Economic Forecast 2014: Warming Up?

Policy decisions could impact whether state is part of national upturn

By Lesia Winiarskyj and Dave Conrad

Nick Perna, economic advisor to Webster Bank, discusses his expectations for Connecticut’s economy over the next few years.

It’s been a long time coming, says Eric Rosengren, president and CEO of the Federal Reserve Bank of Boston, but he’s now “reasonably upbeat” about the U.S. economy and the forecast for 2014.

Speaking at the 2014 Economic Summit & Outlook in Hartford last month, Rosengren said he expects the economy to grow at a rate of about 3% in 2014—a nice step up from the average 2% growth in 2013.

Driving the uptick is greater consumer confidence, a housing market on the rebound, and the waning impact of fiscal austerity measures such as the sequester.

The recovery “still has a long way to go,” Rosengren cautioned, noting that the Fed would like to see a return to full employment (an unemployment rate of 5.25%, as compared to the current 7.3%) and an inflation rate of about 2%.

Upward Trajectory

Nick Perna, economic advisor to Webster Bank, is cautiously optimistic too.

Though interest rates will likely remain at or near zero for the short term, Perna predicts a potentially significant increase by 2016–2017. He also expects 15,000–25,000 new jobs in Connecticut over the next year (about the same as last year), 25,000–35,000 new jobs in 2015, and greater increases later—in 2017. Income, he estimates, will rise about 6% per year over the next two years, outpacing the cost-of-living increase, at 2%.

Personal bankruptcies should also fall to half the level they were at the lowest point after the Great Recession.

But, Perna notes, Connecticut’s comeback has been tepid compared to that of neighboring states New York and Massachusetts, whose recoveries have been more robust. He blames Connecticut’s lagging recovery on its severe budget deficits: $3 billion in 2011 and over $1 billion a year for the next biennium.

“I agree that the U.S. economy is on an upward trajectory, that we are on an upward trajectory. But [Connecticut’s legislature] has the capacity to change that trajectory for the worse or better.”

“It’s important to help Connecticut legislators understand the impact of their policy decisions on jobs in Connecticut,” says Jason Howey, president of OKAY Industries.

Howey was part of the 2014 Economic Summit and Outlook panel discussion on advanced manufacturing that also included Chris DiPentima, president and CEO of Pegasus Manufacturing; Sean Crowley, vice president of global manufacturing for Covidien; and Elliot Ginsberg, president and CEO of the Connecticut Center for Advanced Technology.

Connecticut doesn’t necessarily have to be “the cheapest place to do business,” said DiPentima, “but we need to be cost-competitive.” While 2014 looks like a relatively flat year, he adds, his customers—companies like Boeing, Airbus, UTC, General Electric, and Rolls Royce—see steep growth starting in 2015, as a result of private research and development investment. “They’re looking to go from zero to 60 in a two-year period,” he said, and they expect a quick return on their R&D investment.

Ginsberg and Crowley also forecast a significant ramp-up in manufacturing and the need to expand capacity. Without a pipeline of qualified workers, they say, the industry’s workforce shortage threatens to undermine its potential for growth. (CBIA is conducting a survey on manufacturing workforce issues early this year; we will present our findings at Made in Connecticut: 2014 Manufacturing Strategy Summit in Cromwell this spring.) ■

Sponsored by Webster Bank, the 2014 Economic Summit & Outlook was presented by CBIA and the MetroHartford Alliance.

Lesia Winiarskyj, a writer and editor at CBIA, can be reached at lesia.winiarskyj@cbia.com. Dave Conrad is a senior writer at CBIA. He can be reached at dave.conrad@cbia.com.

One Year Into State’s Comprehensive Energy Strategy: What’s the Deal?

David Koons (standing), director of the Office of Planning and Economic Development for the city of Bridgeport, discusses trends in the competitive energy marketplace.

Conference provides updates on natural gas expansion, renewables, security issues

For Brad Kane, managing editor at the Hartford Business Journal and editor of its Connecticut Green Guide, Connecticut’s natural gas expansion—a ten-year, $7 billion project aimed at converting 280,000 Connecticut customers to natural gas—has been one of the year’s biggest stories.

