Connecticut is fielding “a lot of inbound queries” from businesses considering opening or relocating here – something that can be attributed in large part to the effects of the Covid-19 pandemic, according to the state’s COO Josh Geballe.
Speaking at this morning’s Connecticut Business and Industry Association (CBIA) conference, “The Connecticut Economy: Rebuilding Connecticut,” Geballe said that such queries are coming from individuals as well as new and established companies, both large and small.
“There’s a lot of outreach going on” as well, he added.
Geballe said efforts by Department of Economic and Community Development Commissioner (DECD) David Lehman and AdvanceCT – the nonprofit corporation that seeks to advance business formation, retention, recruitment and growth in the state – have been major drivers behind cultivating that interest.
Citing quality of life, its education system, and how it has managed the Covid crisis, Geballe said: “We are hopeful there is a silver lining in all of this for Connecticut – that a lot of businesses are taking a fresh look at us and like what they see.”
Both Geballe and CBIA President and CEO Chris DiPentima expressed general optimism about the state’s business climate and economy, with the latter saying Connecticut is in “a very positive and favorable position” due to its collaborative efforts with the private sector over the past seven months.
Describing himself as a glass-half-full person, Geballe credited Gov. Ned Lamont with successfully steering the state to the relatively strong position it holds today: A recovery of 84% of its pre-Covid economic activity, according to a report by Moody’s analytics and CNN Business, well ahead of the nation’s 76%; its status as one of just eight states to see an increase in real estate listings this year (“residential is very hot right now”); its Rainy Day Fund’s being ranked the nation’s seventh strongest in terms of percentage of budget; and the fact that its Covid infection rate has remained relatively steady at under 1.5%.
The state’s COO said that Lamont had successfully balanced addressing public health and economic concerns at the same time, rather than viewing them as opposite ends of a scale, proving that “you can only recover if there’s predictably and stability about public health. It’s a lot easier to bounce back when you try to limit the damage in the first place.”
Echoing a favorite refrain of Lamont’s, Geballe also said that keeping such critical industries as manufacturing and construction open throughout the pandemic, while other states did not, was key to the state’s successful navigation of the health crisis.
Even so, he acknowledged that small businesses and even some large businesses have been unable to operate at full capacity – a “dire” situation for some – adding that, “Winter could be a challenge.”
Asked what the game plan is for the long-delayed Phase 3 of the state’s reopening strategy – including whether restaurants would have to revert to the takeout/delivery/curbside pickup model they had to utilize during the early days of the pandemic – Geballe said Lamont would address those questions at today’s 4 p.m. press briefing.
“We’re optimistic that we can maintain that balance between public health and economic recovery, helping businesses and protecting jobs,” he said.
Nevertheless, he acknowledged that, like the rest of the world, Connecticut faces a hard economic road ahead, with a projected budget deficit of $2 billion for the current fiscal year. The state’s debt and unfunded pension liabilities still make up 33% of its GDP, one of the highest such rates in the country.
Geballe said the administration would seek to avoid tax increases and protect public services – something that will be aided by the fact that as much as 25% of the state’s workforce is expected to retire over the next couple of years. While that will present its own challenges, he said that Connecticut’s continued improvements to its technology should have an ameliorative effect.
In addition, he and Office of Policy and Management Secretary Melissa McCaw are actively seeking a consultant to further examine the state’s cost structure and the services it provides.
As for Connecticut’s aerospace industry, he admitted it has been battered by Covid; however, he spoke with admiration of JetBlue’s recent announcement that it is adding four non-stop routes from Bradley International Airport, describing the move as “a very bullish ploy.”
Geballe further indicated that talks are ongoing in Hartford about the possibility of another bridge loan program for small businesses, especially in light of the fact that another federal stimulus bill is unlikely to be passed before the Nov. 3 election.
Survey not so sunny
However, according to the 2020 Survey of Connecticut Businesses, also released today, the coronavirus pandemic has caused greater damage to Connecticut’s economy than the 2008-2010 recession.
The survey, produced by CBIA and the public accounting and business advisory firm Marcum LLP, shows revenue and profitability at historic lows, an uncertain employment outlook, and concerns about the state’s recovery.
- More than half of survey respondents either cut hours, laid off employees, or imposed furloughs because of the impact of pandemic-related shutdowns and restrictions.
- Employers implemented additional, voluntary health and safety precautions to protect employees and prevent workplace transmission of the coronavirus.
- 86% of companies applied for a federal PPP loan and 19% applied for one of the state’s emergency assistance programs.
- Only a quarter of firms expect sales growth in the next 12 months, with more than two-thirds seeing a decrease in orders and sales this year because of COVID-19 disruptions.
- Less than half of surveyed companies expect to return a profit in 2020 – a historic low for the survey.
- Most firms expect their employment levels to remain stable over the next six months, with 20% forecasting growth and 20% a decline.
- The outlook for both the state and national economies is muted; only 12% expect the Connecticut economy to expand next year, with 30% forecasting national growth.
According to the survey, 47% of businesses expect to see a profit this year – down considerably from 77% in last year’s survey – with 28% forecasting a loss (versus 11% in 2019) and 25% hoping to break even (versus 13% last year).
Just 20% of respondents said their workforce was growing, with another 20% saying it was declining; 59% said it was staying the same.
Asked what workforce changes they expected to make most-pandemic, 22% said they would expand remote work, with 21% indicating they would add jobs.
DiPentima said that small businesses are “clearly struggling to get back on their feet as a result of the pandemic. While Connecticut is recovering better than most states, this survey clearly illustrates there’s a lot at risk with our economy.
“We must do everything we can to support and nurture employers, particularly small businesses, as they lead the recovery,” he continued. “This is about creating a strong, more sustainable environment for the state’s economic recovery and addressing the issues that traditionally hamper growth or will block future growth.”
The survey includes policy recommendations designed to help businesses — particularly small businesses — manage the high cost of navigating Covid-19 restrictions, create and retain jobs, and rebuild.
Those recommendations include initiatives to drive workforce development, infrastructure investments, urban renewal, small business relief, and a greater return for taxpayer dollars.
“We face unprecedented challenges in the coming months, but they are challenges that we can overcome by dramatically reshaping the relationship between the public and private sectors,” DiPentima said. “Let’s work together to shape policies that drive economic growth, create opportunities for everybody, and continue to make Connecticut a great place to live, work, and raise a family.”
The survey was mailed and emailed from July 8 through July 29 to more than 6,600 executives throughout the state; 962 business leaders participated in the survey, with a response rate of 14.5% and a margin of error of +/-3%.
The majority of surveyed firms are small businesses: 82% employ less than 50 people; with 9% employing 50-100 workers; 5% between 100 and 249; 2% 250 to 499; and 1% employ more than 500 employees.
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