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The Challenge Facing Our Chambers

The board of directors for the East of the River Chamber of Commerce voted late last month to continue its relationship with the Affiliated Chambers of Commerce of Greater Springfield, a move that brought a dose of stability to an agency that sorely needed some.
The ACCGS, as it’s called, lost its long-time director, Russell Denver, in January, and soon thereafter saw a 40-year-long affiliation with the West of the River Chamber (Agawam and West Springfield) come to an abrupt, if not unpredicted, end.
This short but tumultuous chain of events brought with it no end of speculation about Denver’s departure, the future of the ACCGS, the apparently larger presence of the Massachusetts Chamber of Business and Industry (now managing the West of the River group), and the prospects for chambers as a whole.
The East of the River vote has calmed the waters somewhat, although there are still questions and some uncertainty about what happens next.
What we hope happens is some kind of workable balance between the need for regionalism, for the Western Mass. business community to speak with one voice, and also community pride and independence, in the form of chambers representing individual cities and towns across this area. This will be a difficult assignment for sure.
But let’s back up a minute. The ACCGS was formed to give the comparatively small chambers in this region (in communities like Ludlow, West Springfield, Agawam, Longmeadow, and East Longmeadow) a louder, stronger voice, and also an opportunity to better-serve members through services that the Affiliated Chambers could offer (like a dedicated legislative watchdog) and the smaller chambers couldn’t.
And, for the most part, it worked out. Just how well it worked depends on who gets asked that question.
Problems, if they can be called that, arose when the Holyoke and Chicopee Chambers were invited to join the ACCGS and further this concept of a regional chamber, and said, in essence, ‘thanks, but no thanks’ and remained independent. Meanwhile, Westfield, courted in a similar fashion, said ‘yes,’ tried it for a few years, and then went back to an independent state, claiming that something (mostly a degree of its business identity) was lost in the translation.
Things became more complicated after the economy turned south in a big way. Businesses pressed to keep the lights on and meet payroll shed many expenses they deemed non-vital, and, in many cases, that meant the chamber and, more specifically, the ACCGS.
The organization has struggled considerably over the past few years, and quality of service has been impacted, leaving affiliates exploring and, in the case of the West of the River Chamber, exercising other options.
Where does all this leave us? In a somewhat difficult spot, one where communities like Amherst, Easthampton, Westfield, Chicopee, Holyoke, and Northampton want and need a chamber to call their own, but the region needs a strong voice if it is to compete globally.
Can both goals be met? Perhaps, and it is in the best interests of all the chambers and their respective boards to try to find a way. There can be independence and a sense of identity (a chamber office on most cities’ Main Street) but also a larger, more powerful force that can have an impact on regional economic-development efforts. But this can only come through cooperation, not competition and territoriality.
The bottom line is that chambers exist, or should exist, for one reason and one reason only — to effectively serve their members and the business community (however broad or narrow that term is defined geographically) as a whole. Doing this is becoming increasingly difficult as chambers become smaller and resources thinner.
The challenge moving forward is to find new and better ways for chambers to keep their identities while also working together to better-serve members, attract many new ones, and thereby strengthen their organizations and the region. Maybe now that we’ve restored at least a sense of stability, there can be movement in this direction.

Opinion

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Opinion
Business Needs Partnership with Education

A more comprehensive partnership between business and education could benefit both our student population and the economy. The need for expanded educational options, with more focus on career preparation, has been suggested in several recent studies and articles, and is becoming part of the national conversation.
And a new statewide vision can help us set that course.
We’ve read of states and cities with high unemployment where jobs are still unfilled due to a lack of potential employees with the necessary skill set. And according to a recent report, the National Skills Coalition has found that, by 2016, 38% of all job openings will require more than a high-school education.
Additionally, a new study conducted by the Harvard Graduate School of Education notes that, of the 47 million American jobs expected to be created by 2018, only one-third will require a bachelor’s degree. One solution, the report suggests, is to place stronger emphasis on career-focused education. The report also urges employers to expand opportunities for work-based learning by high-school students.
Over the past century, America moved ahead because of the widespread education of its workers. Now, that once-accepted education level has become inadequate, because many jobs previously available for a high-school graduate no longer exist, or at least not in this country.
With lower-skilled and lower-cost jobs moving abroad, could technically advanced products and processes lead to jobs that would be created and retained at home? Do the appropriate academic programs now exist, or can they be established in response to this need? Might the high-school dropout rate decrease if students could see a clear path through education to a useful and satisfying career?
One clear way to answer these questions in the affirmative is to strengthen partnerships — among educational institutions at different levels, and between education and business.
A pathway to progress in American education and jobs is being promoted by Richard Freeland, Massachusetts commissioner of Higher Education, in the Vision Project. This initiative asserts that Massachusetts will be a national leader, and will assess and report on five goals for our 29 public higher-education institutions. These goals include sending more Bay State high-school graduates to college, graduating them from college at a higher rate, measuring their academic achievement, aligning programs with the workforce needs of the state, and closing achievement gaps among different student population groups.
At Springfield Technical Community College, we have been working on these issues for some time, through a variety of means that include:
• Encouraging higher college-enrollment rates through outreach efforts to area high schools, and through scholarship and financial-aid support;
• Focusing on increasing student success through Achieving the Dream initiatives (STCC is the only Western Mass. college selected by the Lumina Foundation for this national, multi-year, grant-funded effort);
• Making sure our career programs lead to jobs in area businesses and organizations;
• Measuring student academic achievements, and comparing the results nationally; and
• Working to close the achievement gap among our varied student populations through focused advising and assistance toward student success.
One goal in the Vision Project — producing graduates that possess the skill sets demanded by business and industry — is the most relevant for this forum. Are we educating appropriately trained graduates for current and future jobs here in Western Mass.?
We believe so, partly because STCC career programs are advised by professionals in those specific industries. We are very grateful to the many businesses, banks, and foundations that have generously contributed toward these academic programs.
A few years ago, we conducted a series of studies in local industries from health care to financial services to manufacturing, and heard that we are, indeed, producing graduates with the requisite skills and knowledge.
We welcome a continued, ongoing discussion with industry leaders. What can we do better? Are there new academic areas that we should explore to assure a solid economic future not only for our graduates, but also for the potential employees needed to allow our regional industry to grow? We look toward an expanded, strengthened partnership between education and business to invigorate the economic vitality of our region.

Ira Rubenzahl is president of Springfield Technical Community College.

Editorial

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Opinion
Smaller Manufacturing Sector Still Relevant

Tony Fernandez said that, when a long-time Springfield official came to visit him recently at Baystate Metal Solutions’ Armory Street plant, this individual confessed that he long believed the property in question was abandoned and unoccupied. In fact, it had been humming — sometimes at a faster pace than others — for nearly 40 years.
This episode could effectively serve as a metaphor for the region’s manufacturing sector as a whole. To many, this industry is like that property on Armory Street: people drive by, figuratively, look at it quickly, and think there’s nothing going on there — that its day has passed.
In defense of that Springfield official, it would be easy to think this property was abandoned. Once a stable of sorts for the horses in Springfield’s mounted police patrol, it had certainly seen better days and looked shuttered (some renovations are now in progress). And in defense of those who see the manufacturing sector as a once-proud but now rather insignificant part of the region’s economy — well, it might be easy to think that, as well.
But as in the case of the Baystate complex, with the manufacturing sector, one just needs to look a little more closely.
Indeed, as the stories in this issue of BusinessWest relate, there is still a thriving manufacturing sector in this region. In truth, it’s a fraction of its once-massive size, but there is still depth, diversity, jobs, and resilience.
As the stories on Baystate and Hazen Paper reveal, manufacturing companies in this region — and all others — must, even if they’ve been around for 85 years (Hazen) or since 1973 (Baystate), adapt, change, diversify, and create ways to be ever-more resilient.
At Hazen, the third-generation paper converter still counts basic laminating work as its bread and butter. But in recent years, it has created and expanded a holographic division that is doing exciting, cutting-edge work helping graphic artists and packagers use a host of high-tech designs to sell everything from golf balls to toothpaste to Elvis CDs.
Investments required to bring creation and production of these holographic originations were significant and came with considerable risk, but the company made them, because they were necessary, not for survival, but for the company to continue growing in Holyoke and now Berkshire County and Indiana.
At Baystate, meanwhile, new ownership is injecting life into a company that had been declining for several years. A metal fabricator, Baystate, formerly Ace, still creates cabinetry and other components for everything from television transmitters to first-response vehicles on the decks of aircraft carriers.
Baystate has made significant strides in just seven months since Fernandez arrived, but it needs help in the form of local and state grants to help acquire new equipment and bring processes in house.
We hope that this help is forthcoming, and, likewise, we hope that economic-development officials, area lenders, and local leaders will look a little more closely at the existing manufacturing sector — what might appear to be abandoned, vacant property. If they do, they’ll often discover that there’s life inside.
And while it’s critical to support new, sometimes-exotic avenues of job creation — from wind turbines to cellulosic ethanol — investments in a smaller but still-significant manufacturing sector are equally important for the future of this region.

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Opinion
They Make a Difference in Many Ways

This region is going to miss Anthony Scott.
Holyoke’s police chief is slated to retire in a few months, when he turns 65. In addition to making a serious dent in the level of criminal activity in the Paper City, Scott has been as outspoken as they come, making him a real favorite of the media and a royal pain to the judges and parole officers he’s criticized seemingly without end for what he considers light sentences and decisions to release repeat offenders on their own recognizance.
Scott, who will retire to a consulting gig in South Carolina, will long be remembered around here for his hard-edged sound bites and newspaper headlines, but his main contribution — it remains to be seen whether it’s a lasting contribution (that’s up to his successor) — was his success with simply driving criminals out of his city because, as he put it, he made the “overhead costs” too high to do business there.
Scott’s decade-long tenure in Holyoke is a classic example of how there are many ways to make a difference in this region through one’s work or contributions to the community. And this year’s Difference Makers, as chosen by BusinessWest (profiled beginning on page 40), really drive that point home.
Lucia (Lucy) Giuggio-Carvalho has made a difference by starting Rays of Hope. She was still recovering from breast cancer when she pulled together the concept, the sponsors, the upfront money, and, yes, the courage and determination to get this fund-raiser off the ground. Today, Rays of Hope is on the brink of surpassing the $1 million mark for funds raised in one year, and with any luck, organizers will bust down that door this fall.
But beyond the money raised — which goes toward research and a variety of services for breast-cancer victims — the walk has become, well, an event, a show of strength and perseverance for survivors and their friends and families. The results are difficult to quantify, but Carvalho and her walk have certainly made a difference in thousands of lives.
Some of Tim Brennan’s contributions are hard to quantify as well. It’s like that when you’re a long-range planner. Some of his efforts as director of the Pioneer Valley Planning Commission are visible — like the bike trails running through area cities and towns, a visibly cleaner Connecticut River, and a widened Coolidge Bridge. However, with initiatives such as the Plan for Progress, which Brennan initiated, the benefits are difficult to see with the naked eye.
But they have succeeded in doing something that is desperately needed in this region — promoting business owners and municipal leaders to look beyond next week, next year, or even the next decade, imagine what the competitive landscape will be like, and be ready for that day.
As for Robert Perry, as he told BusinessWest, he’s not really handy, but that hasn’t stopped him from being a driving force with Habitat for Humanity — or any of the organizations to which he’s contributed his time, energy, imagination, and ability with numbers.
In short, his contributions have added up to something special — literally and figuratively.
Which brings us to Don Kozera, whose strong leadership skills and ability to shape goals and, as he put it, “define reality” for his staff, have enabled Human Resources Unlimited to help those with physical and mental disabilities find employment, independence, and self-esteem. By doing so, he and all those at HRU are making a difference in the lives of thousands of people, and this region as a whole.
BusinessWest invites all its readers to attend the Difference Makers gala on March 24 at the Log Cabin Banquet & Meeting House in Holyoke. We’ll be celebrating these five individuals, but also the many ways in which people can make a difference, and the hope that their work will inspire others to find and develop still more methods for having an impact.

Editorial

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Opinion
Taking Away Lessons from Evergreen Solar

It was a headline that many in this region might have missed, lost amid the shootings in Arizona, a slew of snowstorms and subsequent cleanup efforts, and the area NFL franchise starting the offseason much earlier than expected. But it certainly bears noting.
Evergreen Solar, the solar-panel maker that opened a plant at the former military base in Devens just two years ago, amid considerable fanfare and with state aid to the tune of $58 million (one of the largest packages ever awarded in Massachusetts), announced on Jan. 12 that it would be shuttering that facility, thus eliminating about 800 jobs. That news was bad enough, but it got worse when the company said, in essence, that it was a victim of weak demand and competition from China, and would be shifting work to that country, where it also has a plant. Company officials would say only that this was “a grueling decision for any management team to make.”
The announcement must have sent shockwaves through the Statehouse, where the Patrick administration, which worked hard to bring Evergreen here, touted the company as perhaps the best example statewide of the emergence of clean-energy technology as a source of both new jobs and economic development, and as a indication that the Commonwealth’s shrinking manufacturing base could in fact diversify itself and find new avenues for growth.
What’s more, state officials cited Evergreen as a fine illustration of how state incentives could be effectively put to use to create jobs, drive innovation, and stimulate momentum at a time of economic duress.
So much for all that.
In the wake of the announcement, state officials searched hard for a silver lining to these clouds (no pun intended), but couldn’t find any. Instead, they were left to start backpedaling on the dollar amounts actually given to Evergreen (so the damage might not look as great), tallying up all that the corporation will have to give back to the state — $3 million in direct grants and perhaps $20 in future tax breaks — because it didn’t meet the terms stipulated in the aid agreement, and offering some hope that the many infrastructure improvements (mostly new roads) undertaken as a result of the project would benefit future endeavors.
But in the end, this is a huge setback for the state, one that will definitely leave a mark — and no shortage of skeptics to question the next clean-energy deals to come down the road.
In the end, though, no mistake is a complete loss if people can learn from it. What can we learn for this?
For starters, don’t put so many eggs in one basket. This is easy to say in hindsight, but a lot of people were saying it before the state handed over nearly $60 in incentives. Many were questioning the strength and longevity of the solar-panel business and casting doubts about whether this country could compete, cost-wise, with China on such products, despite public-sector support.
The conventional thinking then (and even more so now) would be that $58 million would be much better-spent on many different initiatives with promise. Some would not have worked out, but, undoubtedly, some would have. By going all in — or close to that — on Evergreen, the state left itself vulnerable to a big hit, and that’s what happened.
The other big lesson: don’t give up on clean-energy ventures. The Evergreen meltdown will undoubtedly leave the state gun-shy when it comes to future opportunities of this kind, and while an extra dose of caution, or two, is in order, there is no need to abandon this emerging sector and leave it to other states, regions, or countries.
There are a number of former manufacturing hubs, like Springfield, Holyoke, Chicopee, and others, that are still at the beginning stages of the reinvention process. Clean-energy developers can still play a big role in that process.
Like the Patriots’ debacle against the Jets, the Evergreen Solar experience is a tough and, in some ways, embarrassing loss for the Commonwealth. It will be interesting to see if and how it bounces back.