Kane shared the region’s top energy headlines—and what goes into reporting them—in his morning keynote address at the 14th annual What’s the Deal: 21st Century Business Energy Conference, hosted by CBIA and the Connecticut Power and Energy Society on Oct. 10.

Natural gas expansion, he noted, is a key component of Connecticut’s Comprehensive Energy Strategy, which Gov. Dannel Malloy unveiled at last year’s What’s the Deal conference. The governor’s plan serves as a roadmap to cheaper, cleaner, more reliable energy in a state that consistently ranks anywhere from second to fifth in the nation, said Kane, for highest energy costs.

Natural Gas: A Game-Changer

Michael Dirrane, director of Northeast marketing for Spectra Energy and a panelist at the event, characterized natural gas as “a tremendous game-changer” for the region.

“We now have production of natural gas in our backyard, in Pennsylvania and Ohio. The supply is there; it’s getting the infrastructure set up to bring it in.”

Robert Young, a regional manager at Burns & McDonnell Engineering Company’s New England office, agreed.

“We have this source of energy independence in the U.S., where we’re not only talking about not having to import energy but actually being able to export it,” said Young. “But there’s still the issue in the Northeast of getting the gas to the customers, of improving distribution.”

Connecticut’s expansion project starts with roughly 40,000 low-use customers (those who have access to natural gas but aren’t using it to heat their homes) and another 150,000 who are “on-main” (meaning that they are within 150 feet of a main but are not hooked up). Another segment the state hopes to reach, said Roddy Diotalevi of UIL Holdings Corp., includes neighborhood clusters, municipal buildings, schools, and healthcare and manufacturing facilities.

Complicated Plan, Moving Pieces

When it comes to natural gas, infrastructure is only part of the problem. Penetration in Connecticut’s residential markets is decidedly low, Diotalevi explained, because much of the cost of expansion will be borne by new customers—which in turn determines whether and to what extent expansion can occur.

Camilo Serna, vice president of corporate strategy at Northeast Utilities, added that aggressive gas expansion requires coordinating a lot of moving pieces in a complicated plan, getting customers to commit in adequate numbers, and determining how to fund the expansion.

Serna and fellow panelists proposed a number of possibilities for encouraging faster and wider adoption of natural gas throughout Connecticut, among them:

  • Residential conversion credits
  • Maximizing manufacturers’ rebates and energy efficiency rebates
  • Reducing customer hookup costs—for example, waiving the charge for customers 150 feet from the main
  • Launching and publicizing new financing options
  • Developing an adequate contractor network and HVAC participation to meet demand

Renewables and Energy Efficiency

Business leaders consult with vendors in the trade show area.

That same integration of incentives, targeted financing opportunities, and increased contractor participation has been instrumental in the success of other statewide energy initiatives, such as C-PACE (Connecticut Property Assessed Clean Energy), which allows commercial, industrial, and multi-family property owners the ability to make qualifying investments with no upfront costs and a guaranteed positive cash flow from energy savings; CEFIA (Clean Energy Finance and Investment Authority), which provides homeowners, businesses, and municipalities with incentives and low-cost financing for renewable energy and energy efficiency; and Connecticut’s Energy Efficiency Board (EEB), which conducts independent, comprehensive evaluations of residential and commercial and industrial energy efficiency programs funded by Connecticut’s Energy Efficiency Fund.

“Layering all these benefits—incentives, investment tax credits folded into cash flow, guaranteed payment for renewable energy credits, deferred payment until a project is completed, monitoring to ensure investments are secure and savings are achievable—this creates a package that’s a very attractive investment for a building owner,” said David Ford of Trane U.S. Inc.

Coordinated efforts such as these have also helped renewable and alternative energy providers, said Michael Silvestrini, president of Greenskies Renewable Energy.

“They’ve incubated industries such as solar power to the point where subsidies are no longer crucial. Over the next six years, solar energy is expected to achieve retail grid parity that attracts national players.”

