of these issues, and I cannot tell you how to solve these complex problems.

And despite the apparent egotism that would seem to come from the following statements, I have a much more important story to tell you.

I represent to Philadelphia both its greatest hope and bleakest look into the future.

I am, as you will hear, a statistically ideal Philadelphia resident--the type of person who represents the answer to Philadelphia's woes.

I am also potentially Philadelphia's most depressing story--auguring a bleak and depressed future for the City.

I moved to Philadelphia to attend graduate school, with the notion of staying on 4 years.  14 years later, I am still here.  I love Philadelphia, and plan to remain here for the rest of my life. 

I am active in the community, and humbly believe that all members of Philadelphia's Government should hold me (and those like me) in the highest regard.

Let me reiterate, I love Philadelphia.  And while I could live anywhere I chose, I plan to remain here for the rest of my life.

In 1999, I started Scribe, a company that offers editorial and production services for what we call multipurpose publishing. 

We work for over 30 publishers and our books can be found all over the English speaking world.

Since our inception, we have experienced vigorous annual growth, with no foreseeable end to that.

As of March 1st, we will employ 24 people.  We pay good wages, and offer health benefits to all of our full-time employees.

Hire a diverse and significant cross-section of the population.  Throughout our company's history, we have employed: part-time college students, welfare to work mothers, people with disabilities, and many recent college graduates who remain in Philadelphia because of the jobs we offer.

Over 50% of our employees live in Philadelphia.  Four people moved here specifically to work for Scribe.

Before I continue, let me tell you a little bit about my industry: 

Outsourcing, especially to oversees companies, is the current buzz

Scribe is a U.S. based company to which publishers outsource

Scribe due to our use of technology and efficient process management is
almost able to compete with companies in China, India, and the Philippines.

Scribe represents for Philadelphia a significant model for long-term
business development.

In fact, our business model is considered to be stronger than our off-shore competitors.

As I stated, I represent the hope for Philadelphia.

But I also represent the potential for a bleak future here in Philadelphia.

A little more information before I continue:
At one point, Philadelphia was the hub of publishing
When I began my business, there were 9 competitors, or similar companies, for Scribe
The last one moved its operation to the Philippines, and its offices out of Center City.

Like other companies, Scribe is experiencing increased revenues, but more difficulty with cash flow. There is also a downward pressure on pricing for our services.  Thus, my salary has not increased.  This threatens the valuation of Scribe, which raises a variety of problems

Currently, Scribe believes the only way to remain economically viable is to reduce our operating expenses.  The only way we can see accomplishing that is to move our operations outside of Philadelphia.  We have instituted a plan to do just that.

We are not, however, moving to India or China.  We believe U.S. workers to be the best for our industry.  As I mentioned, we believe our business model to be a stronger one than the off-shore model.

*requires a well-educated workforce
*benefits from the presence of institutions of higher learning
*prefer urban area, with culture and arts that accompany it
*must have close proximity to NYC, Boston, DC, and Nashville
*benefits from cultural diversity

In other words, Philadelphia is an almost ideal situation.  But as a business person, I must look at the one thing that drives Scribe the most, our bottom line.

And the bottom line tells me that Philadelphia is prohibitively expensive for a company like mine.

I need to reduce my operation costs a few percent. 

A change of a few percent of operating costs would make it such that moving our operations would not be necessary.

A change of a few percent of operating costs would mean that Scribe would not be instituting a Philadelphia hiring freeze begriming March 1st.

A change of a few percent of operating costs would mean that we would not be planning to shrink our Philadelphia operation.

A change of a few percent of operating costs would mean that instead of eventually moving out of Philadelphia, Scribe would continue to grow here.

Instead of examining at Huntsville, Columbia, Jackson, Ft. Lauderdale, or Charlotte, a change of a few percent of operating costs would mean we would look no further than home--Philadelphia.

While I understand the need for the City to bring in revenue, and I would be lying to you if I told you that the BPT is the sole reason why we must move from the Philadelphia, I can tell you that it is only a few percent that is causing me to move my growing, thriving, technologically based, environmentally friendly, culturally enriching business out of Philadelphia.

And while I would urge a complete reworking of the tax codes in Philadelphia, the BPT represents an important few percent!

Thank you.