For Immediate Release
Jan. 15, 2010

TECHNOLOGY NOW CONSIDERED MOST IMPORTANT SECTOR TO EASTERN CONNECTICUT’S ECONOMIC SUCCESS

CBIA survey finds rising business costs, the state’s fiscal crisis and legislators making it tougher to survive

Eastern Connecticut businesses, like their counterparts across the state, have been hit hard by the recession. They cite the cost of doing businesses as their primary challenge, specifically identifying health care premiums, local property taxes, energy, and labor costs as major concerns. Forced to make difficult decisions, including trimming their workforce and implementing employee pay cuts or reducing benefits, eastern Connecticut business executives believe the state’s fiscal crisis will continue to have a negative impact on their operations and they blame legislators for making it even tougher to be successful.

And while tourism and defense are vital to eastern Connecticut’s economy, technology is now considered the most important sector in driving the region’s future economic success.

These are some of the findings of the 2010 Survey of Eastern Connecticut Businesses conducted by the Connecticut Business & Industry Association (CBIA) in partnership with the Chamber of Commerce of Eastern Connecticut, the Greater Mystic Chamber of Commerce, and Citizens Bank.

The cost of doing business tops the list of challenges for eastern Connecticut businesses, with 72 percent of respondents citing it as their greatest challenge. That’s up from 29 percent in 2006 and 59 percent in 2008.

As in past years, respondents identified health care as their most onerous business cost, with 68 percent describing it as a significant burden and 20 percent as a slight or moderate burden. Other significant concerns are local property taxes (46 percent), the cost of energy (44 percent), and labor costs (28 percent). Nearly two-thirds claim the state legislature has had a negative impact on their ability to operate a successful business.

“Two key findings jump off the pages,” says Christopher Rixon, chairman of the board of the Greater Mystic Chamber of Commerce. “First, the cost of doing business, while not unique to southeastern Connecticut, continues its dramatic rise as the area’s leading challenge. Second, nearly two-thirds of respondents claim the state legislature has a negative impact on their ability to operate a successful business. The connection between the two findings is telling: eastern Connecticut businesses feel a true disconnect with Hartford as they expect to pay more and receive less.”

While the economy has shown slight improvement, most respondents are not anticipating positive changes over the next 12 months. In fact, more than three-quarters (78 percent) of eastern Connecticut companies believe the state fiscal crisis will continue to have a negative impact on their operations next year. National economic uncertainties (71 percent), price increases for commodities (58 percent), the price of energy (57 percent) and a slowdown in lending (54 percent) are also expected to be problematic in the next 12 months.

“The survey provides a number of proposals to assist with economic development that should be strongly considered by policymakers and public officials in 2010,” says Richard M. Barry, president, Citizens Bank, Connecticut.

Other survey highlights include:

• Nearly half (45 percent) of eastern Connecticut businesses have downsized in response to the recession, and 42 percent have reduced employee compensation and benefits.
• Most believe the region’s recovery will lag the state’s, anticipating that eastern Connecticut’s economy will not recover lost jobs, housing prices and consumer confidence until 2011 (35 percent) or later (23 percent in 2010 and 17 percent in 2013).
• Quality of life is consistently cited as the single greatest benefit of operating a business in eastern Connecticut (58 percent) followed by the region’s growth potential (17 percent) and skilled workforce (10 percent).
• The region’s casinos are seen as primary drivers of tourism (64 percent) followed by beaches and harbors (18 percent), and Mystic Seaport, Aquarium and Olde Mistick Village (15 percent).
• The majority of respondents (87 percent) believe transportation projects are important to maintaining a healthy business environment in the region.
• Improving the region’s transportation infrastructure ranked second only to technology-based innovation as the top economic priority for eastern Connecticut.
• Despite widespread job losses, 31 percent of respondents are having difficulty attracting qualified workers. Businesses cited a lack of qualified applicants (69 percent) the region’s high cost of living (44 percent) and high housing costs (30 percent) as the main difficulties filling positions.
• Almost half of the businesses surveyed (49 percent) believe social networking technologies have potential benefits for their firms.

“We should focus our attention on relieving the business community of some of the burdens indicated in the survey results, as doing so will lead to a positive economic future for the entire region,” said Tony A. Sheridan, Chamber of Commerce of Eastern Connecticut president and CEO.

The survey was conducted by e-mail in October 2009, during one of the most volatile periods in recent history for Connecticut. The survey has a margin of error of plus or minus 3.7 percent.

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CBIA is the state’s largest business organization, with 10,000 members.

 

For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

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