“Here in the Northeast it’s been consistent, predictable state policies like long-term contracting and Connecticut’s lead-by-example program that have been driving renewables and bringing them to our region,” said Lisa Ward, manager of government relations for ClearEdge Power, which produces stationary fuel cell systems.

“Public Act 11-80 [Connecticut’s Comprehensive Energy Strategy] has been very progressive and supportive of these industries,” she added, pointing specifically to an expanded property tax exemption that includes fuel cell technologies.

Fuel cells, biomass, and wind, however, have not yet achieved economies of scale that allow them to operate without subsidies, Ward and fellow panelists acknowledged.

Other obstacles for her industry, Ward noted, are inconsistencies from municipality to municipality in terms of permitting and fees, which could range from zero to tens of thousands of dollars.

In addition, siting challenges—such as a ban on wind energy projects—continue to hinder progress for other types of energy providers in Connecticut. (Best practices from other states include using farmland for wind energy, allowing the renewable energy industry to ‘cohabitate’ with agriculture.)

Energy Security

Securicon’s Ernie Hayden says electric grid cybersecurity “needs to be part of the day-to-day conversation” for policymakers, regulators, and industry executives. Hayden was a keynote speaker at the CBIA/CPES 14th annual What’s the Deal: 21st Century Business Energy Conference

Ernest Hayden, certified ethical hacker and executive consultant for the information security firm Securicon, suggested that tax breaks and incentives could also improve electric grid security.

Hayden delivered the afternoon keynote address at What’s the Deal.

Historically, he said, the emphasis for utilities has been on physical security to protect assets—for example, preventing copper theft or substation break-ins. Focus on cybersecurity has only recently percolated into the smart grid space.

“The job is getting bigger and bigger and harder to do because of a ubiquity of data that has to be protected,” said Hayden, citing the expansion of bring-your-own-device policies (where employees attach their personal devices to their employers’ network) and “an Internet not designed for security, where not every hole in the sieve is covered.”

Hayden cautioned that these are concerns that should be top of mind for all utility executives, board members, and government officials.

“It’s right up there with profit and loss.” ■

Lesia Winiarskyj is a writer and editor at CBIA. Contact her at lesia.winiarskyj@cbia.com.

Culture Change in Government

Bureaucracy getting leaner, but continued progress necessary

By Dave Conrad

Quietly but steadily state government in Connecticut is getting leaner, greener, and user-friendlier. It’s a culture change that’s making Connecticut more responsive to businesses and more responsible to taxpayers, says Gov. Malloy.

In October, the governor released the latest report on what state agencies are doing to streamline their operations and make more efficient use of taxpayer dollars.

Called Continuous Improvement in Connecticut State Government, the 84-page report from the Office of Policy and Management is a catalog of streamlining efforts and the results anticipated or already in the books.

“We have continued to modernize state government,” said Gov. Malloy. “From energy retrofits to reducing permit processing time from months to days, this report offers a broad look at quantifiable savings over last year—demonstrating that we’re doing a better job of serving taxpayers.”

Among the many improvements businesses will be interested in seeing—or may already be realizing—are these from the report:

  • Using a lean process, the Department of Energy and Environmental Protection (DEEP) broke a logjam in industrial stormwater general permits.
  • DEEP is saving $1.84 million per year through reduced state energy bills as a result of energy retrofits via the Lead by Example program.
  • The Department of Labor (DOL), in partnership with the Chief State’s Attorney’s Office, created the Unemployment Compensation Fraud Unit, recovering over $400,000 in unemployment insurance overpayments and preventing about $100,000 weekly in fraudulent payments. The program also has led to 18 arrests.
  • DOL also leaned its unemployment insurance tax notices to get them to employers before the start of the new year—much earlier than before.
  • The Department of Administrative Services (DAS) has reviewed, renegotiated, or rebid statewide contracts for goods and services to the tune of more than $18 million savings in Fiscal Year 2013 alone.
  • DECD is implementing an online CTNEXT Contact Relationship Management System to improve Connecticut Innovations and DECD data projects and share information across their platforms. DECD said that “entrepreneurs often talk about receiving help that is significantly more energetic, respectful, and capable, with a sense of urgency in other states. To compete, we must change our culture of customer service for businesses seeking help.”