Opinion

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Opinion
America’s Revival Begins in Its Cities

During economic downturns, we begin to fear that we are entering a permanent period of decline. But we can avoid that depressing prospect if we recognize that a revival will not come from federal spending or another building boom. Reinvention requires a new wave of innovation and entrepreneurship, which can emerge from our dense metropolitan areas and their skilled residents. America must stop treating its cities as ugly stepchildren, and should instead cherish them as the engines that power our economy.
America’s 12 largest metropolitan areas collectively produced 37% of the country’s output in 2008, the last year with available data. Per-capita productivity was particularly high in large, skilled areas such as Boston, where output per person was 39% higher than the nation’s metropolitan average. Boston also seems to be moving past the current recession, with an unemployment rate well below the national average of 9.8%.
Since 1948, the national unemployment rate has exceeded 9% only one other time: the grave 1982 recession. During the 1980s, we looked at Japan and saw an economy that seemed to be surpassing our own. Today, we watch with unease as China surges.
Yet American decline is not inevitable. During the 25 years after 1982, our real gross domestic product increased by 3.3% per year, which was also the rate of growth during the quarter-century before 1982. Our post-1982 growth involved massive economic restructuring. Manufacturing employment fell by 39% from its peak of 19.4 million jobs in 1979. The 1979-2009 manufacturing decline was more than offset by the 126% employment jump in professional and business services and the 184% increase in education and health jobs.
Boston offers a model of how cities can foster such transformations. In the 1970s, Boston seemed headed for the trash-heap of history. Manufacturing jobs had vanished, and social chaos ensued. But Greater Boston experienced three great decades, as a former industrial hub became a capital of the information age.
To succeed in the future, the country needs to produce a stream of new ideas, like personal computers, Facebook, and steerable catheters. We must produce goods and services innovative enough to command the high prices needed to cover high labor costs.
Such breakthroughs rarely come from solitary geniuses. The movie The Social Network hints at the messy, interactive process that created Facebook, which now has over 500 million users and is valued at about $40 billion. Mark Zuckerberg benefited from being surrounded by smart peers, whose ideas about social networking helped his company get started.
The roots of Boston Scientific reveal a similarly collaborative process that started in the basement of a Belmont church. The brilliant inventor (and spiritualist) Itzhak Bentov created a steerable catheter, catering to the demands of Boston’s medical community. Boston connected Bentov with John Abele, who brought his business vision and later connected Abele with other partners, who helped him create a medical-innovation behemoth.
Cities have long enabled economic creativity. Detroit in 1900 looked a lot like Silicon Valley in the 1960s, with an entrepreneur on every street corner. In that urban hotbed, innovators like Ford, Buick, and the Fisher Brothers supplied and financed each other — and borrowed ideas freely. The urban edge in engendering innovation explains why globalization and technology have made cities more, not less, important. While all workers in the Boston area benefit from the region’s human capital, the flow of knowledge seems strongest in the dense clusters of Boston and Cambridge.
For decades, the American dream has meant white picket fences and endless suburbs. But the ideas created in dense metropolitan areas power American productivity. We should reduce the pro-home-ownership bias of housing policies, such as the home-mortgage-interest deduction, which subsidize suburban sprawl and penalize cities. We should rethink infrastructure policies that encourage Americans to move to lower-density environments. Most importantly, we should invest and innovate more in education, because human capital is the ultimate source of both urban and national strength.
As we grope toward a brighter future, we must embrace our cities, and invest in the skills that are central to their success.

Edward L. Glaeser, a professor of economics at Harvard, is the author of the forthcoming book The Triumph of the City.

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Incentives — They’re a Necessary Evil

‘Corporate welfare.’
That’s the term used in some circles to describe the incentives — mostly in the form of state and local tax breaks, but they come in other forms as well — given to companies to locate in a community or remain there and expand their operations. It has a very negative connotation, and, in the eyes of many, it’s warranted.
Welfare, a term that’s being removed from the lexicon, at least in this state, and replaced with ‘transitional assistance,’ implies help to those who outwardly need it. Some would say that businesses, or at least the vast majority of them, don’t need and don’t deserve tax breaks and other assistance when very few companies, and no residents, get such help.
But this view does not reflect the current world in which we live and try to do business. Indeed, jobs are the lifeblood of every community, every region, every state, and, yes, every country, and the competition for jobs has never been more intense. Thus, incentives like those recently awarded by the state and the city of Springfield to Smith & Wesson and Titeflex (see story, page 6), and by the state to Qteros (now doing business in Chicopee), are certainly warranted, if not exactly popular.
States and economic-development regions are being quite imaginative, and generous, with incentives, especially in this economy and when so many former manufacturing centers are struggling. If these companies and others, such as Performance Food Group in Springfield when it was looking to expand in the city, did not get the tax breaks they requested, they would, in all likelihood, have gone elsewhere.
All this said, communities and states have a responsibility to award incentives wisely and fairly, with an eye toward helping a region, not an individual business. Most people remember when Springfield was handing out grants and attractive loans willy-nilly, to seemingly anyone who wanted to open a restaurant and had a business plan in hand — and they remember the consequences: unpaid loans and vacant storefronts.
Which is why we’re pleased to see that the state’s Economic Assistance Coordinating Council has changed the rules when it comes to how it awards tax subsidies. These changes, which came in the wake of criticism that the state had squandered millions of dollars over the years on dubious projects, such as fast-food restaurants and retailers who probably would have opened in the Bay State anyway, were certainly overdue.
The new regulations, adopted early in 2010, limit which companies are eligible for subsidies, and give state economic-development officials more discretion over the awards. In short, priority is now given to manufacturers and companies at the cutting edge of new technology and processes (such as Qteros) and to opportunities for job growth in the so-called Gateway Cities, which include Springfield, Holyoke, Chicopee, and others in this region.
And these awards come with some heavy strings, such as the promise of new jobs and investments in these companies’ operations. So while time will ultimately tell what happens at Smith & Wesson, Titeflex, Qteros, and other companies in this region, the money spent by the state and the communities involved appears for now to be well-spent.
As we said at the top, business incentives — or that much-less-flattering term for them, corporate welfare — seem inherently unfair when residential taxpayers don’t receive breaks and many business owners stay in a region for decades, and sometimes expand several times, without asking for or receiving financial assistance.
But the reality is that these incentives are, indeed, necessary, and you might as well drop the word ‘evil’ that usually follows that term.
When you do the math, and divide the state tax subsidies awarded to Smith & Wesson ($6 million) by the number of jobs created (225), it’s about $26,000. That’s a lot of money for a job, but for a region that’s screaming for new employment opportunities, especially good-paying jobs in manufacturing, that price sounds like a bargain.
And a price well-worth paying — if, and only if, the conditions are right.

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Opinion
Continuing a Proud Tradition

In the fall of 1995, BusinessWest created a new recognition program. Called ‘Top Entrepreneur’ (‘Entrepreneur of the Year’ was and still is copyrighted), it was launched to pay homage to the strong tradition of entrepreneurship in Western Mass., recognize its vast importance in the development of this region, and honor those who are continuing that tradition today.
Past winners have included Jeb Balise, president of Balise Motor Sales; Andrew Scibelli, then-president of Springfield Technical Community College and catalyst for the Technology Park on that campus; the Falcone family, founders of the Rocky’s Hardware chain; and the Holyoke Gas & Electric Department, chosen last year for its entrepreneurial exploits in the realm of regional economic development.
This year, the honoree is Robert Bolduc, founder and CEO of Pride, the large chain of stores that has become a significant part of the local business landscape. Bolduc, who started his operation with one small, full-service gas station in Indian Orchard, later to become one of the first self-service facilities in the region, grew it in every way it can be grown — from geography to the products on the shelves — and could have been honored at any time over the past 15 years.
He was our pick this year not merely for his body of work, although that was certainly a big factor — but also for the way in which he pressed on and continued to expand during the past few years, when most business owners in this region were hunkering down and merely trying to survive.
Bolduc’s story, which is chronicled starting on page 24, is an inspiring and effective way for us to re-emphasize the importance of entrepreneurship to the growth and vitality of this region. As we’ve said on many occasions, while it’s possible that one or more very large employers could be attracted to this region, thus spurring employment opportunities, it is far more likely that real and substantial growth will come organically from small ventures growing into larger employers.
History has shown this to be the case, including such stories as those of Horace Smith and Daniel Wesson, who started small in Springfield before becoming one of the largest gunmakers in the world (and a company that, coincidentally, will soon be adding more than 200 new jobs); Milton Bradley, who reinvented toymaking; Michael Kittredge, who started Yankee Candle, and countless others.
These individuals all started with good ideas, but also had the skill, vision, persistence, courage, and, yes, healthy doses of luck to turn them into successful ventures that have contributed to the overall health and vibrancy of our region.
It is this tradition that we’re honoring with our Top Entrepreneur award, but we hope this recognition program does more.
Our other motivation in starting it was to inspire the colleges and business-development groups in the region to continue to find new ways to foster entrepreneurship. This means everything from educating elementary-school students that owning one’s own business is a very reachable, very worthwhile career option, to developing new facilities in which fledgling companies can get started and perhaps, if the individuals behind them have the wherewithal, get to the next level and beyond.
So as we honor Robert Bolduc for all that he and his team at Pride have accomplished, we also pay tribute to all those who carry on the tradition, and hope that these stories continue to fuel both the imagination and the spirit of entrepreneurship so vital to progress in the Pioneer Valley.

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A Taxing Situation for Businesses

Massachusetts general law allows cities and towns to tax business properties at a higher rate than residential properties even though all properties are assessed the same way, at full and fair market value. While this practice dates back to 1984, there really isn’t any factual or sound reasoning for it other than to shift some of the property-tax burden off of residents and onto business. That said, 106 of the 351 communities in Massachusetts take advantage of this option, and some of them now have a business tax rate more than twice that of residents.
One other property tax faced by businesses but not residents is a tax on ‘personal property.’ This levy is assessed on objects ranging from the dentist or hairdresser’s chair to the local variety store’s cash register, all of which is taxed at the business-tax rate.
Businesses face many other fees, taxes, and costs, ranging from their annual license to workers’ compensation insurance, unemployment insurance, and health care costs. All of these are either set or regulated on a regional or statewide basis, and therefore all would be using the same rate structure or tax table, as for unemployment insurance taxes. Let me note here that the per-employee cost of unemployment insurance is now the highest of any state. While these costs might cause an economic disadvantage to a Massachusetts business, they do not affect decisions on where to locate within the state.
Back to the local property tax that is set by an annual vote of elected officials. In the Greater Springfield area, five towns within the Affiliated Chambers of Commerce of Greater Springfield — East Longmeadow, Hampden, Longmeadow, Ludlow, and Wilbraham — all have a single rate for both business and residents. At the hearing prior to the vote, residents often speak out, as in Longmeadow this year, asking for property-tax relief, meaning a shift of more taxes onto businesses. Those boards of selectmen have consistently seen the folly in doing that and realize that any shift at all would severely burden a sector so vital to a town’s makeup.
In three other communities — Agawam, Springfield, and West Springfield — it is a different story; all three have adopted a higher business rate. One should note that these communities are surrounded by the other communities mentioned above, and many of those communities do have land zoned for business and therefore have very competitive rates.
This year, in each of the three communities with two rates, the councilors heard from the business community that this rate is important to them, especially in their efforts to survive this difficult economy, keep their doors open, and maintain jobs. As you think of these words, picture the stores that make up the fabric of the community; the barber or hairdresser you go to, where you have your car serviced, where you run to pick up that item or gift you forgot about. One other way to understand the importance of this issue is to look at the vacant storefront that once had a business in it with two to five people employed there.
At one of the hearings, it was noted that the difference in tax rates between Springfield and Ludlow, two communities joined by a very short bridge, is such that a barber on the Springfield side of the bridge would have to perform almost 200 more haircuts than his counterpart on the Ludlow side of the bridge just to pay the increased taxes due to his location. Several other examples showed that, when you break down the tax burden by the square foot of a property, those similar businesses in cities with two rates were paying more than twice as much per square foot as those in single-rate communities.
So, the question is: are local property-tax rates really important to local businesses? They certainly are when businesses make decisions about where to locate, whether to employ that extra person, often from the neighborhood, or simply whether to keep the doors open. In advocating for a fairer split of taxes, it is the business community’s hope that they can survive, prosper, and grow, and, more importantly, that other businesses will come into the city or town and expand the tax base. That way everyone, businesses and residents alike, win.

Jeffrey Ciuffreda is vice president of Government Affairs for the Affiliated Chambers of Commerce of Greater Springfield; (413) 787-1555.

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The Economy and Our National Funk

“Yes, we can.’’ That was Barack Obama’s mantra as he took the helm of the nation nearly two years ago. Even though the economy looked scary, he — and we — had a sense of optimism that we could fix it. Not only would we avoid a second Great Depression, but we’d make things better.
Since then, we’ve successfully pulled back from the precipice. Private employers have added jobs for 10 straight months. In September, the National Bureau of Economic Research declared that the recession ended in June 2009.
And yet, despite these improvements, we seem to have lost our can-do conviction that the economy can indeed improve, that we can again create good jobs for all who need them. There appears to be a growing acceptance that slow job creation is “just the way things are.’’ A growing fatalism convinces us that the economy will be stuck at the bottom for quite some time.
These diminished expectations aren’t merely evidence of a national funk; they also pose a real threat to our economy — not just by making businesses and consumers less willing to invest in the future, but also by letting elected officials off the hook. Bringing down unemployment means more stimulus programs, but the widespread idea that we are doomed to austerity gives policy makers an excuse not to tackle the problem.
Americans are talking as though 2008’s direst economic predictions had come to pass. “Recovery means lower expectations,’’ MSNBC recently pronounced, reflecting the tone. Three out of every four millennial workers — those age 18 to 27 — report feeling threatened by the possibility of a layoff or job loss in the near future, and this is dimming their career hopes, according to a recent study by Lumin Collaborative. Older workers are delaying retirement because of falling assets, and many are accepting jobs far beneath their experience and education.
We are sending a new Congress to Washington, but we lack any faith that our representatives actually can address the most pressing issue on our minds: jobs. According to a recent poll from CBS, barely four in 10 Americans think that congressional Republicans have a clear plan for creating jobs. Obama’s numbers on this issue are only slightly better.
When nearly one in 10 are struggling to find work, and after 2.5 million foreclosures and counting, this sense of despondency is understandable. But this reaction, even among those who are working, is one of the most insidious outcomes of the Great Recession. Even though you or I cannot create the 15 million jobs necessary to get all those unemployed back to work, believing that no one can do so can hurt us all. A lack of ‘can-do’ thinking on the part of those in power — and those who advise them — will be just as disastrous for the American economy as was recession.
Consider what’s happened in Japan. That economy continues to struggle to recover from the bursting of its housing bubble in the 1990s. Japan has been stuck in a deflationary spiral, eerily similar to the path the U.S. is headed down. The fundamental problem has been a lack of willingness to spend and the political will to take the necessary steps to push Japan back on a path of stronger economic growth.
A more encouraging example, from Germany, suggests that we don’t have to accept that high unemployment is “the way things are.’’ German policy makers, for example, take unemployment seriously. And while their nation saw a larger decline in output during the Great Recession than did the U.S., their unemployment rate did not rise. Policy makers had put in place measures to encourage employers to keep on workers by temporarily cutting hours. In this way, they avoided the kind of high unemployment we’re now seeing, and Germany is now set to experience its fastest year of growth since 1991.
The federal stimulus bill saved or created more than 3 million jobs, and states received some relief to help them cope with falling tax revenues. But federal dollars are fading long before we’ve solved the unemployment problem.
Now much of the conversation in Washington is turning to paring back spending, rather than focusing on job creation. Washing our hands of the problem of high unemployment won’t make it go away. We need to demand that our elected leaders continue to focus on job creation — and not accept the notion that they can’t solve the problem. v

Heather Boushey is a senior economist at the Center for American Progress.

