Economist: Connecticut hampered by unsound fiscal practices

BRANFORD >> Connecticut Business & Industry Association Vice President and Economist Pete Gioia told a commercial realtors group that the state “has an enormous economic potential” that is being held back by unsound fiscal practices at the state level.

Gioia told about three-dozen attendees at the New Haven Middlesex Realtors 2016 Commercial Conference, which was held at the Owenego Inn, that the state’s economy is growing “at a slow-to-moderate pace.” He said it is expected to grow at a rate of between one percent and 3 percent over the next five years.

But if state lawmakers were to adopt more sound fiscal policy and implement more business-friendly regulations, the growth during that period easily could top 3 percent, Gioia said, and might even outpace the national economy as a whole in terms of expansion.

“The biggest drawback (for the state’s economic future) is that Connecticut hasn’t gotten its fiscal house in order,” he said. Budget deficits create concerns among business people that tax increases will follow, Gioia said.

Much of Gioia’s optimism regarding the state’s economic future is centered around three of Connecticut’s manufacturing powerhouses: Stratford-based Sikorsky Aircraft, Pratt & Whitney in East Hartford and General Dynamics Electric Boat division, which is located in Groton.

Electric Boat division announced in January that it was adding up to 850 jobs to its workforce in Groton and Quonset Point, Rhode Island, this year alone. The submarine maker also announced it will add nearly 4,000 jobs in the next 15 years at those two locations.

In September, aircraft engine maker Pratt & Whitney, which has factories in Middletown and East Hartford, announced it will add 8,000 jobs over the next decade in Connecticut.

Two weeks later, Sikorsky Aircraft announced it had struck a $220 million deal with the state to keep the company headquartered in Stratford through 2032.

A major part of that deal calls for the company to build a new heavy lift helicopter for the U.S. Marine Corps. The CH-53K King Stallion will be built in Connecticut.

“We’re going to start to see some traction in manufacturing,” Gioia said.

The hundreds of subcontractors that do work for Sikorsky, Pratt & Whitney and Electric Boat will benefit from the increased spending by the companies, he said.

Sikorsky’s deal with the state calls for the company to nearly double the $350 million a year it currently spends with Connecticut-based suppliers. The company also is pledging to increase its capital investment in machinery and equipment in the state by 22 percent.

The projections for manufacturing growth in the state will mean Connecticut technical high schools, as well as colleges and universities, will have to step up their efforts to recruit students for science, technology, math and engineering programs, according to Gioia.

In addition to trying to keep up with demand for manufacturing workers, another challenge facing Connecticut companies is the value of the dollar against foreign currencies, he said. The dollar is stronger than currencies such as the euro, which means products Connecticut companies export to the countries in the European Union cost more.

“Europe is a major export market,” Gioia said. “For Connecticut, it is the top export market.”

Tim Sullivan, deputy commissioner of the Connecticut Department of Economic and Community Development, told the realtors group that the agency focuses its work on six key business sectors where the state either is already dominant or has the potential to be.

Those area are insurance and financial services; digital media; green technology; advanced manufacturing; bioscience; and tourism.

Sullivan said companies the realtors represent when they look at commercial real estate in Connecticut could benefit from DECD’s Manufacturing Innovation Fund. The program provide vouchers from the state to help manufacturers invest in equipment.

“It’s a really smart investment,” he said.

Call Luther Turmelle at 203-680-9388.