Connecticut Economic Summit & Outlook 2011

This morning, my father, Stanley Livingston, and I attended the Connecticut Economic Summit & Outlook 2011 at the Hartford Marriot. The annual event is sponsored by the Connecticut Business & Industry Association and the MetroHartford Alliance. With a looming $3.5 billion deficit, the State of Connecticut faces a serious fiscal challenge. The morning was action packed with an interesting and entertaining lineup of speakers.

I didn’t agree with everything I heard, but a lot of ideas were thrown out. The highlight was hearing from the newly inaugurated Governor Dannel Malloy. He was preceded by a speech by David Hess, President of the Pratt & Whitney division of United Technologies Corp. and an economists panel composed of Nicholas Perna, Joseph Tracy, and Robert Triest. After Governor Malloy, journalist Mark Pazniokas moderated a legislative panel composed of Senate President Pro Tempore Donald Williams Jr., Senate Minority Leader John McKinney, House Speaker Christopher Donovan, and House Republican Leader Lawrence Cafero Jr.

We were really interested to hear David Hess speak. Horst Engineering, our 65 year old family business, is a large suppliers to several divisions of UTC. Hess spoke of the “right kinds of business” that will remain in Connecticut despite UTC’s massive outsourcing/offshoring efforts. He indicated that, “we’re back,” when discussing Pratt’s commercial engine business. He insisted that the company has a long-term view. He cited former UTC Chief Executive Officer George David’s address at the Economic Summit & Outlook 1997. 13 years ago, David said that, “High value, high knowledge work,” would stay in Connecticut, but he predicted a wave of globalization. Hess noted that much of what was predicted had come true and that the company has had to make difficult decisions regarding Connecticut jobs.

Pratt is selling engines all over the world with a particular emphasis on China, India, and Brazil. He also said that Pratt now has 8,000 employees in China, Poland, Turkey, and Singapore. These are lower cost regions of the world. With regard to Connecticut tax policy, he asked that legislators “tax us on our success, not just on our ability to achieve that success.”

The economists presented a bunch of numbers that indicate the recovery has gone slowly and will continue slowly. Joseph Tracy said that we lost an entire decade of job growth. While waiting for Governor Malloy to arrive, Nicholas Perna joked about the dire fiscal situation that our new governor is inheriting. He predicted that, “in June, Governor Malloy will demand a recount.”

As for Governor Malloy, he repeated many of the same themes that he covered during his inaugural address earlier this week. He made it clear to the 600+ business people assembled in the packed ballroom that he was a Democrat. He took on the paid sick leave issue that he supports as a specific example of something that he will clash with the business community over. His speech was the main event and he got a warm welcome from the crowd and energetically fielded several questions after finishing his remarks.

With a smile,  he chastised the crowd for not giving him this kind of support “before November 3rd.” He has yet to fill all of the key positions in his administration, but he owes the legislature and citizens of Connecticut, a budget. Everyone will be interested to learn his plans. Where will he cut expenses? Where will he reduce investment? Where will he increase investment? Where will he increase taxes? What will he do with the state’s burdensome regulations?

There are many more questions as we begin 2011. Connecticut isn’t the only state facing a severe budget deficit, but this one is close to home. The battles ahead will have a profound effect on the small business community. At Horst Engineering, we are anxiously awaiting the fight.

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