Opinion: Discovering CT's business turnaround

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

Connecticut Gov. Ned Lamont speaks during the groundbreaking of the expansion of ASML's research and development facility in Wilton, Conn. Monday, Sept. 12, 2022. ASML is a leading supplier to the microchip semiconductor industry and currently employs more than 2,500 workers at its Wilton location. The $200 million investment will add 1,000 new jobs and upgrade the faciities in many ways to benefit the overall employee experience.

Connecticut Gov. Ned Lamont speaks during the groundbreaking of the expansion of ASML's research and development facility in Wilton, Conn. Monday, Sept. 12, 2022. ASML is a leading supplier to the microchip semiconductor industry and currently employs more than 2,500 workers at its Wilton location. The $200 million investment will add 1,000 new jobs and upgrade the faciities in many ways to benefit 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; thriving new fintech and biotech such as Biohaven, Alexion, Point Pickup and mortgage industry disrupter Tomo; multigenerational enterprises such as Mashantucket Pequot Tribal Council, Microboard, United Aluminum, GL Capasso and East River Energy; college presidents of UConn, Quinnipiac and Connecticut College; nonprofits such as Jackson Labs, Save the Children, the Community Foundation, and Havenly Treats, a refugee training enterprise; state legislators across parties; mayors of Hartford, New Haven, Bridgeport and Stamford, plus Gov. Ned Lamont.  
 
Well, this session was not truly unparalleled. This was the second such event we hosted. The first was the Connecticut Economic Development forum we hosted for many of these same players five years ago — and it came at a far less happy time for the state. We were told that event was the most diverse gathering of the state’s top leaders across sectors in its history, including its constitutional conventions.  This time, we had even broader representation; however, the group scrapped traditional gripe session finger-pointing.
 
The negative mood then was of an ailing state infected by accusatory finger-pointing and despairing of massive unfunded debt; huge deficits; crushing taxes; crumbling transportation infrastructure and a self-defeatist attitude. As members of the departing GE top leadership told the group, “It is not just these problems but the state’s political leadership lacking the will to confront these burning major issues, instead distracted by inconsequential brush fire concerns.”  
 
Well, that’s all changed — as our event and our research leading up to the event made clear; yet this message is often lost amidst the institutional inertia of hand-wringing media stuck in outdated historic patterns of thinking, repeating the tired cliches which were true five years ago, but no more.
 
The degree to which the mood of top business leaders reflected a dramatic, 180-degree transformation was not lost on any in attendance at our event. In the words of Hearst’s Dan Haar, the mood was nothing short of “ebullient,” with business leaders queuing up in praising a newly welcoming business and economic climate within the state. As Rodney Butler, tribal chairman of the Mashantucket Pequot Indian Tribe, put it, “It’s been a breath of fresh air, and the progressiveness of state leadership has made a huge difference.” Butler was describing how Connecticut is just one of six states in the nation with an online casino, but his general sentiment mirrored that of other top business execs.
 
The revered retired CEO of Webster Bank Jim Smith summed it up well when he said, “Are we better off than we were five years ago? I think the answer is, unequivocally, yes. We’re better off fiscally, we’re better off economically. I think we’re better off psychologically.” Even vocal political opponents came together, with GOP stalwart Bob Patricelli all but endorsing Lamont’s reelection bid in a nod to the state’s turnaround. Sikorksy boss Paul Lemmo called Connecticut the most friendly state where he’s led Lockheed businesses — comparing favorably to Maryland, New Jersey and Florida. Greg Schwartz of mortgage tech pioneer Tomo celebrated the fiscal and business climate improvements and the superior work force commitment over that of California, where he helped lead Zillow.
 
That these CEOs were so bullish on the state’s business climate, economic turnaround and future is hardly surprising. Prior to the event, my team and I combed through available economic data and statistics to quantify the magnitude of Connecticut’s economic turnaround, and what we found — which can be seen in its entirety as an original, independently researched 50-plus-page slide deck with detailed sourcing — demonstrates just how far the state has come.
 
On the fiscal front, imposed responsibility through the volatility, spending, appropriations and bond caps combined with a strong $3 billion budget reserve fund and $5.8 billion supplemental pension contributions are gradually restoring Connecticut’s financial health after years of questionable decision-making, turning a $5 billion budget deficit in 2018 into a $4 billion budget surplus in 2022, and even though the challenge from $40 billion in long-term unfunded liabilities remains stark, the state has directed $6 billion in surplus contributions to the pension this year alone.
 
When it comes to innovation, Connecticut’s entrepreneurs have long complained the state did not historically boast deep private venture capital pools — but this is changing gradually. Increasing access to capital with record VC deals, the development of deeper venture funding pools within Connecticut with $293 billion assets under management in-state, and improving business climate are powering innovation across strategic sectors such as bioscience, technology, advanced manufacturing, fintech, contributing nearly $100 billion to gross state product and 200,000 jobs created; Connecticut now ranks fifth among states in patenting activity with a doubling in patents held over the last decade.
 
One of the most common complaints from top business leaders is they struggle to find enough qualified applicants, particularly after COVID struck, and to attract and retain top talent to the state. Advances in workforce development for instance, doubling the number of STEM graduates over the last decade; the No. 2-ranked education system per Milken Institute and No. 8 in research and development spending), quality of life (e.g., top average household income/top 5 median household income), transportation (e.g. 13 new Metro-North express trains, 20 percent faster commute times), urban renewal (5 percent increased housing in all major cities), and capitalizing on regional positioning (e.g. attracting new talent from New York City and retaining the highest percentage of young workers of any New England state) are incrementally tackling long-standing structural challenges.
 
In total, economic productivity metrics suggest a strong economic rebound at a macro level relative to other states with record $300 billion-plus gross state product, industrial activity surging past pre-COVID levels by 10 percent, and with no lost production times to COVID. I know the companies behind these numbers well in my work as co-chair of AdvanceCT, where I’ve seen firsthand how major 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 build and grow their businesses in Connecticut. Even companies with a long history in Connecticut are newly emboldened to make significant legacy and advanced manufacturing reinvestments in the state totaling more than $25 billion, such as Sikorsky, Pratt & Whitney, Linde, Pfizer and PepsiCo, creating more than 10,000 jobs.
 
These original statistics need little explanation — and even some on my research team were surprised by the quantifiable magnitude of Connecticut’s business and economic turnaround. We — like so many others — had missed all the signs of gradual but significant progress taking place under our feet, and it took the largest gathering of prominent business leaders in recent Connecticut history to finally shatter the old and tired narrative that Connecticut is mired in the economic doldrums. Connecticut’s economy is strong, and businesses are once again choosing to move to Connecticut. 
 
Jeffrey Sonnenfeld is a senior associate dean at the Yale School of Management where he is Lester Crown Professor of Management Practice. He is also the co-chairman of Advance CT, a nonprofit association dedicated to engage, retain and recruit businesses and advance overall economic competitiveness in Connecticut. Steven Tian is research director of the Yale Chief Executive Leadership Institute.