Yale School of Management

At Alumni Panel, Leaders Ask: How Did Connecticut Lose GE?

When General Electric decided to leave Connecticut for Boston last year after more than four decades in the state, policymakers were left asking what had gone wrong—and how Connecticut could attract and retain businesses in the future.

During a forum on February 8 titled “GE Whiz What Happened? Lessons for Connecticut’s Economic Growth,” business leaders and current and former policymakers talked about the challenges of doing business in the state and why some companies, such as General Electric, have left. The Yale SOM alumni event was moderated by Jeffrey A. Sonnenfeld, senior associate dean for leadership programs and Lester Crown Professor in the Practice of Management.

Governor Dannel P. Malloy, who had introduced a new budget for the 2017-18 and 2018-19 fiscal years to lawmakers earlier in the day, said that the state needs to balance immediate needs—including paying for pension and benefits obligations—with looking to what can be done to attract and retain businesses in the state.

“These things don’t happen overnight, and Connecticut didn’t become a problem state overnight, either,” Malloy told the audience. “We’re spending a lot of time trying to undo that [pension obligation] damage.”

Malloy said part of his focus is finding industries that are most likely to grow, such as biosciences and advanced manufacturing, so that the state can lay the groundwork for investment.

“It’s hard for Connecticut to compete in low-valued-added manufacturing,” he said. “We have very cold winters and hot summers and high other costs as well. We’re just not going to be a great widget manufacturing state again, but because we have a great workforce and a strong background with engineers, we can bring advanced manufacturing here.”

Arjun Ganesan ’12, CEO of Ancera, a biosciences company based in Branford, said the state needs a “big win”—a major company—to convince other people to move to Connecticut. To accomplish that, the state needs to find ways to improve its overall quality of life.

“Quality of life in pockets is excellent, but in other areas, it’s not as good,” Ganesan said.

One problem, Malloy and others argued, is the state’s lagging transportation infrastructure. State officials said that Connecticut’s advantage is its location between Boston and New York. But getting to either city quickly remains a hurdle, with gridlock on the interstates and a slow-moving train system.

Malloy and lawmakers argued that their hands are tied by two-year terms, during which constituents are frequently concerned about immediate improvements instead of long-term plans for high-speed rail or other infrastructure projects.

Ann Klee, vice president for Boston development and operations at General Electric, said that part of the reason the company decided to leave the state was a lack of “innovation economy” in the state.  

“GE was here for 42 years, and it was a great place for us, but it was time for us to change,” Klee said. “We as a company are changing into a digital, industrial company… In order to do that, we needed to be in a different place, where we could attract and retain talent—a place that has a strong, fiscal, economic, political environment and is surrounded by a strong business community of entrepreneurs and venture capitalists.”

Good transportation is part of such an environment, Klee said. Since the company’s move to Boston, fewer employees drive to work, with most using easily accessible public transportation.  “Transportation is huge for us,” she said. “We need to not only be able to get to work easily, but also 180 countries around the world.”

Existing public-private partnerships for transportation could be expanded to help other businesses, argued Stamford Mayor David Martin, who said that his city has 68 shuttle lines running from the train station to various businesses, including Synchrony Financial’s nearly 15,000 employees. Martin said that the state needs to shift away from a “suburban strategy,” which he says has largely used tax dollars to benefit smaller communities, and refocus on urban areas in order to boost their business potential and retain existing companies.

“Stamford doesn’t get squat in terms of state support,” Martin said. “We’re sending all of that money away, and I’m trying to build a place for people to live and to grow their businesses and I’m getting no help at all. When we talk about transportation, is the DOT [Department of Transportation] focused on economic development?… I’ve got to protect Synchrony’s shuttles, because otherwise the DOT will convince [Synchrony Financial CEO Margaret Keane] to go elsewhere.”

Synchrony Financial President and CEO Margaret Keane said that partnerships can do more than provide transportation. She noted that the company has partnered with the University of Connecticut, providing a $2.2 million grant to the university for training students in cybersecurity. She added that the company’s location in Stamford brings some benefits, providing easy access to New York City with a lower cost of living.

“I do think the quality of life is pretty good,” Keane said. “People like living here. One of the reasons we chose to stay is that there was so much change spilling out with GE that to make another change would make life very difficult. I’m not saying it’s all easy, but we’ve made a commitment to Connecticut and we’re trying to make it work.”

