July 16, 2012

Goodrich skirmish part of larger fight

Touchy, touchy.

Sometimes we here in the Land of Steady Habits are so accustomed to losing economic development battles that we have a knee-jerk reaction to assume the worst. Such seems the case in the contretemps over United Technologies' decision to locate its newly reconfigured Aerospace Division in North Carolina.

In patting themselves on the back for landing the headquarters, Charlotte civic leaders suggested one factor was 'political diversification.' That was enough to send Gov. Dannel Malloy before the microphones to report the sky had not fallen, that his administration had not blown the deal and that indeed UTC would be a Connecticut company for years to come.

Let's take a deep breath and recap the bidding here.

UTC has acquired Goodrich, a Fortune 500 company that calls Charlotte home. There are about 200 jobs in that HQ operation. Yes, UTC could have moved them here at great cost and high attrition. It could have found someplace else to go if the deal was sweet enough — and there's every indication UTC is a sharp bargainer on such matters. Instead, it decided to take some generous welcoming gifts totaling more than $5 million to stay put in Charlotte.

Like so many 'First Five' companies here in Connecticut, UTC took money for essentially doing nothing. That's nice work if you can get it and UTC could. Good for UTC.

But long term it also may be good for North Carolina, which is keeping an estimated $650 million in the local economy over the next decade. While it would have been nice to have that money in Central Connecticut's economy, that was never likely. In fact, some 75 local jobs will likely head to the Tar Heel State but overall UTC seems committed at least short-term into letting Connecticut employment grow a bit.

And that's where the 'political diversification' comment comes into play. On one level, 'political diversification' is a no-brainer for such a huge and diverse company. Why not position yourself so that as many members of Congress scream when budget cuts threaten your business? It seems particularly timely as Congress ponders massive defense cutbacks. But this goes well beyond that argument.

UTC officials have made no secret of their displeasure with the direction of the Connecticut business climate, back certainly into the last century. Relations have thawed a bit under the Malloy administration and that's a good thing. But companies like UTC are like the proverbial ocean liner — they don't turn on a dime. The bias toward seeking non-Connecticut worksites has been ongoing for a number of reasons — proximity to Asian customers, cheaper labor costs and, yes, lower taxes and less regulation.

It would have taken a whole lot of 'First Five' money to overcome inertia and turn that ship on the Goodrich deal. Connecticut wisely chose not to go there. Just as wisely, Malloy says the state is in on-going talks with UTC about a host of issues.

Longer term, it's in everybody's best interest to convince UTC to halt the drift and enjoy life as a Connecticut company. It will probably take some incentives and some of that money will be little short of extortion as the company tests its ability to get Connecticut to pay for decisions the company had already made.

More importantly, it'll take actually listening to the perspective of a highly successful corporate giant who really can do its business roughly anywhere on the globe. Who knows, an executive like Malloy might actually learn something?

The Goodrich location issue is a minor skirmish in a much larger battle. Malloy can well afford not to contest this piece of ground but sooner or later he needs to signal that Connecticut really is open for business. And sooner would be best.

That's not going to be easy, given the legislature's record. But it's a battle well worth fighting.

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