Editorial

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Opinion
A Key Step Toward Economic Diversity

There wasn’t much fanfare when the Economic Development Council of Western Mass. (EDC) created a new position this past summer, that of ‘manager of Cluster Development.’ But this addition to the staff could have some important implications for the future health and well-being of this region’s economy.
The new cluster czar, if you will, William Wright, who has held a number of business and economic-development-related positions at UMass Amherst and in Michigan, has been handed an important assignment: devising strategies for growing and strengthening clusters of like businesses in this region.
His presence in the EDC’s suite of offices in downtown Springfield is part of a growing movement, nationally and internationally, to take what is inherently an organic process — the development of business clusters — and essentially expedite the process. If he is successful, the region will be taking some big steps toward the diversification of its economy that has become necessary — but not exactly reality — since the area’s manufacturing base started to deteriorate.
Backing up a bit, Wright told BusinessWest (see story, page 6) that clusters are nothing new. They’ve been around for centuries, and this region has developed several, mostly small in size, including gun making, paper and textiles, and, to a lesser extent, plastics. What is relatively new is the notion that cluster development can be accelerated and facilitated, perhaps shaving years or even decades off the process.
This isn’t easy work, and it’s complicated further by the fact that many cities and economic regions are now doing it, but we believe it is an important step forward.
Why? Because, as we’ve said many times before, in this region, and Springfield in particular, there has not been sufficient movement in the process of reinvention. There has been movement in some areas, including distribution (many jobs have been added in that sector), precision manufacturing, technology, biosciences, and even clean energy — but certainly not enough to replace the thousands of manufacturing jobs lost over the past half-century, and not enough to sustain the region moving forward.
So many so-called Gateway cities — Lowell, Holyoke, Fall River, and Worcester are others — have been stuck in neutral for many years now. Clusters are game changers. Anyone who’s been to Cambridge (life sciences), Silicon Valley, or the Research Triangle knows that. The Pioneer Valley is certainly not likely to replicate any of those efforts, but it can grow some existing clusters into more powerful economic engines that will create vibrancy for the future.
There are many facets involved with cluster development, from fostering entrepreneurship to creating stronger partnerships between the business community and the region’s colleges and universities; from facilitating the flow of capital to making a region top-of-mind when it comes to deciding where to launch or grow a business. It all comes down to one word — connections.
Wright is just getting started with his work to make such connections and foster cluster development. This work is difficult, as we said, and no one really knows whether it will bear any fruit. But from all indications, this is an important step forward for the region, one that could lead to real progress in those ongoing efforts to diversify and reinvent.

Opinion

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Opinion
‘Anchors’ Need to Step up in Springfield

A little over a year ago, I submitted an op-ed piece to BusinessWest. The subject was my attendance at the annual meeting of the Initiative for a Competitive Inner City (ICIC).
ICIC founder Michael Porter, a renowned Harvard Business School professor, presented 10 years of data about small, successful inner-city businesses. Some of you may recall that Porter spoke in Springfield during the mid-1990s about the importance of small businesses relocating to the urban center. His presentation prompted the move of my business to a downtown Springfield location, where it continues to operate.
While I didn’t attend this year’s ICIC meeting, I received a copy of Porter’s presentation. His subject was the role of anchor institutions — hospitals, colleges, and universities — in the transformation of economically disadvantaged inner cities. These anchors are generally among the disadvantaged cities’ largest employers. This is certainly true in Springfield, and thus the topic is certainly relevant.
Local colleges and universities and health care institutions make significant contributions to Springfield’s health and well-being. They have a sense of obligation and act as good corporate citizens. I believe they view these contributions as distinct from their core businesses and as such are considered expenses. They report how much they contributed in both dollars and volunteer hours, and measure both as costs to the institution.
If anchors are to have the transformative effect that Porter observed in other cities, he contends that these anchors must dramatically change their mindset. He believes they must begin to look at their relationship with the inner city where they reside through the lens of “shared value.” They must answer the questions: what do we (the anchor institution) need from the city? What does the city need from the anchor? At the intersection is where they will find shared value.
Porter challenges these anchor institutions to expand their definition of their respective core businesses beyond the obvious to include fundamentals such as real-estate developer, employer, purchaser, and workforce developer, among others. To achieve shared value requires making investments, but the outcomes are measured as returns on those investments. If you’re interested, you can access Porter’s presentation on the ICIC Web site, www.icic.org.
Among the data cited are some outstanding examples of anchor institutions that have created shared value in inner cities. One such example is the University of Pennsylvania and the impact made on West Philadelphia. In one category, that of purchaser, the university has increased its purchasing from local vendors to 12% of its entire procurement budget. According to Porter, this is by far the largest commitment he’s been able to document. Dramatically expanding local purchasing requires a commitment from an anchor organization’s leadership. These institutions are so large, their leadership understandably has no idea where goods and services are being purchased and who the qualified local vendors are. Porter says these anchors must clearly articulate their needs as well as their expectations to the local vendor community.
While anchors may need to change the way they normally structure contracts or the way they view vendor relationships, there are discernible benefits. Doing business in Springfield is generally less costly. Doing business locally means greater vendor access. This, in turn, should yield a better product. Doing business with people you know and work with on not-for-profit boards and community initiatives should provide assurances about the values of these small, local businesses. Most importantly, the impact of anchors willing to purchase from local businesses sends a signal to other small companies about business opportunity in Springfield.
Last year, I made an informal request of several anchors as well as the EDC — the organization that represents the region’s 80 largest employers. In each case, I asked them to review their accounts payable to determine their degree of local purchasing. I suggested each consider increasing local procurement by 5%. Naturally, they are under no obligation to respond to my request. However, this simple act would have an enormous impact on the local economy and specifically on the health of well-established small businesses.
The return on this investment could be easily measured, and is one of many examples of shared value that these anchor institutions can and should achieve. It is also a big step toward transformation, which is vital to the interests of businesses of all sizes in Springfield. v

Nancy Urbschat is the owner of TSM Design in Springfield; (413) 731-7600.

Editorial

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Opinion
2010: A Year of Some Forward Progress

When all is said and done, 2010 will go down as a rather unremarkable year when it comes to business and economic development in Western Mass. Quite unremarkable might be more accurate.
Overall, there were few large-scale success stories, and as far as individual businesses were concerned, few if any will be calling this their proverbial ‘best year ever.’ As for headlines, besides the economy, which simply didn’t rebound here the way everyone was hoping and some were expecting, the next-biggest story was the groundbreaking for the high-performance computing center in Holyoke. This was really a 2009 story, and the groundbreaking was rather underwhelming and anti-climactic.
But while this past year lacked real drama, there were many stories from the pages of BusinessWest that seem to indicate some forward progress and give cause for optimism, if one is inclined to be optimistic.
Here are some positives to come away with:
• More signs of life in downtown Springfield. Maybe not as we’d like, but there are some. The lights are on in the old federal building, and the major landscaping work outside is nearly complete. The retenanting of the structure, a work in progress to be sure, will bring more foot traffic downtown and could help spur more retail development in a central business district that needs it.
Meanwhile, the Asylum building is coming down (not just yet, but soon, we hear) and the New England Farm Workers’ Council has acquired the historic Bowles Building, with designs on bringing market-rate housing and perhaps some retail to the long-vacant upper floors of the property known primarily as home to the Student Prince restaurant.
Other signs of progress: One Financial Plaza is turning more lights on, the State Street Corridor project added new chapters, work is underway on the new data center to take shape in the old Technical High School, and the ‘sneaker’ project, otherwise known as Art and Soles, spread some color downtown and gave people another reason to visit. And some did.
• More involvement from the state university. UMass Amherst Chancellor Robert Holub and his fedoras were seemingly everywhere this year, from the computing center festivities to an expansion of the Pioneer Valley Life Sciences Institute, to ceremonies marking construction of the new $156 million New Laboratory Sciences Building on the Amherst campus.
The multiple sightings of Holub and his hats mean that the university is doing what we know it has to do — become more of a force in this region. Initiatives such as those outlined above, as well as the university’s many other initiatives in Springfield, from the sneakers project to taking a lead role at the Andrew M. Scibelli Enterprise Center at the Technology Park at STCC, all bode well for the future.
• The continued health of the ‘eds and meds’ sector. These institutions have been hit hard by the recession, just like every other sector, but they continue to be the rock of the local economy. Area hospitals have weathered the economic storm and appear ready for a rebound, while the $250 million Hospital of the Future at Baystate Medical Center moves quickly toward an opening that will mean substantial job growth.
On the eds side, the renamed Westfield State University is playing a key role in revitalizing the downtown in that city, while Holyoke Community College is expanding its presence with the new learning center downtown. Meanwhile, other institutions, from Elms to Bay Path to AIC, continue to make an impact far outside their campuses.
There were many other positive stories in 2010, from the continued growth of the biosciences and clean-energy sectors to advancement of the Ludlow Mills project being undertaken by WestMass Development Corp. Together, they don’t make 2010 a year of big headlines or profound developments. But it was a year of some important forward progress.

Opinion

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Opinion
Putting the Pioneer Valley Back on Track

A $70 million federal grant to rebuild the Pioneer Valley’s main, north-south rail line has generated excitement and anticipation across the region. Another $210 million of committed rail-corridor grants in neighboring Connecticut and Vermont underscores the strategic importance of this critical Northeast rail link connecting New York City with Montreal.
Next year, this $70 million award will begin funding the wholesale rebuilding of the rail line from Springfield north to Vermont — construction work that will take 24 months to complete. Thus, by 2013, we can look forward to rail passenger service being reintroduced and expanded to Holyoke, Northampton, and Greenfield, which all lost service in 1989 due to poor, unsafe track conditions. Rail revitalization constitutes a game changer, enabling the Valley to regain an asset that’s crucial to a prosperous and sustainable future.
The opportunity for the Valley’s 700,000 residents to access metro centers including New Haven, Hartford, and Springfield, plus major Northeast Corridor mega-regions like New York, Philadelphia, and Washington, is a rail benefit most area residents understand and are eager to take advantage of. Less known are the ways new and improved rail service constitutes an economic engine providing a powerful catalyst that spurs development and employment opportunities, especially around the stations that will serve thousands of train riders.
As has been demonstrated in the U.S. and around the globe, the introduction of intercity and/or commuter rail service stimulates new economic-development opportunities, which, locally, are projected to exceed $240 million in value. In the specific case of the Knowledge Corridor, a variety of economic opportunities are anticipated:
• Fostering transit-oriented developments in and around rail stations along the rail corridor that grow residential, commercial, and mixed-use developments by taking advantage of their proximity to rail; think of Springfield’s $70 million redevelopment of Union Station or Greenfield’s new Intermodal Center.
• Connecting rail-passenger services to transportation providers such as PVTA’s regional system and intercity carriers like Peter Pan Bus Lines; think PVTA and Peter Pan bus services feeding Five College students to new rail stations in Northampton and Holyoke.
• Reducing the Pioneer Valley’s overreliance on single-occupant automobile trips at a time of intensifying concerns about the cost and reliability of worldwide energy supplies and stark warnings about the urgent need to reduce greenhouse-gas emissions.
• Linking rail service to Bradley Airport and, by so doing, boosting transit ridership while gaining air travelers from both Connecticut and Massachusetts; think affordable and congestion-free rail access to Bradley.
As we await the start of reconstruction on the region’s north-south rail corridor, no one should overlook the importance of reinvigorating the east-west rail line connecting Springfield to Palmer, Worcester, and Boston. The Mass. Department of Transportation will soon launch a long-awaited, $1.9 million planning study to address this designated high-speed rail corridor.
Passenger trains are capable of moving people quickly, efficiently, comfortably, and safely. In addition, they are environmentally friendly, energy-efficient, and positively contribute to enhanced levels of national security by reducing our reliance on scarce natural resources. These benefits, coupled with the ancillary economic-development and job gains, add up to a significant and impressive return on investment that’s bolstered by a highly favorable 3-to-1 benefit-cost ratio. Given these favorable metrics, we can’t afford to forfeit these benefits nor the increased property-tax revenues generated from transit-oriented developments.
More than a century ago, as railroads emerged as a major force in growing and connecting a young nation, it was a small clique of local, private investors who used their funds to ensure that Springfield would be located adjacent to the rail lines that would connect the Commonwealth to a rapid westward expansion. These investments spurred Springfield’s growth into the region’s largest urban center.
Now, 170 years later, Pioneer Valley residents are once again confronted with the question of whether to invest in rebuilding a rail network capable of transporting the Valley into the 21st century and thereby achieve the sustainable success that will keep the Valley connected, competitive, compact … and special. v

Timothy Brennan is executive director of the Pioneer Valley Planning Commission; (413) 787-1547.

