Merger move illustrates small-city challenge
The criticism from Republicans that the move of the headquarters is a result of tax policy and an unfriendly business environment in the state is a canard.
It is certainly not good news when a major corporation announces it is moving its headquarters out of your state, even when it comes with a promise to leave rank-and-file jobs in place.
That is the news the state got this week when the Farmington headquartered United Technologies Corp. announced its mega-merger with the defense contractor Raytheon Co. If successful in getting all regulatory approvals — more about that later — the new company will operate under the name Raytheon Technologies Corporation.
UTC Chief Executive Officer Greg Hayes offered assurances that the company’s manufacturing and research operations in Connecticut will continue. He will become CEO of the combined company.
“Raytheon Technologies will maintain a strong presence in Connecticut for years to come,” Hayes said in a conference call with industry analysts.
UTC manufactures jet engines at its Pratt & Whitney plants in East Hartford and Middletown and also has a research facility in East Hartford. About 19,000 UTC employees work in Connecticut. During the administration of Gov. Dannel P. Malloy, UTC received some $400 million in tax credits to invest in those facilities.
The good news is that those operations and the associated jobs will remain in the state. Gov. Ned Lamont said Tuesday that UTC has promised to hire 1,000 workers in the state over the next few years, The Hartford Courant reported.
The bad news is that the merged company will be consolidating its headquarters in the Boston area, where Raytheon is now located, meaning about 100 top corporate jobs will shift out of Connecticut.
That is significant, certainly. These are high-paying jobs, held by the kind of people who play key roles through both leadership and philanthropy, contributing to our communities and shared civic life.
But the criticism from Republicans that the move of the headquarters is a result of tax policy and an unfriendly business environment in the state is a canard. There is zero evidence tax or business policies drove this decision. The explanation is simpler; the Boston area is a more attractive, high-profile location for a major corporation to have its headquarters.
Trying to shift blame for the bad news to the first-year Democratic governor and the Democratic-controlled legislature is the kind of political game playing that should be expected, we suppose. But when that is done with, it would be good to have a genuine discussion about addressing the concerns this move raises.
It has happened before. General Electric left its headquarters in Fairfield for Boston two years ago.
Connecticut is a state of small cities and will continue to be at a disadvantage when competing with Boston, New York and other major cities. Connecticut needs a plan to make its smaller cities assets, rather than liabilities.
While they may not be attractive to the corporate giants, Connecticut’s cities could be made attractive to companies on lower tiers and to startups with potential for job growth, companies that are getting priced out of the major cities but still want the cosmopolitan options a city — even a smaller one — can provide.
But making Connecticut cities better requires a strategy, one that eases their disproportionate property tax burden, improves transportation options and efficiency, offers support to renovate and repurpose older building stock and provides improved job opportunities for those in poorer neighborhoods. A big challenge, certainly, much tougher than taking political pot shots, but necessary to make the state again a place where companies grow, not depart.
As for the regulatory issues, Sen. Richard Blumenthal, D-Conn., was making the right points.
“As a member of the Senate Armed Services Committee, I am troubled by the possible impact on cost and competition of defense product, which may significantly affect American taxpayers,” Blumenthal said in a statement issued by his office. “This entire deal merits aggressive and penetrating scrutiny by Congress — as well as the Pentagon, the Department of Justice, and other executive branch agencies.”
President Trump, in a CNBC interview, expressed concern about the impact on competitive defense bidding.
Though both major players in the aerospace and defense industries, the companies have little production overlap. The merger should likely pass regulatory muster. But before a final verdict is rendered, the merger deserves the close scrutiny Blumenthal demanded and Trump suggested.