Connecticut Legislature Bolsters Manufacturing Legacy
03 Aug, 2014
By Rachel Duran
The 2014 Connecticut legislative session was a productive one for economic development in the state, where two major manufacturing initiatives were signed into law.
The Connecticut Aerospace Reinvestment Act, and the Connecticut Manufacturing Innovation Fund will have a dramatic impact on manufacturing activities.
Under the Connecticut Aerospace Reinvestment Act, United Technologies Corp. (UTC) will invest up to $500 million to upgrade and expand its aerospace research, development and manufacturing facilities during the next five years. During the same time period, UTC expects to invest up to $4 billion in research and other capital expenditures in the state. The effort will impact more than 75,000 jobs in the state.
“The deal with UTC allows them to do something that I think is quite creative; to monetize some of the tax credits they have sitting on their balance sheet,” says Catherine Smith, commissioner, Connecticut Department of Community and Economic Development. “They have been unable to use them effectively, offsetting taxes. We struck a deal to spend $400 million of the tax credits, essentially allowing them to monetize them early, in exchange for their agreement to build a number of facilities.”
UTC will construct a new Pratt & Whitney corporate headquarters, which it will keep in the state for a minimum of 15 years, as well as keep the Sikorsky Aircraft Corp. corporate headquarters in the state for a minimum of five years. UTC will also build a new Pratt & Whitney worldwide engineering center of excellence; create a custom training center at UTC Aerospace Systems in Windsor Locks; build new labs and infrastructure at its research center; and invest in new research at these operations.
The reinvestment act is a great opportunity for businesses in the state, Smith says. There are nearly 700 supply chain companies in the state that do work for Pratt & Whitney, Sikorsky and the UTC aerospace division.
The aerospace and defense manufacturing cluster is important to the Hartford region. “The UTC agreement will be an amazing contribution to the region and the state,” says John Shemo, vice president and director of economic development, MetroHartford Alliance.
Under the second manufacturing initiative, the Connecticut Manufacturing Innovation Fund, funds will support supplier companies in the aerospace sector and other manufacturing sectors as they ramp up to support large OEMs in the state, such as UTC and General Dynamics. Smith says supply chain companies need trained workforces, and the ability to compete with high quality materials and parts. She says many of the suppliers will make investments before they see a dollar of revenue.
As such, the fund ensures Connecticut’s suppliers have the ability to modernize and invest in their workforces. Smith would like to see a voucher program where manufacturers can access technical expertise such as in the higher education system, have the ability to develop prototype parts — even creating better marketing plans.
These new funds join other noteworthy economic programs in the state, which includes the Small Business Express Program. This funding supports small companies with less than 100 employees, with either a grant of up to $100,000, or a loan of up to $300,000. “We have had a total of about $250 million available for that program,” Smith says. “We have assisted 1,100 companies to the tune of $140 million.”
The First Five Program supports companies that plan to conduct substantial expansions. The program was so successful in its first session that the state’s Legislature added 10 additional slots. Smith says 11 companies have received the benefits offered under the First Five Program, which includes incentive support based on the creation of the first 200 new-full time jobs in the state. These businesses continue to receive credits for each net new job created above 200.
Industries and Innovations
Smith says Connecticut’s economic development climate is well suited for industries relating to manufacturing (including aerospace, marine applications, medical devices); bioscience and life sciences; insurance and financial services; and emerging expertise in fuel cell research, and IT and digital media.
Noteworthy projects of late include the announcement in April by Electric Boat that the facility in Groton was awarded a $17.6 billion contract from the U.S. Navy to build and deliver Block IV Virginia-class submarines. Electric Boat is the prime contractor for the design and construction of nuclear submarines for the U.S. Navy, and has subcontracted with nearly 500 companies located across Connecticut.
In June, precision manufacturing company, A-1 Machining Co., was awarded funding to support its efforts to expand, purchase machinery and equipment, and make leasehold improvements at its new facility in New Britain. A-1 Machining makes parts for turbine engines for commercial airlines, military aircraft, power generation and marine applications.