Editorial

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Opinion
Time for Springfield to Get Its Message Out

Springfield Mayor Domenic Sarno is right.
The city is, in many respects, like a company with products, he told BusinessWest. And like those companies, it has to sell itself if it wants to grow and prosper. And so, what is being touted as Springfield’s first major marketing program is getting underway.
‘Make it Happen’ is the new marketing slogan, or tagline, and while it remains to be seen whether that message resonates with people here and elsewhere, and if the $100,000 budgeted over the next two years is anywhere near enough to properly convey the message — there is no debating that Springfield simply must begin to market itself, and in a big way.
Why? Well, there are several reasons, all of them spelled out in the Urban Land Institute (ULI) report completed a few years ago. In short, marketing works — whether it’s for a car manufacturer, a cereal maker, a political candidate, or a city — if it’s done properly and consistently. And while the city is late getting into this game, late is better than never.
To elaborate, marketing is, in most all cases, a proactive and very necessary activity. And for far too long, Springfield has been much too reactive. In other words, the city has been far too content to let others control the message being sent about it, and that simply must change.
That’s because the message out there, by and large, is that Springfield is an old, tired manufactured city whose best days are years, decades, or perhaps a century or more behind it. The message being sent is that the City of Homes is a place where it’s not happening, and probably can’t happen.
So to achieve progress, Springfield needs to change the message, and more importantly, it has to back up what it says.
‘Make it Happen’ is a nod to Springfield’s past, when it was, as everyone knows by now, a city of firsts, from the motorcycle to the board game; from the ice skate to the parking meter. All those things and many others happened here. But it wasn’t just products, it was highly successful companies created to make those products.
It’s been some time since there’s been a real first in Springfield, and many things have changed since the city earned that reputation. Competition is truly global now, and Springfield is in many ways at a disadvantage in terms of climate, geography, and the cost of doing business. But people can still makes things happen here, as FloDesign Wind Turbine, Seahorse Bioscience, and those bringing the Scuderi engine to the marketplace can attest.
It’s time Springfield started to tell these stories, and join cities like Lowell, Providence, and countless others and get its message out.
And a big part of this process is creating awareness, and a positive attitude within this market. Indeed, it’s probably safe to say that people far outside this market have a better impression of Springfield than many people who live and work here. Putting the ‘Make it Happen’ image on a billboard or the side of a bus won’t change attitudes overnight, but they can perhaps get people thinking that maybe, just maybe, the glass is actually half-full.
For too long, city officials and civic and business leaders have taken the approach that, if they can just get the local media to stop focusing so much on crime, poverty, and high dropout rates, then things will be much better. It doesn’t work that way; cities have to do things about those problems, not wish them away. And they have to change attitudes.
Like it or not, the perception of Springfield is that this city, like many older manufacturing centers, is troubled and tired, a place where you must summon the past tense when using terms such as ‘vibrant,’ ‘energetic,’ and ‘relevant.’
Whether this perception is indeed reality is a matter of conjecture. But there is no debating that, unless the city takes steps to change and control the message — and marketing is a big part of this equation — then perception will become reality.

Opinion

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Opinion
Path to Recovery Poses Many Challenges

Incumbent Gov. Deval Patrick defied the national Republican tidal wave to win a second term at the helm of a commonwealth still seeking a post-recession economic identity. Massachusetts voters also retained overwhelming Democratic majorities in both House and Senate on Beacon Hill, sent a blue delegation to a newly red Congress, and defeated a proposal to reduce the state sales tax by more than half.
The Massachusetts that Gov. Patrick surveys as he savors his accomplishment is a paradox — stronger economically and with many more growth assets than other states, yet fragile in its ability to deliver on the promise of opportunity to all citizens of the Commonwealth.
The Bay State enjoys a lower unemployment rate at 8.4% than the nation as a whole, and the $2.5 billion state budget deficit pales in comparison with the fiscal disaster in California. But the 292,300 jobless people in Massachusetts and thousands of employers struggling to hold onto their businesses are anything but sanguine about what the future holds.
The challenges facing the governor and other policymakers seeking to promote economic growth are sobering — soaring health-insurance premiums, a looming 40% increase in average unemployment insurance rates, tight commercial credit markets, consumer uncertainty, and a state regulatory system that discourages innovation while creating little public benefit. Underlying many of these challenges is a pervasive sense among employers — many of whom expressed the opinion at the Associated Industries of Massachusetts’ recent regional policy briefings — that neither policymakers nor the general public really appreciate the complexity and risk of running a business in Massachusetts.
Bay State employers have solutions to offer and look forward to participating in the debate on the future of the Massachusetts economy. AIM represents thousands of employers who stand for jobs, economic opportunity, fiscal responsibility, business formation, and a government that acknowledges that the private sector has the unique ability and responsibility to create the common wealth for the people of Massachusetts.
We look forward to working with the governor, the Legislature, and the Congressional delegation to build support for several key principles of economic recovery:
• A uniformly favorable environment for business development across all industries and all regions of the Commonwealth;
• Economic policy that balances key public investments with a competitive cost structure that keeps jobs in Massachusetts;
• Predictable, responsible, and long-term state fiscal policy;
• Well-conceived and collaborative regulation that creates measurable benefits; 
• A nimble, world-class education system that provides opportunity for all Massachusetts citizens and the knowledge base for economic growth; and
• Collaboration be-tween business and government to ensure mutual success.
These principles will provide the foundation for a sustainable recovery that touches every sector of the diverse Massachusetts economy, from manufacturing to high technology to retail and hospitality.
Successful economic policy creates uniform benefit throughout the marketplace, balancing the need to invest in the future without simultaneously harming the industries of the present that employ the vast majority of Massachusetts residents.  
We look forward to the challenge.

Rick Lord is president of the Associated Industries of Massachusetts.

Opinion

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Opinion
Getting the Nation on Track for Jobs

This appears to be a good season for investment in transportation. In September, President Obama proposed to invest $50 billion in the nation’s transportation infrastructure. Transportation Secretary Ray LaHood has already committed $776 million to bring buses and bus facilities into a state of good repair. Combined with the $8 billion investment in high-speed rail that was part of the February 2009 stimulus package, it seems that the nation is finally putting a down payment on a 21st-century transit system.
But these sums are a pittance compared with the need. The U.S. has yet to commit the money needed to create a world-class rail system, or to stimulate a transit-vehicle manufacturing industry that today depends mostly on imports. In reports we released this week in cooperation with the Apollo Alliance and Worldwatch Institute, we estimate that a serious investment in public transit could stimulate thousands of sorely needed manufacturing jobs. To appreciate how far we are falling short, consider the example of China.
China recognizes the economic links between developing rail lines and promoting manufacturing. In 2001, it began a $132 billion rail-construction project, which is scheduled for completion in 2012. During roughly the same period, the U.S. appropriated just $19 billion for rail construction, or about one-seventh China’s level.
As part of its recession-recovery package, China committed $88 billion in 2009 to railway infrastructure, doubling its 2008 investment. The goal: to create much-needed transportation links, to generate demand for 20 million tons of domestic steel, and to create 6 million new jobs overall.
To reach the government’s goal of 1.1 million kilometers (about 450,000 miles) of railroad by 2012, China will spend a total of $292.5 billion. Of this, 13,000 kilometers will be for high-speed rail. A key benefit: China’s two leading locomotive and rail-car manufacturers will employ more than 212,000 people combined to meet domestic goals. If transportation policy is to create domestic manufacturers and permanent manufacturing jobs, a steady and predictable level of investment is needed. The U.S. lost its domestic passenger rail-car industry by the late 1980s not because of high labor costs, but because of erratic demand. Most of the countries that dominate the industry today, such as Germany and France, have wages comparable to the U.S., but they have a comprehensive strategy that allows producers to anticipate stable demand for their products.
Annual domestic demand for production of rail cars in the U.S. bounced between a low of 268 units to a high of 1,067 units during the 1970s, according to Thomas Boucher of Rutgers University. And as demand for transit vehicles waned, U.S. companies couldn’t come up with investment dollars to keep up with state-of-the-art technology.
We analyzed the job-creation potential of investment in rail infrastructure and estimate that the U.S. could gain 79,000 jobs in rail and bus manufacturing and related industries under an investment scenario sufficient to double transit ridership in 20 years. An investment at levels similar to China — $24.4 billion per year over six years — would yield 252,213 jobs, including many well-paid blue-collar jobs of the kind that have been devastated over the past decade.
Reclaiming a domestic rail industry is part of a broader need to revive competitive manufacturing. Even in its weakened state, manufacturing accounted for $1.6 trillion (12%) of U.S. GDP in 2008 — more than real estate, finance, and insurance.
Manufacturing accounts for 60% of U.S. exports and 70% of private-sector research and development funding. Yet the U.S. goods deficit with the rest of the world in 2008 exceeded $836 billion. The annual trade deficit with China alone was $266 billion in 2008, with 75% due to the manufactured-goods deficit.
A high-quality passenger-rail system is a trifecta. It would attract more riders and cut dependence on private cars — in turn reducing the carbon emissions that cause global warming. More than that, a commitment to mass transit could promote the resurgence of a major manufacturing sector that we’ve lost, reducing our trade deficit and increasing domestic jobs.

Joan Fitzgerald is professor and director of the graduate program in Law, Policy and Society at Northeastern University. Joseph McLaughlin is a senior research associate at the Center for Labor Market Studies at Northeastern.

Editorial

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Opinion
Patrick Gets Our Nod, but Has Work to Do

This is a critical time for Massachusetts, what most observers would describe as a critical crossroads. The state is still trying to recover from the worst recession in 80 years, while at the same time it is working to stimulate economic development in an ultra- competitive climate in which 49 other states and countless countries around the world are vying for businesses and jobs.
There is also the matter of casinos and whether they are to be part of the economic-development mix, the obvious need to make this state more business-friendly, and the very real possibility that the state’s sales tax will be rolled back to 3%, creating some possible opportunities for retailers but also a potential fiscal nightmare for the Commonwealth and its publicly funded institutions and programs.
For these reasons and others, BusinessWest lends its endorsement to incumbent Deval Patrick in the all-important governor’s race to be decided on Nov. 2. This is a nod over challenger Charlie Baker (Tim Cahill’s candidacy is a joke, and he should do the state a favor and drop out before the election) that comes with some caveats, as we’ll explain. The bottom line, we feel, is that Patrick is the best option for the state at this critical juncture.
For starters, we’ll note that Patrick has made some missteps in his first term. The Cadillac DeVille and office-redecoration exploits were among them, but more important were his steps backward in efforts to downsize government and stem the tide of patronage jobs. His failure to seal a casino deal has also led to questions about his leadership skills and ability to work with the Legislature to get things done.
But Patrick has matured in office and, over the past few years, has managed the deep recession effectively, while also amassing several legislative accomplishments, such as a toughening of pension and ethics laws, consolidation of transportation agencies, expansion of charter schools, and more.
What has stood out for us is his very real — not symbolic or token — support of Western Mass. and some of its struggling cities.
In Springfield, for example, Patrick was personally responsible for Liberty Mutual opening an office in the Technology Park at Springfield Technical Community College, a facility that now employs more than 300 people. His administration also played key roles in the State Street Corridor revitalization effort, South End redevelopment, efforts to make UMass Amherst a more vital force downtown, the Data Center being built at the former Tech High School site, and other initiatives.
Meanwhile, in Holyoke, another former manufacturing center trying to reinvent itself, Patrick administration played a key role in advancing the high-performance computing center project, an economic-development initiative that could have huge ramifications for that city and the region as a whole.
The wheels started turning thanks to officials at MIT, UMass Amherst, Boston University, and other schools, as well as private industry, but the Patrick administration helped steer this project to a successful conclusion, and in a city that sorely needs an economic boost.
While in the past, governors and candidates for that post have talked about how they represent the entire state and how important Western Mass. is to them, Patrick has backed up the talk, and in a way that hasn’t been seen since Michael Dukakis was in the corner office.
While we believe Patrick has earned another term to see if he can build on these accomplishments and create more progress for this region and the state as a whole, we’ll note that he and everyone else on Beacon Hill still have some serious work to make this state more business-friendly, and this must be one of the top priorities for whomever is governor next January.
Jobs are the real key to making a full recovery from the Great Recession and enabling cities like Springfield and Holyoke to forge new identities. And the key to creating them is making this a state business owners believe they can afford to be in. Right now, not enough people are of that sentiment, and until the reality, and not just the perception, changes, Massachusetts will be at an extreme disadvantage.

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Opinion
The Income Gap Is Widening

The term ‘middle class’ is more than an economic distinction. It’s also an appreciation for balance and equity and a national yearning for a strong, cohesive society. Yet a polarizing income gap in Massachusetts and elsewhere is threatening both the class and the concept.
Massachusetts is emerging from the recession ahead of other states, with job creation on the rise. However, the state leads the country (it is tied for first place with Arizona) in having the largest gap between the haves and have-nots, according to the Center for Labor Market Studies at Northeastern University; 10% of households in the state earned as much income in 2009 as the bottom 70% combined during that year.
What is driving this widening gap? Economists differ on this, but many point to executive compensation, declines in manufacturing jobs and wages, a corresponding increase in employment in the so-called ‘knowledge economy,’ and changes in household dynamics, such as the rise in single-parent families. Gaining a better understanding of these issues should be a top priority for the next governor and should be at the forefront of the policy debate in the closing weeks of the gubernatorial election.
New data by the MassINC Polling Group suggest an eroding confidence in a cornerstone of the American Dream: the belief that the hard work of one generation opens the door to a better life for the next. Just 22% of Massachusetts parents believe the next generation will do better than they did financially. This pessimism is a new phenomenon. In 2003, when a slightly different question was posed in a MassINC poll, 68% of parents believed their children would be generally better off.
Why the dramatic change in public opinion? Income inequality has been rising for years, but the difference now is that economic growth isn’t lifting all boats. Over the last decade, census figures show median household income fell by between 1% and 8%. Little wonder that the mood of the electorate reflects strong undercurrents of frustration and resentment.
Growing income inequality and its political implications have received increasing attention across the political spectrum since the 1980s. Alan Greenspan had a point when he said in 2005: “a stark bifurcation of wealth and income trends among large segments of the population can fuel resentment and political polarization. These social developments can lead to political clashes and misguided economic policies that work to the detriment of the economy and society.’’
Perhaps we should have listened. The resentment, polarization, and political clashes contemplated by Greenspan have already materialized. The resulting anger is fueling a push for simplistic solutions to such complex problems as deficit reduction, immigration, and a host of other issues. In essence, the middle ground on policy issues is rapidly disappearing, just like the middle class itself.

Greg Torres is president of MassINC and publisher of CommonWealth magazine. Andrew Sum is director of the Center for Labor Market Studies at Northeastern University.

