Connecticut is Open for Business. This is How and Why.
7 Feb 2024
Just a few years ago, few would have imagined that Connecticut might become one of the best states in the nation for business. For decades, Connecticut ranked near the bottom of practically every business climate survey, as even the Connecticut legislature admitted in 2015, with business leaders despairing over the state’s massive deficits; fiscal mismanagement; onerous taxes; crumbling infrastructure; and hostile and defeatist attitudes towards business.
But over the last half-decade, business leaders working with Gov. Ned Lamont have quietly played an underappreciated but significant role in reviving Connecticut as a premier destination for businesses, large and small. Despite criticism from the extreme flanks of both political parties, upon his inauguration in 2019, Lamont had the political courage to seek counsel from and bring in independent voices from the business world, including asking the four authors of this op-ed to help as unpaid volunteers in building out the newly reconstituted AdvanceCT as the state’s business attraction and retention engine.
Former PepsiCo CEO Indra Nooyi and former Webster Bank CEO Jim Smith served as co-chairs from 2019 until 2021, followed by Synchrony CEO Margaret Keane and Yale Senior Associate Dean Jeffrey Sonnenfeld from 2021 until this month. As the leaders of AdvanceCT’s board over the last five years, the four co-authors have spent thousands of hours attracting new businesses to Connecticut, helping Connecticut-based enterprises grow and thrive, and selling Connecticut to fellow business leaders, drawing on our credibility as peers from the business world rather than coming from traditional economic development backgrounds or government bureaucracies.
While each of us have many anecdotes of business attraction triumphs, don’t just take our word for it; consider what statistics say about Connecticut’s economic transformation over the last three years alone:
There have been over 100,000 new jobs created in Connecticut with at least $100 billion invested in Connecticut by the private sector (as a measure of reference, the state government budget is $25 billion annually); with a focus on several crucial high-growth strategic sectors including advanced manufacturing, particularly in aerospace/defense, as well as life sciences/biotech, financial services/fintech, and renewable energy.
In aerospace/aviation, Connecticut now has the single highest concentration of defense and aerospace manufacturing of any state in the nation, contributing 10% of the state’s GDP and representing 135,000 total jobs and a 30% growth. In aircraft engine and parts manufacturing alone, Connecticut represents 25 percent of all US production; as well as 15 percent of all US shipbuilding/repair work as the largest maritime hub in New England.
In biotech/life sciences, the pool of venture capital funding available in Connecticut has doubled, with 200 VC investors based here managing over $300 billion assets under management, No. 2 of any state in the nation; and Connecticut life sciences startups have raised $3.2 billion in early stage fundraising, $2 billion in IPO proceeds and more than $20 billion in M&A proceeds. No wonder Connecticut is now the No 2 state for bioscience R&D investment, No. 3 state for bioscience VC investment, No. 3 state for bioscience patents, and No. 3 state for biological advanced degrees, thanks in part to our 38 colleges and universities leading the way on bioscience research with New Haven becoming a premier biotech hub.
Financial services/fintech now employs over 107,000 Connecticut residents – No. 1 of any state for concentration of finance talent – with over 5,400 financial companies contributing $30 billion to the state’s GDP, including 10 of the world’s 20 largest hedge funds. Stamford has emerged as a hub for fintech innovation, with fintech startups raising over $3 billion in funding.
Although Connecticut has long been criticized for high energy costs, that is quickly changing as Connecticut emerges as an epicenter for clean energy, with the highest concentration of offshore wind jobs in the US and No. 3 for offshore wind power generated, No. 2 in clean energy patents, as well as No. 3 for fuel cell patents.
Of course, Connecticut’s economic turnaround has been a true team effort across the public and private sectors, starting with Lamont, who has had the political courage to prioritize business development as the state’s most persuasive and tireless advocate. As an accomplished entrepreneur himself, Lamont not only appreciated the scope of the state’s economic woes when he took office; he understood what needed to be done and knew implicitly that business leaders could help as full partners.
Furthermore, Lamont drew extensively from the business world in selecting his administration’s top officials, including three successive commissioners from unconventional backgrounds to lead the state’s Department of Economic Community Development, Goldman Sachs banker David Lehman, real estate entrepreneur Alexandra Daum, and technology venture capitalist Dan O’Keefe, who continues to serve today. All three have led the way in fortifying the state’s talent pipelines, public-private partnerships, funding support, and workforce development. Lamont also appointed the endowment management expert, former Carnegie Corporation Chief Investment Officer Ellen Shuman, to reorient Connecticut’s historically underperforming pension investments as chair of the Investment Advisory Committee.
While we have done our part to facilitate connections to our business peers as volunteer co-chairs – with our successors, Quinnipiac University Judy Olian and Amphenol CEO Adam Norwitt, well positioned to continue this important work – much of day-to-day heavy lifting of business attraction and retention is done by the impressive AdvanceCT team, first led by Peter Denious and now by John Bordeaux. To skeptics who suggest that Connecticut’s economic recovery may have progressed smoothly anyway, merely the product of favorable macroeconomic conditions or secular growth trends, we would point to some of the recent wins which would likely not have occurred without AdvanceCT’s proactive engagement. Based on statistics compiled by the AdvanceCT research team led by Rachel Gretencord, in 2023 alone:
AdvanceCT participated in 50 business attraction and growth wins, representing 2,000 jobs created and $500 million in future investments.
AdvanceCT doubled the current project pipeline by adding hundreds of prospective projects in partnership with industry, putting business attraction efforts on firm footing for years to come, with AdvanceCT active membership and board representation encompassing virtually every major employer in the state.
AdvanceCT relaunched CampusCT, which grows CT’s employment-ready entry-level talent pool by pairing college students with professional opportunities as well as providing a more streamlined employment portal for the 150,000+ college students pursuing degrees in the state, taking advantage of the fact that Connecticut has one of the youngest populations of any New England state.
Every state has its own economic development triumphs and business attraction/retention wins to point toward. But Connecticut’s story is special. As the four co-chairs of AdvanceCT over the last five years, each of us is confident that many years from now, when the full story is written of Connecticut’s economic turnaround, Connecticut’s revival of private sector dynamism and entrepreneurial spirit, catalyzed by productive, mutually-beneficial public-private partnerships such as the ones we have facilitated, will be used as a model for how state political leaders and business leaders can work together productively.
Jeffrey Sonnenfeld is Senior Associate Dean and Lester Crown Professor of Management Practice at the Yale School of Management.
Margaret Keane is the former CEO and Executive Chair of Synchrony, one of the nation’s premier consumer financial services companies.
Indra Nooyi is the former Chair and CEO of PepsiCo and chief architect of Performance with Purpose, a legacy which encourages PepsiCo to do what is right by being responsive to the needs of the world.
James C. Smith is the CEO of JCSmith Advisors and Chairman Emeritus and former CEO of Webster Financial Corporation, a $70 billion regional commercial bank based in Connecticut. Over the last five years, the four co-authors have served together as Co-Chairs of AdvanceCT, the state’s economic development vehicle.
With research assistance from Steven Tian, Director of Research at the Yale Chief Executive Leadership Institute, and drawing from data provided by the AdvanceCT research team led by Rachel Gretencord
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