CBIA has been encouraging state government to achieve that culture change—to find ways to produce and deliver services better and more cost-effectively. In our Turning the Tide report, released earlier this year, we discussed big-ticket budget items in need of streamlining and the potential for adopting best practices from other states.

Learning from Others

Several states have embraced the lean culture in every aspect of their state government. They have the results to show for it and sophisticated ways of reporting their accomplishments.

Take Minnesota, for example. The Gopher State’s “Enterprise Lean” is a government-wide way of life that’s reflected in a robust website and reporting mechanism.

Then there’s “Lean Ohio”—and another user-friendly website detailing how that state is making their government “simpler, faster, better, and less costly.”

Washington state recently held its second annual Washington State Government Lean Transformation Conference. More than 2,000 people, mostly state workers, attended the two-day event.

Another impressive idea resides in Virginia, where the Virginia Performs program is constantly measuring state government, or “Measuring what matters to Virginians,” as its slogan says. Virginia Performs is not just reflective of lean practices but a dynamic catalog of every part of state government—including action plans and actual performance.

What all of these states have in common is that change, often through lean, is part of their culture. And it’s practiced constantly and reflected in very organized, systematic public reporting mechanisms. That’s what Connecticut should be looking to adopt, embrace, and improve upon. ■

Dave Conrad is a senior writer at CBIA. Contact him at dave.conrad@cbia.com.

Drone Technology and Business Monitoring-

Regulatory, business, academic communities discuss risks, benefits

By Lesia Winiarskyj

Dr. Massimiliano Lega demonstrates the StillFly drone at the fall meeting of CBIA's Environmental Policies Council.

The Federal Aviation Administration projects as many as 30,000 unmanned aerial vehicles in domestic airspace by the year 2020, thanks in part to a new FAA permitting process for civilian drone operations starting in 2015. It’s a move that’s raising questions—and concerns—about the use and deployment of drones.

“This trend—combined with recent incidents involving drones—brings up serious policy issues about privacy and surveillance by government agencies, private citizens, activist groups, and commercial entities,” says Eric Brown, CBIA’s director of energy and environmental policy.

Dr. Massimiliano Lega, an aerospace engineer and environmental engineering professor at the University of Naples, Parthenope, touched on some of these issues at the fall meeting of CBIA’s Environmental Policies Council.

Eye in the Sky

The event, held at the Saybrook Point Inn in September, featured live drone demonstrations, Q&A sessions, and discussions with national and regional officers of the U.S. Environmental Protection Agency about plans for using remote devices for business monitoring and compliance.

Sharing actual images captured by a three-foot drone—including several taken during the event—Lega noted that unmanned aircraft can be outfitted with multispectral cameras, thermal and radiometric sensors, and other sophisticated instruments that detect everything from breaches in a building’s thermal insulation to subsurface contamination of soil or water.

In spite of negative press about drone deployment, Lega focused on some of the technology’s positive potential, including:

- Higher crop yields through soil monitoring and early pest detection

- Reduced negative environmental impacts and risks to human health

- Solid waste landfill monitoring through aerial infrared thermography

- Increased energy efficiency and the detection of problems with a building’s envelope

- Development and safe placement of power lines and monitoring of suspension joints

- Improved traceability of pollutants, including calculations of individual source contribution to contamination when there are multiple potential sources, and determining emissivity for different materials

- Reconstruction of contaminated sites, through 3D imaging, based on data collected and forensic environmental engineering

- Automatic continuous sampling and measurement of heavy metals

- Real-time process monitoring of wastewater that detects pollutants not visible to the naked eye

“Many investigations begin with evidence of this type of damage,” said Lega, “rather than evidence of an illegal polluting act.”

Better Data Collection

The EPA's Timothy Watkins discusses his agency's air pollution monitoring strategy.