Opinion

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Opinion
Don’t Put the Brakes on Science, Progress

In light of the latest developments of the on-again, off-again, on-again government funding of human embryonic stem-cell research, it is time to consider the devastating implications of this chaotic funding environment. And to do that, one needs to understand how a modern research lab operates.
A typical lab has 20 to 40 people, led by a senior researcher (the ‘principal investigator’). Most people in a lab are doctoral students or postdoctoral students who are pursuing careers in science.
Labs have many different projects under investigation simultaneously. Most labs have annual budgets of $1 million to $5 million, with most of that money coming from grants from institutions like the National Institutes of Health.
The NIH allocates money to researchers whose proposals are reviewed by a panel of scientists knowledgeable in the field. A typical grant proposal is 25 single-spaced pages and takes months to prepare. The NIH responds in approximately 9 months.
Because the demand for money exceeds the supply, only 20% of the proposals get NIH funding. A researcher receiving his or her first major NIH grant is more than 40 years old, on average.
Lab leaders spend a great deal of their energy recruiting the right people for their lab, nurturing a portfolio of interesting projects, and raising money. Most principal investigators, even the most successful ones in the world, spend at least 25% of their time trying to get money. If they can’t get money, they lay off people and cancel projects.
Now imagine you are a post-doc in a lab and are working on a project to use human embryonic stem cells to cure diabetes by creating new beta cells in the pancreas.
This is difficult work that is high-risk, but high-reward. You have come to grips with the many ethical considerations in working with stem cells derived from embryos that were created during IVF procedures and were destined to be destroyed before the donors agreed they could be used for research. You have begun to get traction in your career, and have been a prominent co-author on several articles in well-respected journals.
When you read the news that your research is now illegal, you are horrified. You are back at square one. Years of research are potentially wasted.
You have no viable research projects underway. It will take well over a year to begin a new research stream, and there is a low probability you will get funded in a new area. You may be fired. In short, your career is in danger of total meltdown.
That is the real cost of our randomized model of research support in the U.S., in which a change in administration or a court ruling can outlaw work that was previously supported by the government. Funding can be canceled with the stroke of a pen.
The projects are less important than the people, particularly people who have invested years in developing their careers and selecting an area on which to focus. People need predictability — not in the research ideas they pursue, but in basic human issues like pay and employment.
It may be possible to restart projects with private funds, but that is by no means certain. Raising philanthropic dollars can be as hard and time-consuming as raising money from the NIH. And these projects will have to be set up with duplicate equipment in geographically separate areas.
Sadly, great people will abandon promising projects. Great people will leave basic research and move to more predictable pastures. And some great young people will decide not to go into research careers at all. The precipitous shift in the legal and regulatory environment for human embryonic stem-cell work will have adverse implications for years to come.
Unpredictability inflicts a heavy cost on scientific progress, whether in domains like stem-cell research or in searching for safe alternative fuels. It damages the country’s competitive position because great projects won’t be completed in the U.S., and, more importantly, great people won’t do the kind of work that is necessary to make progress on our most intractable challenges.
Society pays a high price for randomization of research support — a fact that, sadly, is not recognized by the public, the media, or politicians.

William A. Sahlman is senior associate dean for external relations at Harvard Business School.

Editorial

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Opinion
WestMass at 50: Still a Regional Asset

For some time now, those round-number anniversaries, especially the ones with names involving precious metals or gems, have become appropriate times to pause and reflect on whatever or whomever is celebrating that anniversary.
And so it is with the WestMass Area Development Corp., which marked 50 years of existence this past spring, and is making note of that milestone at ceremonies in October. Most people in the area and its business community would not have guessed that this organization is that old — it has made most of its headlines and impact in the past 25 to 30 years — but that is the reality.
It started in business as the Springfield Area Development Corp., and most of its early projects involved the City of Homes and bringing new economic-development opportunities to a city that hadn’t seen any in some time. The thought process at the time was that a nonprofit organization was needed to promote development by aggregating land, making it ready for building, and then patiently filling the space created with businesses that were appropriate for the community in question and would bring needed jobs and tax revenue.
The thinking was that a nonprofit group would be more willing to take on projects with certain degrees of risk, and that it would be more patient and prudent with regard to how this space was filled. And a half-century later, one could easily argue that those who conceived of this organization were correct in their thinking. The evidence can be found in Springfield, Agawam, East Longmeadow, Westfield, and other communities, where the landscape has literally been changed because of WestMass.
Nothing has come very easily for WestMass, but over the years, its track record has shown that it has indeed taken on some projects that the private development community would have passed on. In so doing, the region has several industrial parks that might otherwise have become large subdivisions or, worse, still be undeveloped, idle land.
WestMass has drawn some criticism over the years for not being more willing to take on difficult brownfield projects, such as the Uniroyal complex in Chicopee; for the painfully slow rate of progress in the Chicopee River Business Park; and for appropriating large tracts of the region’s precious developable land for massive distribution facilities that provide generally low-paying jobs — and not as many of them as they did in years past. Meanwhile, it’s been argued that too much of this region’s time and energy, economic-development wise, has gone toward filling WestMass and Westover Metropolitan Development Corp. industrial parks, when there are many other priorities in area cities and towns.
By and large, however, WestMass, like Westover, has been, and continues to be, a very valuable asset for the region. It is suffering mightily through this recession, as it has the past several, including the recession of the late ’80s, when it was forced to declare bankruptcy, but when the skies clear and the huge inventory of existing manufacturing and distribution space is depleted, WestMass properties will play a key role in attracting new businesses and retaining existing ones that need space to grow.
Looking down the road, we are reminded of something that Allan Blair, executive director of the Economic Development Council of Western Mass., has said often — that when it comes to economic development, all the easy projects have been done. Everything now is logistically challenging, and the degree of difficulty will only increase over the coming years and decades.
To thrive in such a challenging environment, this region and its economic-development leaders will have to be bold, imaginative, and persistent. These are the qualities that have marked WestMass since the beginning, and we hope they will see the organization through at least another half-century of service.

EDITORIAL

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Opinion
Green: the Color, and Direction, of Progress

Even casual readers of BusinessWest would notice that a growing number of pages in this magazine are being devoted to all matters ‘green.’
Several months ago, we put out something called the ‘Green Issue.’ Yes, the cover was green (actually, several shades of it), and most all stories inside had a green tinge to them. This issue, Sean Anderson, assistant vice president of Facilities and director of Corporate Green Initiatives at MassMutual, graces the cover. He’s standing within a huge solar-power installation that sits on a one-acre section of roof at the company’s 1.4 million-square-foot headquarters building on State Street in Springfield.
In addition to the MassMutual story, which is about much more than solar power, there is another piece about the many ways in which area colleges are going green, and also the people who are heading these efforts: ‘green czars,’ if you will.
All this focus on green is not by accident; it’s by design — literally and figuratively — to show how green, or sustainability, has become part of the fabric of the region and its business community.
As we’ve said many times, our broad goal at BusinessWest is to essentially hold a mirror to this region’s business community, and try to articulate what appears in that glass. Increasingly, that mirror is reflecting businesses, institutions, and individuals working to do what is environmentally responsible and what also makes good common sense when it comes to running a business.
And in the process, these companies, institutions, and people are laying some track for what could be a dynamic new business sector, or cluster, that could create needed diversification for our region, and also more jobs.
Over the past several months, we’re published several green stories — from PeoplesBank’s building of a LEED (Leadership in Energy and Environmental Design) certified branch in Springfield to FloDesign’s efforts to reshape wind power with a radically new turbine design; from hospitals doing what they can to reduce their sizable carbon footprints to a new company trying to introduce this region to geothermal energy; from the new planned high-performance computing center in Holyoke to the YWCA’s efforts to incorporate green design into its new facilities.
The sum of all these stories amounts to a movement, one that has a number of potential benefits for the region and the planet as a whole. First, we’ll start with the ‘doing the right thing’ aspect of this work. From colleges encouraging students to turn out the lights in their dorm rooms when they’re not in use to MassMutual employing new technology to shut down vending machines when the area they are inactive, action is being taken to conserve energy and ultimately use less of it, which will benefit everyone in the long run.
In the meantime, these steps and countless others are not merely saving businesses and institutions money (in most cases), they are also making them competitive at a time when competition is coming from everywhere and it’s intensifying constantly. This is critically important because, in addition to attracting new jobs, the region needs to retain those that it has, and making companies more competitive is one way to help do that.
Also, when companies and institutions go green, they are helping to build another source of jobs and economic stability for Western Mass. Indeed, green is not merely a trend or a movement, or something for this business journal to write about. It is an economic sector that holds great promise in this region.
To make a long story short, we’re going to keep holding up that mirror, and we’re sure it’s going to yield many more stories about how green is working its way into the local vocabulary.
And that will certainly be a reflection of progress — on a number of levels.

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Opinion
United Way Focuses on the Building Blocks

By DORA ROBINSON
As we look outside our doors, it can be difficult to escape the challenges we face in the region.
Nearly 25% of Springfield families and 37% of Holyoke families with children under age 5 have incomes below the poverty level. Hampden County’s high-school graduation rate is 70.2%, compared to the statewide rate of 81.5%. Specifically, the graduation rate in West Springfield is 66.4%; in Springfield, 54.5%; and in Holyoke, 48.5%. And last year, food pantries in Hampden County served 22% more meals than in the previous year.
While we must face the issues of our community, we do not need to accept them as reality. We can face them with hope, optimism, and courage, knowing that we can make a difference. The United Way of Pioneer Valley is leading that effort. Our focus is on education, income, health, and basic needs — the building blocks for a good quality of life.
 Our efforts around income promote financial stability and independence by raising awareness of mechanisms that support income growth, convening stakeholders to strengthen income stability and enhance access to bank accounts and services, increasing volunteerism in support of financial education, and partnering on statewide collaborative efforts to bolster family assets and financial literacy.
To raise the bar on education, we partner with local, regional, and state initiatives that support the educational achievement of all children. We collaborate with the school systems and community providers to raise the high-school graduation rates. We invest in educational programming, like mentoring, summer learning, and family engagement.
 And, as the need for emergency food, fuel, and utility assistance increases, we will be there for individuals and families to provide much-needed resources and allocations to provide a hand up for those in need — as we always have.
 But it is not solely up to the United Way of Pioneer Valley. We are all part of the community, and we can all be part of the solution. We can all live united. But how? As part of the United Way Live United movement, we are asking people to “Give. Advocate. Volunteer.”  
 You can give of your time, energy, and talents to create lasting change and improve the lives of all.  Your financial contributions can help fund programs that make a difference for poor, low-income and working poor people to have a better life. Many of these are your co-workers, friends, family, and community members.
 You can foster a community of hope and opportunity through advocating for change — be it with a neighbor or a legislator. You can give voice to the vulnerable by supporting initiatives that raise awareness to the challenges faced by our homeless and those who may find themselves on the precipice.
 You can build a stronger community by serving as a mentor to a young adult. You can empower others with your experiences. You can simply share your wisdom with a child.
 We invite you to be part of the change. You can give, you can advocate, and you can volunteer. You can make a difference in the Pioneer Valley, and that’s what it means to live united.

Dora Robinson is president and CEO of United Way of Pioneer Valley.

Opinion

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Opinion
We Must Separate Doctors from Industry

This summer, Harvard Medical School announced new restrictions on the relationships between its faculty and the pharmaceutical and medical-device industries. The policy prohibits faculty from accepting gifts and meals, limits their consulting income, and requires public reporting of any payments received. The stated goal is to eliminate a perception of undue commercial influence in medical education. This is the right decision by Harvard. It is now time that all other medical schools and teaching hospitals follow suit.
The medical/pharmaceutical industry influence on academic medicine is ubiquitous. In 2007, a survey of academic department chairs published in the Journal of the American Medical Assoc. revealed that 60% reported some form of personal relationship with industry, including as a consultant, paid speaker, officer, founder, or member of a board.
While many of these relationships are appropriate, an increasing number go off-track. Later that same year, the Department of Justice filed criminal complaints against four of the five medical-device manufacturers in New Jersey, alleging that the companies used consulting agreements with orthopedic surgeons as inducements to use a particular company’s products. According to Justice, the investigation revealed it was common practice that surgeons “were paid tens to hundreds of thousands of dollars per year for consulting contracts and were often lavished with trips and other expensive perquisites.”
More recently, Sen. Charles Grassley of Iowa has investigated research conflicts of interests at numerous teaching hospitals and academic medical centers, including Harvard Medical School. In October 2008, an article in the the New York Times noted that Grassley’s findings “suggest that universities are all but incapable of policing their faculty’s conflicts of interest.” Eric Campbell, a health policy researcher at Mass General and Harvard Medical School, called these consulting arrangements “one of the great wink-winks of all time.”
Things must change. Medical schools and teaching hospitals have nothing to fear by establishing more appropriate restrictions governing their relationships with industry. The experience of our hospital system is one case in point.
Several years ago, clinical leaders at our system, UMass Memorial Health Care, became concerned about the problem created by these relationships. As a result, we launched a comprehensive process that resulted in the adoption, in 2007, of one of the strictest vendor-relations policies in the nation. Among other things, we prohibit gifts, meals, and entertainment, eliminate industry influence in medical education, restrict consulting to true scientific (not marketing) issues, and restrict access by sales and marketing representatives at our facility.
At first, there was skepticism. Some physicians resented the suggestion that accepting a mug or a free lunch somehow taints their medical judgment. Others worried that we would lose industry support for medical education and they would not be able to stay current on the latest drug and device developments. But almost three years later, there has been nary a whimper. No grieving at the loss of free lunches or dinners, and very few complaints about the loss of any educational opportunities. Indeed, most physicians are happier with the more limited, and more appropriate, interactions with industry. And they don’t mind writing with generic pens.
Recently, we conducted a survey of our physicians and residents to determine the level of support for our policy. While there remains some skepticism, almost two-thirds of respondents said they wanted UMass Memorial to continue to play a leading role among academic medical centers in promoting a strict policy. One resident said the policy made him so proud that, as he leaves his training, he asks all his potential employers about their policy.
This is not about demonizing pharmaceutical and medical-device companies. Our policy continues to allow significant contact with industry. These companies are vital to medical research and our continued ability to discover new and improved ways of caring for patients. But when we allow the good parts of those relationships to be sullied by the bad, we undermine the integrity of the entire interaction.
All of academic medicine needs to now acknowledge that the goals of a profit-driven industry, while laudable, do not always align with the goals of independent scientific research, teaching, and the delivery of high-quality patient care. Harvard is not the first to go down this road, but it may be the most influential. It should not be the last.

Douglas S. Brown is senior vice president and general counsel, and Stephen Tosi is chief medical officer, of UMass Memorial Health Care in Worcester.

Editorial

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Opinion
Patrick Holds the Right Cards on Casinos

Amid the standoff on Beacon Hill that has apparently put casinos on hold for at least another year, and may have scuttled their chances altogether, there is no shortage of finger-pointing on this highly controversial subject.
Some lay the blame on Gov. Deval Patrick for insisting that a casino measure include just three resort-style casinos and no slot parlors at racetracks (called racinos) by some. Indeed, Patrick’s opponents in the upcoming election say that his stubbornness will keep the state from adding a projected 15,000 jobs any time soon, while also delaying any much-needed revenues in the form of casino licenses. In fact, Tim Cahill said that, if the state winds up with no casinos or slots, Patrick “owns this recession.”
But from our view, Patrick is right about this gaming bill, and we’re glad he’s sticking to his guns, even if it means casinos will have to wait another year or two or even 10. The governor says casino backers have waited a long time to see a gaming measure win approval, and they should wait longer if doing so means the difference between getting the legislation right and getting it wrong.
And approving slot parlors at the racetracks is simply wrong.
Why? For starters, doing what the Legislature has proposed amounts to awarding no-bid contracts to the track owners, which is simply not a good way to do business, even if those track operators are suffering and need an economic boost. But more importantly, the racinos offer very little in terms of jobs — it doesn’t take many people to run a slot parlor — and economic development, and will inevitably become additional competition for the three resort casinos, including the one proposed for a site just off the Turnpike in Palmer. There is already plenty of competition to begin with, and probably much more on the way in New York and other New England states. The Commonwealth doesn’t need to be creating competition for its own casinos.
As he explained his stance on the slot parlors and his reluctance to compromise, Patrick said the risks from the racinos far outweigh the potential benefits, and he’s right.
Casino supporters, including the many in Palmer who are looking at the facility proposed for their town as an economic lifeline, have a right to be upset and disappointed with the stalemate in Boston. Gaming has been debated in this state for a long time, and it finally seemed as though the stars were properly aligned for passage.
But then, politics got in the way, as it so often does.
From our perspective, though, the measure being pushed by the House and Senate and rejected by the governor was flawed, and the current stalemate is better for the Commonwealth than a bad gaming measure.
Who knows what will happen 11 months from now? The governor faces strong competition this November and may not prevail. Meanwhile, a number of legislators may not win re-election, and a number are not even seeking another term. Casinos may never again come as close to passage as they did this July.
But in the final analysis, the proposal that was on the table just wasn’t worth that roll of the dice.

