Tribal Economies

A revival of private sector investment and public spirit has been key, Yale experts say

A revival of private sector investment and public spirit has been key, Yale experts say

Connecticut Governor Ned Lamont speaks during the groundbreaking for ASML’s expanded research and development facility in Wilton, Conn., Monday, Sept. 12, 2022. ASML is one of leading suppliers to the chip semiconductor industry and currently employs over 2,500 workers at its Wilton location. The $200 million investment will create 1,000 new jobs and upgrade facilities in several ways to improve the overall employee experience.

Tyler Sizemore/Hearst Connecticut Media

Last week, we hosted a unique economic development forum at Yale. It included the state’s largest employers, such as Sikorsky, Pratt & Whitney, Xerox, Travelers, Charter Communications, and Ethan Allen Designs; flourishing new financial and biotech technologies such as Biohaven, Alexion, Point Pickup and mortgage industry disruptor Tomo; multigenerational companies such as Mashantucket Pequot Tribal Council, Microboard, United Aluminum, GL Capasso and East River Energy; college presidents of UConn, Quinnipiac and Connecticut College; nonprofit organizations such as Jackson Labs, Save the Children, the Community Foundation, and Havenly Treats, a refugee training company; state legislators of all parties; the mayors of Hartford, New Haven, Bridgeport and Stamford, as well as Governor Ned Lamont.

Well, this session wasn’t exactly unprecedented. It was the second event of this kind that we organized. The first was the Connecticut Economic Development Forum we hosted for many of these same players five years ago — and it came at a much less fortunate time for the state. We were told that this event was the most diverse gathering of the state’s top leaders across all sectors of its history, including its constitutional conventions. This time we had an even broader representation; however, the band abandoned finger-pointing traditional gripe sessions.

The negative mood then was that of a sick state infected with accusatory accusations and desperate for massive unfunded debt; huge deficits; crippling taxes; crumbling transport infrastructure and a defeatist attitude. As members of GE’s outgoing senior leadership told the group, “It’s not just these issues, but the political leaders of the state who lack the will to confront these major burning issues, are instead distracted by inconsequential concerns about the bushfires.”

Well, that all changed – as our event and our research leading up to the event clearly showed; yet that message is often lost amid the institutional inertia of the hand-wringing media stuck in outdated historical thought patterns, repeating the tired clichés that were true five years ago, but no more.

The extent to which the mood of top business leaders reflected a dramatic 180 degree transformation was not lost on everyone at our event. In the words of Hearst’s Dan Haar, the mood was nothing short of “exuberant,” with business leaders lining up to praise a newly welcoming economic and business climate within the state. As Rodney Butler, Tribal Chairman of the Mashantucket Pequot Indian Tribe, said, “It’s been a breath of fresh air, and progressive state leadership has made a huge difference. Butler was describing how Connecticut is only one of six states in the country with an online casino, but his general sentiment mirrored that of other top business leaders.

The revered retired CEO of Webster Bank, Jim Smith, summed it up well when he said, “Are we better off than five years ago? I think the answer is, unequivocally, yes. We are better off financially, we are better off economically. I think we are better psychologically. Even vocal political opponents have gathered, with GOP stalwart Bob Patricelli all but endorsing Lamont’s re-election bid as a nod to the state’s turnaround. Sikorksy boss Paul Lemmo called Connecticut the friendliest state where he ran Lockheed’s businesses – comparing favorably to Maryland, New Jersey and Florida. Greg Schwartz of mortgage technology pioneer Tomo celebrated improvements in the tax and business climate and superior workforce engagement compared to that of California, where he helped lead Zillow.

That these CEOs have been so optimistic about the business climate, economic recovery and the future of the state is hardly surprising. Prior to the event, my team and I combed through available economic data and statistics to quantify the extent of Connecticut’s economic recovery and what we found – which can be seen in its entirety as one more original slideshow 50 pages, independently researched. with a detailed supply – shows how far the state has come.

On the fiscal side, the liability imposed by volatility, spending, appropriations and bond caps, combined with a strong fiscal reserve fund of $3 billion and additional pension contributions of $5.8 billion dollars, is gradually restoring Connecticut’s financial health after years of questionable decision-making, turning it into a $5 billion fund. budget deficit in 2018 into a budget surplus of $4 billion in 2022, and while the challenge of $40 billion in long-term unfunded liabilities remains difficult, the state has directed $6 billion in excess contributions to the pension this year only.

When it comes to innovation, Connecticut entrepreneurs have long complained that the state doesn’t historically boast of having deep private venture capital pools — but that’s gradually changing. Improving access to capital with record venture capital deals, developing deeper venture capital funding pools in Connecticut with $293 billion in assets under management in the state and the improved business climate fuel innovation in strategic sectors such as biosciences, technology, advanced manufacturing, fintech, contributing nearly $100 billion in gross state product and 200,000 jobs created; Connecticut now ranks fifth among states in patenting activity with patents held doubling over the past decade.

One of the most common complaints from top business leaders is that they are struggling to find enough qualified candidates, especially after the hit of COVID, and to attract and retain top talent in the state. Progress in workforce development, for example, doubling the number of STEM graduates over the past decade; education system ranked #2 by Milken Institute and #8 in research and development spending), quality of life (e.g. highest average household income / median income of top 5 households ), transportation (e.g. 13 new Metro-North express trains, 20% faster travel times), urban renewal (5% increase in housing stock in all major cities) and capitalization on regional positioning (for example, attracting new talent from New York and retaining the highest percentage of young workers of any New England state) are incrementally addressing long-standing structural challenges.

Altogether, economic productivity measures suggest a strong economic rebound at the macro level relative to other states with a record gross government product of over $300 billion, industrial activity exceeding pre-COVID levels by 10% and no loss of production time due to COVID. I know the companies behind these numbers well from my work as co-president of AdvanceCT, where I have seen firsthand how large companies such as Apollo Global Management, iCapital, Digital Currency Group, Infosys, GE Appliances, Nuvance Health, Tomo, ITT, HCL Technologies and GalaxE.Solutions are now choosing to start and grow their businesses in Connecticut. Even companies with a long history in Connecticut are newly encouraged to make major reinvestments in legacy and state-of-the-art manufacturing totaling more than $25 billion, such as Sikorsky, Pratt & Whitney, Linde, Pfizer and PepsiCo, creating more than 10,000 jobs.

These original statistics require little explanation – and even some members of my research team were surprised by the quantifiable magnitude of Connecticut’s economic and business recovery. We – like so many others – had missed all the signs of incremental but meaningful progress happening beneath our feet, and it took the largest gathering of prominent business leaders in Connecticut’s recent history to finally break the old and tired narrative in which Connecticut is mired. the economic slump. Connecticut’s economy is strong and businesses are again choosing to relocate to Connecticut.

Jeffrey Sonnenfeld is Senior Associate Dean at the Yale School of Management, where he is the Lester Crown Professor of Management Practice. He is also Co-Chair of Advance CT, a non-profit association dedicated to engaging, retaining and recruiting businesses and advancing Connecticut’s overall economic competitiveness. Steven Tian is Research Director of the Yale Chief Executive Leadership Institute.