Ned Lamont ’80, founder and chairman of Lamont Digital Systems, who helped organize the event, said he has spoken with GE and other businesses about two strategic needs for the state: finding ways to grow cities and getting the state’s fiscal priorities in check.

“We’ve got to do everything to grow our cities and make them places were young, tech-savvy people want to move and live, where a company like GE knows they can attract the very best people here,” Lamont said. “Our budget situation is a fiscal train wreck, and the business community knows that every two years we’re going to go through hell and there will be a target on their back. We’re not dealing with the budget crisis and we’re taking it out on our cities. Until we get that right, GE will keep leaving.”

John Olsen, president emeritus of the AFL-CIO labor federation, said that Connecticut’s problem is too many levels of red tape and bureaucracy, noting that each town has its own local government while also its own representatives at the state level who jockey for resources and individual community’s needs. Olsen’s solution? Regionalization.

“You know what the problem is? I’m not going to run a company in a state with 169 towns, 164 boards of education, with 151 members of the General Assembly in the House and 36 in the Senate,” Olsen said. “We’ve got more towns today then we had in the 1830s, so if you really want to grapple with something, we’ve got to do things so that we can solve problems. You talk about high-speed rail? You’ll never get it through. You can’t put up a telephone pole in this state; you can’t build a cell phone tower… I know it takes a Constitutional Convention, but maybe I’ll live long enough to see it.”

Speaking after the event, organizer Jeffrey Sonnenfeld said that it had been marked by extraordinarily frank and constructive discussion.

“We are told that this was the most diverse gathering of Connecticut opinion leaders across sectors, institutions, and parties since its founding over 380 years ago, including both state constitutional conventions,” Sonnenfeld said. “As remarkable as the mix of leaders from business, government, community organizations, academia, etc., was the instant candor to address a key set of collective challenges. Somehow, we all closed on a constructive, spirited note. We are in debt to Ned Lamont’s generous sponsorship and GE’s selfless participation.”

About the Event

Download Executive Summary (PDF)
 

GE’s decision to move its headquarters to Boston was viewed by many Connecticut residents as a major loss.  Others view it as an opportunity for Connecticut to push legislators to reform state government.  All Yale SOM alumni are invited to join Yale SOM’s Jeffrey A. Sonnenfeld, senior associate dean for leadership programs amd Lester Crown Professor in the Practice of Management, for a candid peer exchange titled “GE Whiz What Happened? Lessons for Connecticut’s Economic Growth,” with discussion of the long-range impact GE’s exit will have on Connecticut and the regional economy.

The on-campus event is for alumni only.


 

Distinguished Guests Include:

Dannel Malloy, Governor of Connecticut
Ted Kennedy, Jr. ’91 MES, Senator, State of Connecticut
Ned Lamont ’80, Founder & Chairman, Lamont Digital Systems
Ann Klee, Vice President, Boston Development & Operations, General Electric
Arjun Ganesan ’12, CEO, Ancera
Dan Esty ’86 J.D., Hillhouse Professor of Environmental Law & Policy, Yale Law School
Jim Torgerson, CEO, AVANGRID, Inc.
John Lapides ’72 B.A., CEO, United Aluminum
Josh Geballe ’97 B.A., ’02 MBA, CEO, Core Informatics
Margaret Keane, President & CEO, Synchrony Financial
David Scheer ’84 M.S., Chairman, Achillion Pharmaceuticals
Oz Griebel, President & CEO, MetroHartford Alliance
John McKinney, Former Connecticut State Senator
Brendan Sharkey, Former Speaker of the House, 2013-2017
Scot Esdaile, President, Connecticut State Conference, NAACP
John Olsen, President Emeritus CT AFL-CIO
Themis Klarides, Republican Minority Leader, Connecticut House of Representatives
Joseph F. Brennan, President & CEO, CBIA
Matthew Nemerson ’81, Economic Development Administrator, City of New Haven
Bruce Alexander ’65 B.A., Vice President for New Haven & State Affairs & Campus Development
Wayne Cooper, Executive Chairman, Chief Executive Group
Marshall Cooper, CEO, Chief Executive Group
Marna Borgstrom ’79 MPH, President & CEO, Yale New Haven Health System
Christopher Swift, CEO, The Hartford
David Robinson, Executive Vice President & General Counsel, The Hartford
Andy Merrill, Partner, Prosek Partners

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