Editorial

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Opinion
Helping Manufacturers Break the Mold

There are a number of intriguing initiatives underway to help grow and strengthen the region’s precision-manufacturing sector — everything from a project involving UMass Amherst that will drive innovation, to a conference this fall aimed at spotlighting this sector and keeping business in this region.
But perhaps the most promising endeavor is a recently launched collaborative involving four small area manufacturers. If successful — and everyone involved with this believes it will be — the collaborative will enable these companies to vie for contracts that they could not get on their own while also making them more competitive in the global marketplace.
One participant calls the collaborative a “prototype,” one that could, and hopefully will, become a model for other companies in this region to follow.
Here’s how it works: The four companies, Boulevard Machine and Gear and Thorn Industries, both in Springfield; Mechanical Drive Components Inc. (MDC) in Chicopee; and Creative Machining and Molding Corp. (CMMC) in Westfield, will market themselves as the Pioneer Valley Precision Manufacturing Collaborative. There will be a Web site developed for the group, and it will be one of the lead tools used to help steer business to the collaborative and its individual members.
In theory, and it’s a very sound theory, the collaborative will enable four very small companies with under 20 employees each to take on the look, feel, philosophy, and capabilities of one, much larger enterprise. Thus, these companies can get pieces of contracts that would otherwise be beyond their reach.
Why is this collaborative so important to the region and its precision-manufacturing sector? There are several reasons, but mostly it comes down to demographics. Indeed, while there are some large and very successful companies in the Western Mass. market, such as Hoppe Tool, Berkshire Industries, and Advanced Manufacturing, most are much smaller players that have cultivated niches for many years.
For Boulevard, that niche is aerospace and making parts for companies such as Hamilton Sundstrand, For Thorn, it’s medical-device work for customers such as Johnson & Johnson. MDC does work for several end-users, including NASCAR teams and National Hot Rod Assoc. members, and CMMC makes everything from holders for Yankee Candle products to parts for credit card readers.
These niches have served the companies well, but, in some ways, they limit growth opportunities. By bringing four diverse companies together — in what one participant called a “merger that isn’t really a merger” — the collaborative can open doors that might otherwise be closed.
And if enough doors are opened, then an historically significant sector of the region’s economy, precision manufacturing, which traces its roots to the opening of the Springfield Armory more than two centuries ago, can be an important part of the future, and not just a thing of the past.
This is significant because, as we’ve said many times, while the region is trying to create new business sectors or clusters, such as clean energy and bioscience, it must also commit time, energy, and resources to growing an already-solid employer such as precision manufacturing.
As we said at the top, there are a number of ongoing efforts that fall into that category. All of them bear watching, but the Pioneer Valley Precision Manufacturing Collaborative is extremely intriguing because of its potential to make small companies become much bigger in terms of their presence in the marketplace.

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Opinion
Keeping the Best Minds Local

Massachusetts’ greatest natural resource is its stock of 535,000 college and graduate-school students. Human capital brings the ideas and entrepreneurship needed for regional success, yet too many of our students leave, including the entrepreneurs who created Facebook. Retaining talent requires us to fight the regulations that make entrepreneurship too rare and housing too expensive, but the state should also aim at winning students’ hearts while they are still in school.
Skills predict urban success. Across metropolitan areas, an extra 5 percentage points of the adult population with college degrees in 1970 has resulted in 8% more population growth and 4% more income growth. Yet the Federal Reserve Bank of Boston’s Alicia Sasser found that 29.5% of New England’s college graduates left the region within a year of graduation, the highest out-migration rate in the country. That exodus reflects our schools’ aim of educating the world, but the state not retaining the graduates.
Connecting students to our region requires a response to the good, bad, and ugly sides of college life. I see a remarkable number of college students with a profound passion for doing good, whether working in shelters or tutoring children. They have time and are looking for meaning in life, and leveraging that can both help the Commonwealth and bind college students to the state.
A statewide public service organization — a Bay State Service Corps — could provide meaningful altruistic activities for college students and connect them with local leaders and the larger community. For six years, I’ve helped oversee the Rappaport Institute’s summer fellows program, which pays and assists graduate students to serve the region.
I’ve watched the fellows’ work contribute to public agencies, build their skills, and create a bond with Greater Boston. Providing thousands of college students with ways to serve the state could produce an altruistic army today and a steady supply of future leaders.
The ugly part of college life is the misbehavior that can come from the emotional effervescence of youth. Not for nothing are 37.5% of America’s resolved murders committed by males between 17 and 24. College students aren’t usually killers, but they also have uncontrolled energy which leads them to annoy their neighbors with less-than-perfectly polite recreation.
Now, I’m no expert on fun, but I am sure that the state can do more to make nocturnal pursuits less harmful and more entertaining by focusing on transportation and concentration. Bringing people together in entertainment districts can make safety more enforceable and nightlife more enjoyable, since the real point is to meet people anyway.
But concentrating on enjoyment is only possible when transportation works well. The T’s night-owl service stopped years ago. A combined strategy of rethinking entertainment regulation and nighttime transportation, perhaps trying to use liquor-license fees to keep buses running later, could help make Massachusetts more fun and safe.
The high cost of housing is the bad part of college life. Dormitories can be more expensive than apartments, but undergraduates who choose to live in normal neighborhoods can create plenty of conflict with other residents. The natural solution is to build more dedicated college space, but that’s financially impossible for many educational institutions.
One vision is to explore private interest in building a student city somewhere in Greater Boston. Would a consortium of private developers and colleges be interested in erecting large amounts of dormitory space if they could also put in connected retail space and bypass local land-use controls? If a collection of builders were willing to deliver dormitories, then they would also have an incentive to make the experience pleasant. A collective student city would give students a sense of place and lead to more regional identity.
Massachusetts has survived over centuries largely because skilled people wanted to stay here. Our continued success depends upon students continuing to fall in love with the state. The state can help by strengthening students’ opportunities to serve and have fun, and by making it easier to creatively build student housing.

Edward L. Glaeser, a professor of Economics at Harvard, is director of the Rappaport Institute for Greater Boston.

Opinion

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Opinion
Another Tax That Hits the Middle Class

With the agreement at the Toronto G-20 summit of major nations to cut public deficits at least in half by the year 2013, we will start hearing a lot more about a value-added tax (VAT). We should keep our hands on our wallets.
The goal of cutting the deficit by a set amount by 2013 is arbitrary and premature. Whether that formula makes sense depends on whether the recession is really over. Until we get a stronger economic recovery, too much deficit reduction reduces purchasing power and slows job creation.
A VAT, which is a kind of national sales tax, is especially perverse because it is a tax directly on consumers, who have already been hit hard by the recession.
But it does raise a lot of money. A VAT of 5%, the number usually proposed, would bring in about $250 billion a year.
In the fiscal year that begins tomorrow, the deficit will be $996 billion, according to the bipartisan Congressional Budget Office. The CBO projects that, by fiscal year 2013, it will still be $525 billion. If you do the math, that means a normal recovery plus the expiration of the Bush tax cuts will cut the deficit nearly in half by 2013 with no massive new tax increases. But that hasn’t stopped the budget hawks, who want new taxes to cut the deficit even more.
VAT supporters include many members of President Obama’s own fiscal commission; the billion-dollar Peter G. Peterson Foundation (which bankrolls a lot of deficit hawkery); former Democratic Treasury Secretary Robert Rubin; and the outgoing director of the Office of Management and Budget, Peter Orszag.
Sen. Kent Conrad, chairman of the Senate Budget Committee, likes a VAT. Ezekiel Emanuel, brother of President Obama’s chief of staff and a White House adviser on health care, has called for a VAT as a way to finance expanded health coverage.
Supporters also believe that a VAT offers a bipartisan grand bargain. Because it taxes consumption, it touches only income that is spent. So wealthy people, who invest rather than spend most of their income, would not pay much VAT. As a sweetener for Wall Street, some enthusiasts would include a cut in the corporate income tax as well. That presumably makes it a tax that even Republicans might like.
Advocates trying to sell Democrats on a VAT point to Europe, where value-added taxes as high as 25% in Scandinavia raise prodigious sums that in turn support generous social services. And because a VAT typically exempts products that are exported, it would be good for American manufacturing and our trade balance.
But American budget hawks don’t want VAT revenues to go for more and better preschool or health care or job training or other favorites of liberals. They want the proceeds to go for deficit reduction. And most of the Republican leadership in Congress is dead set against new taxes. So a VAT remains a political stretch.
As the European experience shows, a VAT can indeed be an effective revenue raiser. But unless the proceeds go to support valued public services, it is just another tax on the middle class.
It is possible to make a VAT less regressive by using some of the new revenue to reduce income taxes or payroll taxes paid by working families. Some countries with VATs exempt necessities such as food. We can also offset its regressive nature by coupling it with new surtaxes on very high incomes.
So when the president’s fiscal commission raises the idea of a VAT, as is likely, we need to ask three questions:
• Are basic necessities like food and housing to be exempted?
• Is it part of a package that makes the tax system fairer and less onerous to the middle class overall?
• Do some of the proceeds go to finance public services that have been shortchanged for decades and that got further reduced in the current recession?
If not, the VAT should be considered dead on arrival. The last thing we need in a deep slump with persistent unemployment is higher taxes on the middle class.

Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His new book is titled A Presidency in Peril.

Editorial

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Opinion
Creating More Jobs for Teens Is Critical

The numbers are alarming.
In 1999, more than half (52.5%) of Massachusetts teens ages 16 to 19 held paying jobs. By 2009, that number was down to 32.1%, and for the first four months of this year, it was 23.6%.
That figure will undoubtedly rise during the summer, when teen employment is traditionally at its highest, there is a trend emerging across the Bay State and it does bode well for our cities and towns: teens are just finding it increasingly difficult to find employment.
There are many reasons for this movement, the biggest being the economy and its many side effects.
While conditions have improved somewhat over the past few quarters, the recovery has been mostly a jobless one. This means that teens have competition for open jobs from thousands of unemployed individuals across the region. Meanwhile, ongoing concerns about the recovery and its relative staying power have left many business owners skittish about doing any additional hiring, even if they are part-time positions. Also, many companies learned during the downturn that could make do with fewer people in some offices or departments, and the fact that times are better doesn’t mean they’re going to become less lean.
Beyond the recession, there are certainly some other factors at play with this trend toward teen hiring. First, there are far fewer drug stores, hardware stores, and video stores for young people to work at, and fewer large businesses that have the flexibility to bring on help in the summertime. Another factor is the very real possibility that, when given the choice between hiring a retired Baby Boomer with good work habits and a desire to stay active and hiring a 17-year-old that is a largely unknown commodity, business owners are choosing the former — and who could blame them?
Whatever the reasons behind the trend, there are some real dangers to our region and its job market if it continues.
As Bill Ward, director of the Regional Employment Board, points out in the story that begins on page 6, jobs connect teens to the world of work. They introduce them to the workplace and, in most cases, compel them to become more responsible. It is while employed that young people learn the importance of showing up on time, being part of a team, and doing the best job they can — always.
But in the workplace, young people also learn from their elders. Every Baby Boomer remembers his or her first (or second, or third) job, and they recall more than the skills they acquired and the experiences they recorded, but also some life lessons from people 20, 30, 40, or more years older than they were.
All these things are missing from the equation when teens can’t gain employment.
That’s why it’s important for companies, often working in collaboration with agencies like the REB, to be diligent and imaginative in creating strategies that can create summer jobs or internship opportunities such as those created by Western Mass. Electric Co. and Big Y.
These programs not only help young people by giving them jobs, spending cash, money for college, and a chance to stay off the street and out of trouble. They also help the companies in question by introducing teens to those businesses and the career opportunities that can aspire to. They call these win-win scenarios.
This region and its business community face a number of challenges. Creating more jobs for teens may seem one that belongs far down on the page of priorities, but the reality is that addressing this problem now can lead to far fewer problems down the road.

EDITORIAL

By
Opinion
‘Corridor’ Requires Patience – and Urgency

It would be easy to say that, a decade after it was created, the brand Knowledge Corridor hasn’t exactly caught on. Nor does it seem to be generating great results in this region.
Indeed, few people seem to be using the term — it appears reserved for the economic-development leaders who coined the phrase, and even they don’t employ it often — and when someone does use it, it seems strange and almost out of place.
Meanwhile, there seem to be very few real success stories that can be attributed to the so-called corridor. Officials struggle to name companies that have come to this region because they were impressed by the numbers put up by the corridor when one aggregates the Springfield and Hartford areas, and other successes need quotation marks around that word.
That includes Northwest Airlines’ flight from Bradley International Airport to Amsterdam, which was launched in part because of those aggregated numbers and amid much fanfare, but was soon discontinued, scheduled for resumption, and then canceled again.
High-speed rail is said to be a program helped along by the formation of the corridor, and another initiative — the Web site internhere.com — has been hailed as a successful corridor-wide effort to keep young people in the region after they graduate from area colleges.
Add it all up, and it doesn’t seem like much for a decade’s work.
But just as Rome wasn’t built in a day, an economic region isn’t built in 10 years — or even 20, by most standards — especially when it isn’t marketed extensively and the last two of the 10 years in question have been part of the worst recession since the 1930s.
In other words, it’s far too early to say with any degree of confidence whether the corridor concept will ultimately be successful.
However, it’s definitely not too early to say that the corridor ultimately makes a great deal of sense, and also that both states need to make much more of a commitment to this region if it is to have chance to successfully compete against the likes of North Carolina’s Research Triangle, Silicon Valley, and other well-established economic regions.
Right now, that commitment, in the form of money with which officials on both sides of the border can market the corridor, just isn’t there, due largely to the toll the recession is taking on state budgets.
When the economy improves and states have more flexibility in their budgets, Massachusetts and Connecticut have to get serious about properly funding the corridor, because the numbers do, indeed, jump off the page when you show them to people. By themselves, the Hartford and Springfield metropolitan areas do not exactly stand out with site selectors, largely because neither one cracks the magic 1 million mark when it comes to population or workforce.
Put them together, and they approach 2 million in population, much of it college education. And then there are those 30-odd colleges and universities that graduate tens of thousands of people (and potential employees) every spring.
And, when marketed aggressively and effectively, Hartford can certainly be seen as much more than the insurance capital of the world, and Springfield can be viewed as more than a manufacturing center long past its prime. They can both be presented as cities with economic diversity and emerging sectors, such as biotech and clean energy.
In short, some patience is needed with the corridor — it took decades for the Research Triangle to emerge, for example — but also some energy, or urgency. The corridor has to become more than a phrase that economic-development leaders and even Mass. Gov. Deval Patrick can throw out (and he has) when the time seems right. It has to be something that people believe in and become committed to.
Otherwise, we might be saying the same thing about this region 30 or 40 years from now.