Timothy Watkins, deputy national program director for Air, Climate and Energy Research for EPA, described his agency’s Geospatial Measurement of Air Pollution (GMAP) program, which uses GPS and high-resolution, rapid-response mobile instruments to map air pollution patterns and measure source emissions of VOCs (volatile organic compounds), particulate matter, nitrogen dioxide, and other precursor pollutants of ozone.

The agency’s draft roadmap to next-generation air pollution monitoring, said Watkins, focuses on reliable, lower-cost technology, such as miniaturized sensors that require a smaller platform than traditional monitoring equipment. He said new monitoring strategies could help businesses cut compliance costs, reduce product loss, and improve worker safety.

Robert Judge, EPA Region I air monitoring coordinator, and Ric Pirolli, director of the Connecticut Department of Energy and Environmental Protection’s Air Planning & Standards Division, joined Watkins in answering business leaders’ questions about the quality of data, spatial and temporal gaps in data collection, and how to interpret findings—including isolated and instantaneous readings, rather than periodic readings that capture data over a significant period of time, or networked monitoring that captures many more data points and provides a clearer overall picture of air quality and pollution.

These issues, Brown observed, have significant implications for addressing cross-state air pollution, also known as regional transport, where high air pollution levels in downwind states, such as Connecticut, are caused by activities in upwind states.

“Ninety percent of Connecticut’s air quality problems are traced to transport issues,” Pirolli agreed, “so our state has a great interest in developing the technologies to measure that.”

While Connecticut has strict laws controlling sources of air pollution emissions, the same cannot be said of other states. The EPA has determined that pollution sources in 27 upwind states, including power plants producing much cheaper electricity, contribute significantly to Connecticut’s inability to meet or maintain compliance with federal air quality standards.

DEEP Commissioner Dan Esty has pointed out that regional air pollution transport puts Connecticut—already a high-cost energy state—at an even greater economic disadvantage.

New Frontiers, New Questions

The StillFly drown hovers over the Saybrook Point Marina

While drone technology holds promise, legislation and regulation of drones lag the technical advances made possible by unmanned aircraft.

Issues that have yet to be resolved are what constitutes a drone, who may operate one and how, and what protections businesses and individuals have against invasions of privacy, harassment, and industrial espionage.

Brian Hearing, founder of DroneShield, cautions businesses to become familiar with laws governing the use of and appropriate response to drones. (Local ordinances vary widely, he says.) He also recommends that businesses develop incident response plans.

DroneShield manufactures a small device that detects unmanned aircraft, captures digital and acoustic evidence that “fingerprints” them, and alerts property owners to their presence. ■

Lesia Winiarskyj is a writer and editor at CBIA. Contact her at lesia.winiarskyj@cbia.com.

Celebrate Manufacturing in October

October is Manufacturing Month, part of the “Connecticut. Dream It. Do It.” initiative and aligned with a nationwide effort to promote educational and career pathways in manufacturing.

Everything officially kicks off with National Manufacturing Day, Friday, Oct. 4, and two regional “Manufacturing Mania” events—a showcase for students, their families, and teachers to learn how Connecticut-made products impact and improve their lives every day.

The first Manufacturing Mania event will be held Oct. 4 from 10 am to 1 pm at Toyota Presents Oakdale Theater in Wallingford. The second is scheduled for Oct. 18 from 10:30 am to 1:30 pm at Three Rivers Community College in Norwich.

Among other events being planned are open houses at technical high schools and manufacturing facilities across the state.

CBIA is participating as a Manufacturing Month partner. For more information, contact Karen Jarmon, Connecticut Center for Advanced Technology Inc., at 860.282.4211 or kjarmon@ccat.us.

Brighter Days Ahead for the Global Economy?

Experts share their views at CBIA’s September economic conference

By Lesia Winiarskyj

With Europe showing nascent signs of a turnaround, the conversation about the world economy is changing, Anthony Chan told a packed room of business executives at The Connecticut Economy on Sept. 6 in Rocky Hill.

Chan is managing director and chief economist at J.P. Morgan Private Client.

“Europe is really the exciting story for the second half of this year—and for 2014. For the first time, we are now seeing positive growth this quarter,” a trend Chan believes will continue.