In the digital media sector, in May, ESPN held a ribbon cutting for the state-of-the-art Digital Center 2 facility in Bristol, Smith says. The company was one of the original First Five companies that received funding to support expansion efforts. ESPN’s new multi-platform digital production facility includes four studios, six production control rooms and 26 edit rooms; and is the new home for the “SportsCenter” program.
In other activities, Starwood Hotels & Resorts Worldwide Inc. announced it will expand its global headquarters located in Stamford. The company will retain 980 employees and create 340 new full-time jobs. The company operates in 100 countries under nine hotel brands.
Education and Talent
Smith says the University of Connecticut (UConn) is underway with the expansion of its health facility in Farmington. The hospital is being rebuilt, and staff will be added at the medical and dental schools. “They are adding 50 new research positions at the university,” Smith notes.
In other bioscience and life science activities, The Jackson Laboratory has moved its genomics center adjacent to the UConn health care facility; they are creating up to 100 new jobs, expecting to create up to 300. What’s more, Alexion Pharmaceuticals Inc., another original First Five company, is undergoing an expansion in downtown New Haven, building a new facility adjacent to the Yale-New Haven Hospital and Yale School of Medicine, and creating up to 300 new jobs.
Shemo says the Hartford Hospital is expanding its Center for Education, Simulation and Innovation, adding 40,000 square feet to an existing 20,000 square feet, creating one of the largest human simulation labs in the country.
In regard to Connecticut’s fuel cells cluster, the state is home to 30 percent of all the nation’s fuel cell employees. The activities are driven by research taking place in the state’s higher education system. Connecticut is also home to the Northeast Electrochemical Energy Storage Cluster, a network of industry, academic, government and non-governmental leaders helping businesses provide energy storage solutions. In addition, the Connecticut Hydrogen-Fuel Cell Coalition is comprised of stakeholders involved in fuel cell and hydrogen technologies and fueling systems.
Workforce training efforts related to precision manufacturing are important to Hartford’s business climate, which struggles to maintain a supply of qualified individuals, a challenge seen throughout the nation. MetroHartford Alliance’s international business council is exploring whether modeling a German-based skills initiative in precision manufacturing would be applicable in Hartford. “Our plan is to put together a meeting with local German manufacturers to gain a sense of whether they would be interested in this model,” Shemo says. “If they are interested it would give us some signal that companies in Germany would be interested in us pursuing this model.”
MetroHartford Alliance’s international business council is quite active, with areas of focus on Israel and Germany. The community hosts the Connecticut-Israel Technology Summit, which has expanded to a couple of hundred attendees. Eastern Europe is an emerging international destination. Quinnipiac University in Hamden is home to the Central European Institute, which houses the Central and Eastern European Network. “We collaborate with the university on this activity,” Shemo says.
Hartford’s officials are working with a consulting organization, JumpStart Inc. of Cleveland, Ohio, to assist in developing strategies for entrepreneurial efforts in the community. The group will provide recommendations on how to best utilize an existing loan fund of nearly $1 million to close the gaps in funding startups. Along these lines, a new service provider called reSET Social Enterprise Trust is underway, which is an incubator/accelerator focused on social entrepreneurs. This year, Connecticut’s legislature passed legislation to support businesses that have a bent toward social entrepreneurship.
Also at the state level, Connecticut Gov. Dannel Malloy, is ensuring his administration’s initiatives are transparent to taxpayers. For example, Smith’s department publishes on a quarterly basis the names of all companies that have received incentives, outlining the status of their projects. The information outlines what the contracts stipulate, job creation expectations, and so forth. “Our programs are thought through, answering questions as to what happens if a company doesn’t perform.”
Shemo says the quality of life amenities in Hartford are being enhanced with the addition of apartments and commercial developments in the region, including the revitalization of Front Street, which is part of a larger development with the convention center. A new 500-seat plus music venue will open this summer. “The biggest news coming into this same development is the University of Connecticut is relocating their west Hartford campus to downtown Hartford’s historic Hartford Times building; the MBA school is coming to Hartford,” Shemo says.
Illustration by samarttiw at Free Digital Photo.net