Opinion

By
Opinion
‘C’ on Kids’ Dental Care Doesn’t Pass

Oral health is a little like Rodney Dangerfield — it doesn’t get the respect it deserves.
Ten years ago, the U.S. surgeon general declared dental disease to be a “silent epidemic.” A decade later we’ve made some progress, but clearly not enough. The recently released Pew Report “Cost of Delay: State Dental Policies Fail 1 in 5 Children,” which the DentaQuest Foundation and the W.K. Kellogg Foundation helped fund, paints a stark picture.
In America today, 17 million low-income children still go without dental care. The consequences of that are serious. In Massachusetts, one in 10 minority children goes to school with pain caused by completely preventable dental disease. That means lost school time, challenged learning, and impaired nutrition and health, and sometimes, if left untreated, it can result in serious illness or even death. That was the case with 12-year-old Deamonte Driver, who died of a brain infection caused by a tooth abscess in Maryland in 2007.
Unlike other health care problems which seem intractable and enormously expensive to fix, providing children with the dental care they need is doable at relatively low cost. In fact, if most low-income children got the preventive dental care they deserve, they could eliminate much of the higher-cost procedures down the road.
In grading the states, Pew used eight measures, including providing sealants, fluoridating water supplies, increasing Medicaid coverage for children, expanding the role of dental hygienists in schools, and maintaining an accurate database.
Only six states got an ‘A,’ meaning they met or exceeded six of the eight measures. Massachusetts got a ‘C,’ although if the study had used more recent data, we would have received a ‘B’ because we passed legislation that allows dental hygienists to apply protective sealants (coatings on molars) without a prior dentist exam in community settings.
We’ve come a long way in the Commonwealth. Ten years ago, Massachusetts would have received a failing grade. In fact, in 2005, a federal judge ruled in a lawsuit against the Commonwealth that there was insufficient access to dental care for children with MassHealth. Delta Dental of Mass., together with advocacy partners like Health Care for All, the Mass. Dental Society, key legislators, and others, have dedicated themselves to improving oral health for low-income children and adults.
Today, we should be proud that many more children with MassHealth in Massachusetts have access to dental care and that we are one of only nine states in the nation to have met the goal of having fewer than a quarter of our children at school with untreated tooth decay. In addition, Massachusetts currently reimburses dentists who serve Medicaid-enrolled children more than the national benchmark of the Pew Report, making it more likely that more dentists will accept Medicaid patients. Still, there is room for improvement.
What will it take for Massachusetts to continue our move from a ‘C’ to ‘B’ to ‘A’? The first and most important step is to make sure that more children in high-risk schools have access to school-based dental preventive programs. Those programs provide dental sealants, clear plastic coatings on chewing surfaces of molar teeth that have been shown to significantly reduce tooth decay.
Fluoridation is another important measure. Fluoride prevents tooth decay and strengthens teeth. To pass the Pew benchmark, at least 75% of Massachusetts residents should have access to community water fluoridation. Currently only 59% of residents have this access. This is easier said than done, as the decision to fluoridate is often a controversial local decision. Moving that needle will not be easy.
We have already done much of the heavy lifting. If we commit ourselves to improve the percentage of children who have access to oral health prevention and increase the number of communities that fluoridate their water, we can ensure that the next report will put Massachusetts in the ‘A’ column. A statewide coalition will soon release an oral-health plan that will provide a road map to achieve that goal.

Fay Donohue is the president and CEO of Delta Dental of Mass.

STCC/UMass Pact Will Benefit Businesses

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Opinion

Stuart Shulman got it right.
It is scary being a startup. Very scary. It’s also daunting and quite humbling. The odds, as they say, are stacked against you.
Which is why the partnership forged by UMass Amherst and Springfield Technical Community College concerning the incubator at the Scibelli Enterprise Center on the STCC campus is such an important development for the region. In short, it can significantly improve those odds.
The collaboration, announced late last month, makes the schools full partners in the work to operate the incubator and, in essence, take some of the fear, heartache, and headache out of the process of being an entrepreneur and trying to take a company to the next level.
Shulman, a professor of Political Science at UMass, is one such person. He has started a company, a spinoff from research at the university, called Texifter, which, as the name implies (sort of), creates software that will help users, especially government agencies, sift through large amounts of text. He is the newest tenant in the incubator and a poster child of sorts for the kind of company that Ira Rubenzahl, STCC president, and Marla Michel, the new director of the facility, want to see as clients. His venture is technology-oriented, has growth potential, can take advantage of the benefits of incubation, and it may someday soon be able to hire STCC students and graduates.
And Shulman’s story points up why a successful incubator is so important for this region. Ventures like his need help getting to where they want to go, and they can’t find that help, or support system, working out of their garage, attic, or office at UMass.
Before elaborating, we’ll note that the UMass/STCC partnership does a lot of things. For starters, it will breathe some new life into a facility that has struggled in recent years — especially with the loss of a $500,000 state subsidy and some key leaders — and has, by many accounts, underachieved since opening a decade ago. By bringing UMass in as a partner, STCC will likely gain better access to UMass spinoffs as potential clients, and more clout across the state.
Meanwhile, the collaboration represents another large step forward in the university’s efforts to be visible and involved in Springfield. This has been a priority for Chancellor Robert Holub, who has focused many efforts on helping fill vacant real estate. The incubator initiative could have more far-reaching implications.
Why? Because, as we’ve said many times, growth in this region is almost certain to come organically far more than it will from importing companies and jobs. While it’s always possible to recruit companies that will hire hundreds of people (it happed last year with Liberty Mutual), this isn’t anything anyone should plan on happening in this day and age.
Progress is far more likely to come from growing new businesses, and especially those with strong growth and employment potential. Statistics show that companies that are incubated, where they can benefit from the help of professionals and also learn from those two doors down or across the hall, stand a better chance of surviving and thriving.
The incubator at the Enterprise Center never has taken all the fear out of being a startup, and it never will. But it can take some of the anxiety out of the equation and better those long odds.
And that’s why the UMass/STCC partnership is such an important win/win for this region.

How About a Union Station Casino?

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Opinion

By GERRY FITZGERALD
Now that it’s certain that casinos are coming to Massachusetts, it may be time to start considering seriously where a Western Mass. casino should be sited. In spite of the constant PR drumbeat coming out of Palmer over the past year, the siting of a local casino is an important issue and should not be decided by the noise level generated by developers with an entirely vested interest in the decision.
The Western Mass. location where a casino would bring the greatest benefit to the area as a whole, and to a host community with the greatest needs and the greatest payback, is readily apparent. And it certainly isn’t Palmer. Granted, Palmer is a nice little town with the same problems of many other little towns in Western Mass., but simply having a large tract of open land somewhere near a turnpike exit doesn’t make it the optimum site for a casino.
Springfield is the economic engine that powers Western Mass. A financially healthy Springfield of rising property values, a vibrant school system, rising employment opportunities for its growing minority population, and a revitalized downtown benefits all of Western Mass. These are benefits that a well-conceived, well-managed, visionary casino relationship could bring to Springfield.
With an agreement that the casino gives job preference and training opportunities to Springfield residents first, the people and neighborhoods most in need of an economic hand up — not a handout — will receive it, with dignity and a sense of pride, and just as importantly, they get the opportunity to work in their own community, with the ability to get to work every day by public transportation.
A revitalized, vibrant downtown community can also come with the new casino development. This is the hard part. Locating an $800 million casino in downtown Springfield requires vision and fortitude. But it should be the easiest part, because the key component that satisfies all the requirements of an optimum Western Mass. casino site has been sitting vacant for more than 40 years, waiting for an opportunity big enough to match its economic potential — Union Station.
A huge parcel of prime downtown real estate, Union Station sits unused and undeveloped — but not for lack of trying. Countless commissions have taken a crack at designing a future for Union Station, with a new proposal coming along every few years, complete with the same artist renderings and vague notions of intermodal transportation and retail and commercial office ventures. Mercifully, the latest plan at least spared us the farmers’-market component of previous proposals. But the fact is that nothing will ever go on that site that will generate 2,000 construction jobs, 3,000 permanent jobs, and a multi-million-dollar annual contribution to the city’s treasury, and bring an average of 10,000 visitors per day to downtown Springfield. A casino would.
It is also a unique and exciting opportunity for a casino operator. Come to Springfield and build an $800 million, 40-story, luxury resort hotel and casino, and we’ll give you the site at Union Station, and you’ll also have an Amtrak station in your hotel lobby, with ‘casino trains’ running on the hour from New York City, bringing in gamblers from New York, Bridgeport, New Haven, and Hartford.
A Union Station casino (it even comes with a perfect brand name) wouldn’t be the demise of Foxwoods or Mohegan Sun, but it would most certainly take a very serious gouge out of Fox-Mo’s significant I-91, Southern Conn./ New York business, turn their Albany traffic to a trickle, and keep at home the important Western Mass business. From New York, Bridgeport, New Haven, Hartford, Albany, and points beyond, Springfield is far easier and faster to get to by car, train, or airplane, and has much more to offer gamblers beyond the tables and slots than does a clearing in the woods. A world-class, major resort casino in downtown Springfield is an absolute nightmare for Foxwoods and Mohegan Sun.
A Union Station casino brings people and business to downtown Springfield and the surrounding area. It brings convention business to the Mass Mutual Center (instead of losing it a to Palmer facility), brings visitors to the Basketball Hall of Fame and its restaurants, and attracts people to the museums, Symphony Hall, CityStage, Six Flags, the Big E, and area restaurants, hotels, and stores. And most of all, it puts Springfield’s citizens to work, in their own community, at a location at the heart of the public-transportation system. An opportunity like this will never again be available to Springfield.

Gerry FitzGerald is president of FitzGerald & Mastroianni Advertising Inc. in Springfield.

Opinion

By
Opinion
Health Care Fails Small Businesses

Not long after President Nixon took the unprecedented step of imposing peacetime wage and price controls, the American people learned a basic economic lesson: artificial controls don’t work unless underlying costs are controlled.
Four decades later, the Patrick administration is imposing controls on small-business health-insurance rates. The move will prove to be little more than an election-year reprise of Nixon’s failed effort.
The Commonwealth’s 2006 health care reform was supposed to address rising health-insurance costs for small businesses. It hasn’t — and small businesses are paying the price.
The Commonwealth Connector, an independent authority acting as an insurance-plan clearinghouse, was established to provide real choices and information needed to evaluate options. In theory, an informed and robust marketplace would bend the cost curve and get more of the working poor and lower middle class insured. The theory is right, but the implementation has failed in two key ways.
First, the Connector focused all its energy on providing nearly free products to the indigent. Its board seemed uninterested in market-rate products for small-business employees.
The Connector revenues come from selling plans, and selling nearly free products was the path of least resistance. Unsurprisingly, 90% of the Connector’s operating revenue has come from the fee it earns for state-subsidized plans.
The lack of focus on small businesses is evident. The Connector took three years to make information about provider networks and participating primary-care providers for small businesses available on its Web site. It took over two years to launch a small-employer pilot program; in more than a year, it attracted just 65 businesses and has now been replaced by a new program that offers only seven plans.
Implementation also fell short when the Connector chose to build a top-down bureaucracy rather than leverage the broker and private-market community. The quasi-governmental Connector has a $40 million annual budget and 45 employees earning annual salaries that average $100,000. Its board is heavily weighted toward government officials and unions.
Paternalistic fears about confusing people have led the Connector to overregulate and minimize consumer choice. Instead of engaging the private market by providing unique products, it has rejected or failed to renew products, resulting in offerings that simply duplicate ones already privately available.
This bureaucratic setup cannot provide choices that contain costs to employees and owners of small businesses — nor help address double-digit increases in small-business rates.
There is another path forward. Utah’s Health Insurance Exchange was started with a $600,000 appropriation and has no board and just two employees. It provides a technology backbone that enables brokers and businesses to take advantage of consumer-based options.
As its mission is to promote small-business growth, the Exchange is part of the Governor’s Office of Economic Development. Private-sector partners provide unpaid policy advice on what businesses and employees need.
Fewer than 1,500 small business employees receive coverage through the Connector. In Utah, with a far smaller population, about 55,000 small-business employees have purchased health insurance through the Exchange. It offers 66 plans from a number of carriers, including the largest ones in the state.
The focus on business growth and input from the private market has helped promote other reforms. In its first year, the Exchange developed a database that compares the cost of care across all providers; four years after its creation, the Connector hasn’t developed a similar tool. Unlike Massachusetts, Utah has also passed tort and medical-malpractice reform.
We applaud the Connector’s success in insuring the indigent. But it has failed to give small businesses affordable, diverse choices.
Small-business owners cannot afford 25% annual hikes to already-astronomical health-insurance premiums, especially in this economic climate. Price controls will do nothing to control the underlying forces that drive health-insurance premium increases. And unless Massachusetts does the hard work of getting costs under control, Patrick could be remembered as the guy who tried to prop up the levy as the floodwaters surged in.

Jim Stergios is executive director, and Amy Lischko is senior fellow on health care, at Pioneer Institute.