“This is really signaling to us that Europe is going from contractionary economic growth to positive economic growth.”

With the recent rebound and an uptick in exports, he noted, “consumer confidence in Europe is picking up.”

Economic prospects in China are improving too, he added, and the combined impact of China and Europe’s comeback will be felt in the world’s financial markets and the global economy.

Emerging Markets Weaker

Closer to home, “we’re starting to see wages pick up,” said Chan, who dismissed the notion that job creation is limited to part-time or low-paying work. “Manufacturing is a big star performer today,” he noted, as are professional service industries that also offer higher-wage jobs.

The major point of global economic concern has shifted, Chan pointed out, to emerging markets that have high current account deficits and are financially and politically unstable.

“Foreign direct investment has dried up in some areas,” he said, citing trends in India and Brazil, among others, where there is greater social unrest and ”less confidence in reform.”

Nonetheless, Chan’s outlook remains positive. “Global economic growth is going to continue to improve in 2014.”

New Golden Era

Also speaking at the conference were David Walker, former comptroller general of the United States and founder and CEO of the Comeback America Initiative, and David Darst, managing director and chief investment strategist at Morgan Stanley Wealth Management.

Darst believes the path to a new golden era for investors will be paved by a societal push for structural reform, the rise of new industries, “guerilla companies that sell to the planet,” and the millennial generation. (At 80 million strong, Darst says, “they are the new baby boomers.”)

Darst, like Chan, discussed the political and financial landscape in Europe and emerging markets, as well as domestic housing prices, gold, treasury bond interest rates, energy, the Shiller price to earnings ratio, S&P 500, U.S. equity investment performance, and other variables he said investors need to “keep on our radar screen.”

Business Confidence in Connecticut Lagging

In spite of some good news surrounding manufacturing jobs and business profitability, Connecticut employers are still pessimistic about the state’s long-term competitiveness.

Those were some of the findings of CBIA/BlumShapiro’s 2013 Survey of Connecticut Businesses, released at the Sept. 6 economic conference.

Only 11% of businesses surveyed see Connecticut as a positive place to do business, reflecting concerns over the pace of the state’s economic recovery and Connecticut’s ability to compete regionally, nationally, and globally.

Lesia Winiarskyj is a writer and editor at CBIA. She can be reached at lesia.winiarskyj@cbia.com.

Brighter Days Ahead for the Global Economy?

Experts share their views at CBIA’s September economic conference

By Lesia Winiarskyj

Anthony Chan, managing director and chief economist at J.P. Morgan Private Client, believes recent signs of a rebound in Europe bode well for the U.S. and global economies.

With Europe showing nascent signs of a turnaround, the conversation about the world economy is changing, Anthony Chan told a packed room of business executives at The Connecticut Economy on Sept. 6 in Rocky Hill.

Chan is managing director and chief economist at J.P. Morgan Private Client.

“Europe is really the exciting story for the second half of this year—and for 2014. For the first time, we are now seeing positive growth this quarter,” a trend Chan believes will continue.

“This is really signaling to us that Europe is going from contractionary economic growth to positive economic growth.”

With the recent rebound and an uptick in exports, he noted, “consumer confidence in Europe is picking up.”

Economic prospects in China are improving too, he added, and the combined impact of China and Europe’s comeback will be felt in the world’s financial markets and the global economy.

Emerging Markets Weaker

Closer to home, “we’re starting to see wages pick up,” said Chan, who dismissed the notion that job creation is limited to part-time or low-paying work. “Manufacturing is a big star performer today,” he noted, as are professional service industries that also offer higher-wage jobs.

The major point of global economic concern has shifted, Chan pointed out, to emerging markets that have high current account deficits and are financially and politically unstable.

“Foreign direct investment has dried up in some areas,” he said , citing trends in India and Brazil, among others, where there is greater social unrest and ”less confidence in reform.”

Nonetheless, Chan’s outlook remains positive. “Global economic growth is going to continue to improve in 2014.”

New Golden Era

Also speaking at the conference were David Walker, former comptroller general of the United States and founder and CEO of the Comeback America Initiative, and David Darst, managing director and chief investment strategist at Morgan Stanley Wealth Management.

Darst believes the path to a new golden era for investors will be paved by a societal push for structural reform, the rise of new industries, “guerilla companies that sell to the planet,” and the millennial generation. (At 80 million strong, Darst says, “they are the new baby boomers.”)

Darst, like Chan, discussed the political and financial landscape in Europe and emerging markets, as well as domestic housing prices, gold, treasury bond interest rates, energy, the Shiller price to earnings ratio, S&P 500, U.S. equity investment performance, and other variables he said investors need to “keep on our radar screen.”

Business Confidence in Connecticut Lagging

In spite of some good news surrounding manufacturing jobs and business profitability, Connecticut employers are still pessimistic about the state’s long-term competitiveness.

Those were some of the findings of CBIA/BlumShapiro’s 2013 Survey of Connecticut Businesses, released at the Sept. 6 economic conference.

Only 11% of businesses surveyed see Connecticut as a positive place to do business, reflecting concerns over the pace of the state’s economic recovery and Connecticut’s ability to compete regionally, nationally, and globally. ■

Lesia Winiarskyj is a writer and editor at CBIA. She can be reached at lesia.winiarskyj@cbia.com.

More photos

Survey: Federal Healthcare Reforms Will Increase Costs

Connecticut businesses see state’s economic recovery lagging nation’s

CBIA’s Quarterly Economic Survey: First Quarter 2013 * found that 87% of Connecticut businesses predict increased costs as a result of the federal Affordable Care Act (ACA).

CBIA economist Pete Gioia notes that the January 2014 deadline for complying with ACA requirements was a “major concern” for the state’s businesses.

“Just 1% believe Obamacare will reduce the cost of compensation and benefits for their companies,” says Gioia,“ while 11% see no fiscal impact.”

“And it was quite telling that just 13% feel they have enough information to understand and comply with federal healthcare requirements.”

The survey—released the same day as a Bureau of Economic Analysis (BEA) report revealed that Connecticut is last among all states in economic growth—also found that business owners believe the state’s economy continues to lag behind the national recovery.

Just 17% of businesses expect the state’s economy to improve, while almost a quarter (23%) see the U.S. economy improving.

That outlook repeats a pattern from previous quarters, although half of businesses now forecast stability for the national economy, a jump of 14 percentage points from the fourth quarter of last year.

Some 39% of respondents believe the state’s economy will remain stable, up from 34% the previous quarter.

“These numbers show a state economy that still has a long way to go to reach sustainable conditions,” says Gioia.

Respondents are optimistic about future sales and production, with 39% predicting increases, and just 17% forecasting declines. More than a third (35%) see conditions improving for their firms.

About a quarter (24%) say they would add employees in the second quarter, with 15% expecting to shrink their workforces.

Other important survey findings:

  • 29% of respondents see improving conditions for their industry, while 20% see declines.
  • 37% predict increases in productivity, up from 30% the previous quarter.
  • 38% predict an increase in wage costs, while 59% see those costs remaining stable.
  • 36% forecast higher compensation and benefits costs, while 59% say they would stay the same. ■

* The survey was emailed to approximately 1,900 Connecticut businesses in April 2013. A total of 221 responded, for an 11.6% response rate and a margin of error of +/- 6.7%. All figures are rounded to the nearest whole number and may not total 100%.

Manufacturing & Technology Day

Photos by John Kallio

From chocolates to jet engines, from pasta to submarines, hundreds of products and innovations were on display at this year’s Manufacturing and Technology Day at the State Capitol.

Hosted by CBIA, the May 15 event featured exhibits from 44 of the state’s leading manufacturers and gave legislators and other state policymakers an opportunity to see firsthand the diversity of products made in Connecticut—and hear firsthand from business owners and executives about what kinds of policy changes are needed to spur private-sector investment and job growth.

The event also included a morning program for manufacturers and state policymakers featuring an overview of key legislative issues, a panel discussion on additive manufacturing, and remarks by state Department of Economic and Community Development Commissioner Catherine Smith and members of the state legislature’s Manufacturing Caucus.

Rep. Buddy Altobello (center) chats with representatives of Protein Sciences Corporation.

 

Rep. Dan Carter visits the Legrand display.

 

Sen. Gayle Slossberg (right) discusses business and economic issues at the Connecticut Metal Components (CMC) booth. CBIA board member Michele Caulfield of Stevens Company listens in. (Stevens Company is one of CMC’s family of companies)

 

Sen. Joe Markley (right) speaks with CBIA board member Chris Ulbrich of Ulbrich Stainless Steels & Special Metals.

 

Right to left: Lt. Gov. Nancy Wyman, CBIA President and CEO John Rathgeber, and Rep. Patricia Widlitz.

 

Rep. Charlie Stallworth learns about Cooper-Atkins’ product line.

 

Rep. Lawrence Miller visits the Miller Foods/Oma’s Pride Pet Food booth.

 

Rep. Mike Alberts (center) learns about automated external defibrillator manufacturing at the Defibtech display.

A Partnership for the 21st Century

Bilateral agreement would eliminate trade barriers between U.S. and EU

Susie Kitchens, British Consul General in Boston

By Susie Kitchens
British Consul General in Boston

On a recent trip to Connecticut I couldn’t help but feel a little home comfort as I travelled past signs for places such as Windsor, Manchester, New London, and indeed New Britain. With such a rich shared history tying our two countries together, it is easy to characterise the relationship between the U.K. and New England as one of historic charm and colour. However with trade negotiations on the horizon that could bring our economies even closer, the time is ripe for looking forward, not back, to the bright future that lies ahead.

Right now the United States and the European Union (EU) are embarking on the single most ambitious bilateral trade agreement ever attempted. The Transatlantic Trade and Investment Partnership (TTIP) will provide a significant boost to economies on both sides of the Atlantic in a deal that has already been positively welcomed by both President Obama and EU leadership.

Trade Agreement Impact

The TTIP will not only remove many of the remaining trade barriers between the two largest economies in the world but also represents the single largest opportunity for growth in trade between our two economies in well over a decade. As Prime Minister David Cameron neatly summarises, “The transatlantic economic relationship is already the world’s largest, accounting for half of global economic output and nearly one trillion dollars in goods and services trade, supporting millions of jobs on both sides of the Atlantic.”

For a competitive state such as Connecticut, with four of its top ten export markets located in the EU, the impact of TTIP will be significant. Many of Connecticut’s businesses and industries will benefit from the elimination of tariffs that are currently swallowed as the cost of doing business with Europe.

Although tariffs are, in general, already low, the sheer volume of trade means that their collective elimination would translate into significant cost savings that in the future can be ploughed into new production, encouraging new growth and generating further job creation. Additionally, companies of all sizes will be spared the headache of working to nonaligned regulatory standards: In many industries, TTIP will create a coherent set of regulatory standards—or recognition by the EU and U.S. of each other’s standards—helping to set trading standards for the world.

The U.K. has been instrumental in putting an EU/U.S. free trade agreement on the agenda. The British government pressed the case and supported the establishment of the EU/U.S. High-Level Working Group in 2011.

Demonstrating his commitment to these negotiations, Prime Minister Cameron has asserted, “Breaking down the remaining trade barriers and securing a comprehensive deal will require hard work and bold decisions on both sides. But I am determined to use my chairmanship of the G8 to help achieve this and to help European and American businesses succeed in the global race.”

As the representative for Her Majesty’s Government here in New England, it is now my mission to put these words into action by raising awareness and garnering support from vital stakeholders in business, politics, and academia. That is why I am keen to engage with the Connecticut Business and Industry Association. In order for this agreement to succeed, negotiators will need the vociferous support of the business community to keep their focus on what the benefits of reduced trade barriers would mean for businesses and consumers alike. ■

The British Consulate General in Boston represents the U.K. government in New England across political, commercial, security, and economic areas of interest to the U.K. and New England states.