Editorial

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Opinion
Region’s Colleges Are Economic Engines

Springfield Mayor Domenic Sarno calls it “playing to our strength.”
That was his way of conveying the manner in which area colleges, including all those that call his city home, are becoming more powerful forces in local economic-development efforts.
It’s not exactly a recent phenomenon — colleges have always played an important role in the region’s economic health and well-being, from their local purchases to their huge payrolls to seemingly constant new construction. But in recent years, and especially over the past 18 months or so, area schools have been front and center with initiatives that can, and probably will, have enormous benefits for area cities and towns.
Sarno was responding to news that American International College has been granted preferred-developer status for a project involving three key pieces of the Mason Square neighborhood — two sections of the massive former Indian Motocycle building and the long-vacant fire station next door. The college is looking at everything from a cyber café to a new home for its radio station in the fire station, and everything from housing options to incubator space in the Indian building.
The project is still very much in the due-diligence stage, and the college will move forward only if several funding sources can be tapped. But even if the vision for the properties doesn’t become reality, area colleges will clearly continue to be huge forces in economic-development efforts.
Start with the state university, which is playing a lead role in the efforts to bring a high-performance computing center to downtown Holyoke, a project that could change the face, and the fortunes, of the Paper City. UMass Amherst is also making its presence felt on Court Street in downtown Springfield. The university will be moving one of its departments into a building in that historic area — a project, conceived with generous amounts of encouragement and help from the city, that is expected to be the first of many that will increase the school’s visibility and impact there.
Meanwhile, Westfield State College is eyeing major investments in that city’s still-struggling downtown. WSC President Evan Dobelle helped change the landscape of some neighborhoods in Hartford when he was president of Trinity College through the creation of several public-private partnerships, and he is looking to do the same in the Whip City through a plan to put more student housing in the urban core, and thus boost existing businesses and attract new ones to the Elm Street corridor.
There are countless other examples:
• Springfield Technical Community College created a technology park in the former Digital Equipment Corp. complex across Federal Street from the campus, a gambit that has succeeded in bringing nearly 1,000 jobs to that complex of buildings. A few years later, the school opened a facility now known as the Scibelli Entreprise Center, that is both an incubator and home to agencies that help small businesses get off the ground and to the next level.
• Holyoke Community College is a partner in a project that will not only bring a learning center to a former fire station in the city’s downtown, one that will help give adults skills to succeed in the workforce, but also become another cornerstone in the revitalization of that city.
• Springfield College has, for many years, undertaken programs to improve quality of life in the neighborhoods surrounding the school, which are some of the poorest in the city, if not the state.
• Bay Path College has, for 15 years now, organized a women’s leadership conference that has imparted key lessons on life and business, and it has initiated a number of programs to help spur entrepreneurship.
• The Five Colleges in Hampshire Country have contributed in innumerable ways to the cultural and economic health of the Amherst and Northampton area.
The list goes on. Every school has stepped up, and the involvement is becoming deeper and more imaginative.
“Playing to our strength.” The mayor got it right. The area’s colleges represent perhaps its greatest strength, and cities and towns must collectively work to help find and nurture new ways to tap into that strength.

Editorial

By
Opinion
Showcasing Local Manufacturing Might

Details are still falling into place, but a planned conference to showcase the region’s manufacturing sector and resources that support it appears to be exactly what this region — and this all-important sector of the Knowledge Corridor’s economy — needs.
It’s called AMICCON, or the Advanced Manufacturing and Innovation Competition & Conference, and it is being designed as both a showcase of the region’s manufacturing might and diversity, and also a vehicle for possibly generating more business and economic development in the region.
Conference creators, or founders, including several area manufacturing executives, banking and finance leaders, and economic-development officials, say many manufacturers and supply-chain members in this region are simply not aware of all that is produced in the Springfield-Hartford corridor. As a result, companies are looking to makers in other time zones — and on other continents — to supply items that could supplied by companies in their own backyard.
But there is much more to this conference, planned for Sept. 23, than simply meeting and greeting, although that is certainly important. Indeed, the event is being crafted — as we said, it is still very much a work in progress — to not only spotlight manufacturers, but introduce them to innovators, venture capitalists, and support organizations that can make them more competitive globally.
In other words, this conference and continuum is about making important connections — with potential new customers, new markets, and new partners.
For example, the program is slated to include two programs to be staged by the Mass. Export Center, one an experts panel that will discuss a variety of issues, and the second a seminar called “International Traffic in Arms Regulations for Defense and Aerospace Export.” Together, they will help manufacturers understand the many nuances of exporting and grasp the many growth opportunities represented by selling products overseas.
There will be other educational programs that will make the day eventful and enlightening, but organizers don’t want this to be about one day.
Instead, they want to incorporate ongoing programs that would create a continual spotlight on the manufacturing sector and a year-round focus on ways to bolster that important economic engine. Thus, the word ‘continuum’ is part of the program and its acronym.
A key component of that continuum will be something called the Advanced Manufacturing Innovation Competition (AMIC), which, as the name suggests, is designed to not simply showcase talented precision manufacturing, but promote innovation that may lead to the kind of new-product development that gave the Springfield area its heritage.
When many people think of the term ‘economic development,’ thoughts turn to efforts to bring new companies and new jobs to a region. And while that is a big part of that equation, it is just a part. Another huge part is work to help existing companies to not simply stay in business and remain in the 413 area code, but grow their books of business and their workforces.
The manufacturing sector, specifically the precision-manufacturing component, has long been this region’s identity. The best days for that industry have long since past, but that doesn’t mean there can’t be a bright future.
The AMICCON conference and continuum should go a long way toward putting that sector not simply in the spotlight, but in a better position to achieve long-term health and vitality.

Showcasing the Region’s Young Talent

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Opinion

When BusinessWest started its 40 Under Forty recognition program in 2007, there were some cynics who wondered out loud just how many good classes of winners this region had in it. Indeed, there were many who had doubts about just how deep the pool of talent is in the Pioneer Valley.

Maybe these individuals were reading too many stories about brain drains and how young people have to leave Western Mass. to find fulfillment professionally and personally. Or maybe that’s just another indicator of the Valley’s large and often-disruptive inferiority complex.

From out vantage point, there seems to be no shortage of young talent in this region, and the 40 Under Forty program serves as a way to communicate this fact to the region as a whole. Read the 40 profiles and, as with the first classes of winners, you should be impressed, and maybe a little surprised (still) at the core of young talent in the 413 area code.

That’s because the 40 winners are not simply successful in business, whether they are lawyers, accountants, technology-sector entrepreneurs, or managers of nonprofits, but because they are leaders who are also contributing to quality of life in this region, be it through work for Habitat for Humanity, serving as a Big Brother or Big Sister, being a mentor to one or more young students, or rescuing basset hounds.

It is this balance of work in the office (or plant) and in the community that makes the class of 2010, and the ones who came before it, worthy of much more than their day in the sun.

Some of the credit for this work within the community goes to the companies that members of this class are working for. Many, such as Big Y, PeoplesBank, Meyers Brothers Kalicka, and others, have long and impressive track records for urging employees at all levels to give back. But some of the credit should also go to the region’s two young-professional organizations, based in Springfield and Northampton.

Indeed, while networking has been a primary focus for these groups, they have also instilled in their memberships the need to be active within the community and to find ways to put their talents to use to improve quality for life for people in area cities and towns. This message is clearly resonating.

We’ve said this before, but it bears repeating. The 40 Under Forty initiative is not merely a recognition program designed to honor the top scorers with their pictures on the cover of BusinessWest, a plaque received at the June gala, and a line on a résumé that conveys excellence and accomplishment. No, the program was, and is, intended to shine a light on all the young talent in the region — not just those who won, but also those who were nominated, and even those who were not, and many fall into those latter categories.

The 40 members of the Class of 2010 are simply spokespeople, if you will, for the hundreds, make that thousands, of talented young professionals and entrepreneurs in this region.

Each year, those of us at BusinessWest tell those who judge the 40 Under Forty contestants to enjoy the process, and that the experience will, indeed, make them feel good, or at least better, about the Western Mass. region and its prospects for growth and prosperity. And they invariably tell us that we’re right.

And we think we’ll be saying that for many years to come.

OPINION

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Opinion
Decision Looms for ‘Death Tax’

I know you’re eager to return to those thrilling days of yesteryear — the Bush presidency — and there’s a pressing matter from that era on the national agenda: what to do about the estate tax. We have until New Year’s Day to settle this question, a small window on our values as a country. The background: on the charge that the ‘death tax’ was a punishing money grab from small businessmen and women — coming while they grieved a lost loved one, no less — opponents in 2001 succeeded in increasing the exemption; the tax currently kicks in on inheritances above $3.5 million rather than the old tax’s $1 million. The maximum tax rate, then 55%, was dropped to 45%.

When the Times Square ball rings in 2010, the tax will vanish altogether. Your ticket to the great beyond is tax-free next year. But not if you survive into 2011: because of deficit concerns, opponents had to agree that the tax would return that year, with a rate and exemption at their 2001 levels. This fiscal sleight-of-hand, disdained by all sides, has produced a yuletide debate. Should we repeal next year’s repeal to contain federal red ink, and if so, what should the rate and exemption be? Or do we just kill the tax permanently, as opponents have always urged? President Obama proposes threading the needle by keeping the tax next year but making permanent its current lowered rate and higher exemption. Boston College law professor Ray D. Madoff counters that that would cost the Treasury more in the coming decade than doing nothing. She proposes shielding family businesses under $10 million from the tax but preserving it at some level otherwise.

Both points are spot-on. The case against the death tax (opponents’ term) has always been daffy. Aug. 24, 2000 has passed into political lore as the day that Montana rancher Lynn Cornwell hopped atop a tractor to deliver a repeal plea to President Clinton at the White House. That same day, then-Republican House Speaker Dennis Hastert declared that the tax “is so steep that sometimes the deceased owner’s children must break up a farm or sell a business just to cover the tax.’’ But the tractor drive was a stunt. Far from being a victim of the tax man’s greed, Cornwell has benefited from taxpayer largesse. In the years after his ride, he pocketed $400,000 in federal farm subsidies and fed his herd on federal land at below-market rates, according to William H. Gates Sr. and Chuck Collins, two well-off men who wrote a book supporting retention of the tax.

And Hastert’s point? You could fertilize Montana with what the speaker was shoveling. In 2001, the New York Times asked the American Farm Bureau Federation, a repeal advocate, for examples of families that had to give up their farms because they couldn’t afford the estate tax. The federation found exactly zero victims. Five years later, the Times reported that just 50,000 families will be subject to the tax in 2011. They’re in a tax bracket that means they’ll be able to pay the IRS without having to miss the mortgage payment, turn off the electricity, or eat cat food.

Won’t killing the tax help during a recession? Tax cuts for average people who need to spend their money on necessities would indeed be smart in a downturn. But with the estate tax, we’re talking about the wealthiest Americans, people more likely to save their windfall, not spend it. As for arguments that the tax smothers job growth, President Clinton left the tax alone during the 1990s. Job growth sure was slumming it then, wasn’t it? Keeping taxes low and simple is sound policy. It is perfectly compatible with an estate tax.

Many of the same politicians who oppose the tax bray out of the other side of their mouths about swelling deficits. Meanwhile, a writer for the Weekly Standard made the conservative case for the tax: success in America should come from hard work and talent, not from being one of the “undeserving winners of the sperm lottery.’’

Rich Barlow is a freelance writer in Cambridge.

The Best Local Business Stories of 2009

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Opinion

Let’s face it, 2009 certainly wasn’t anything for the business community to write home about.

For many, this was a year to simply hang in and hang on, a time when “flat” translated into “pretty darned good.” For businesses large and small, this was a time best forgotten — and soon.

But there were some rays of sunlight that somehow managed to break through the clouds, some stories that offer hope of better times for those who live, work, and own businesses in the Pioneer Valley. Here are five, listed in reverse order of importance, in our view, of course.

5. A Focus on Literacy

OK, we can toot out own horn a little. Actually, it’s not our horn. Yes, BusinessWest created a new recognition program called Difference Makers, so-named to honor those who are making a difference in our community, and its first class was honored last spring. That was a good story; the better story came about a few months later when one of this year’s Difference Makers, Bill Ward, director of the Regional Employment Board of Hampden County, and that group’s project manager, Maura Geary, approached us with the idea of putting all of our winners to work.

That suggestion led to an ambitious project called ‘Creating a Culture of Literacy One Book at a Time.’ This past summer, the five Difference Makers helped collect hundreds of books donated to Hasbro Summer Learning Program, and agreed that all future winners of this award would continue to focus time, energy, and imagination on a matter of vital importance to the health and well-being of this region.

4. Qteros Lands in Chicopee

A little over a year ago, the news was that this region was going to lose Qteros, a company trying to revolutionize ethanol production by using not corn, by common switch grass, to the eastern part of the state. However, through the efforts of the company’s principals and some economic-development leaders in this region, the company has made good a commitment to maintain a noticeable presence in this area.

It will do so in a research and production facility that will be located in a new office facility at Westover in Chicopee. Having Qteros in this region will provide some jobs and some additional vibrancy in the Westover area, but perhaps more importantly, it will provide inspiration to fledgling ‘green’ businesses, while sending a message that they can do business in this area code.

3. UMass Comes to Downtown Springfield

It was announced recently that UMass Amherst will be locating one of the university’s programs “an urban design center ” in one of the buildings in Springfield’s Court Square early next year. The move indicates a firm commitment on the part of the university to play a substantial role in economic-development efforts in the region’s largest city.

And the better news is that all those involved with this endeavor say it is merely the beginning of efforts designed to make UMass more of a force in the City of Homes.

2. More Signs of Progress Downtown

Springfield’s central business district still has a long way to go in terms of returning to the vibrancy evident decades ago. But there were a few big steps in the right direction taken in 2009. They include the arrival of the Springfield Armor basketball team, a Developmental League franchise that should bring more people downtown; the opening of a new restaurant, Hot Table, in Tower Square; and, especially, successful efforts to re-tenant the former federal building with Springfield School Department offices, some employees of Baystate Health, and other agencies.

Together, these developments represent real progress in the work to bring more downtown ‘ to live, work, and play.

1. The High-performance Computing Center

Six months ago, hardly anyone in this region knew what a high-performance computing center was. In truth, many still don’t know today, but the picture is starting to come into focus. A center, which brings unprecedented amounts of computing power together in one place, is going to be built in Holyoke, thanks to an impressive partnership effort involving UMass, MIT, Boston University, Cisco, and a host of other players. Holyoke was chosen because of the vast amounts of inexpensive, ‘green” energy produced by that city’s hydroelectric facilities.

The center will create only a few dozen jobs to start, but there is enormous potential for this facility to attract government agencies, businesses from several different sectors, and support services.

This was easily the biggest and best story in a year when there was little competition.

Some Strategies to Combat a Jobless Recovery

By
Opinion

What a difference a year makes.

Twelve months ago, people in business — and the media — were talking about how bad things were, and how much worse they could get. Today, as we get set to turn the calendar again, people are talking about how things are better (for the most part) and how much better they can get in 2010.

Unfortunately, the consensus among most economists and bankers is that, while we should expect a recovery, it will be of the slow and steady variety. Making matters worse is that the expectation that this looks to be a ‘jobless recovery,’ where perhaps some, but probably not many, of the jobs lost over the past 12 to 18 months are regained through expansion.

It is our hope, of course, that the experts are wrong. But, realistically, we believe that employers who have learned to make do with fewer people will be cautious and slow to bring people back on the payroll.

So, while waiting and hoping for things to improve, we would encourage area economic-development leaders and elected officials to pursue strategies and policies that will help create new avenues for jobs in our region beyond our existing base. Here are three key areas of focus.

• Continue to pursue green pastures. We’re starting to see the emergence of a ‘green sector’ in the Pioneer Valley. It’s small in comparison to what’s happening in other areas of the country and in comparison to other other industries in this region. But it’s something to build on.

With the arrival of Qteros, a firm striving to revolutionize ethanol production through the use of something called the Q microbe, near Westover in Chicopee; continued research into other green-energy breakthroughs at UMass; and the beginnings of a green-energy cluster in Greenfield, this region has the potential to become a base for a host of industries that will meet what is becoming a national desire to ‘go green.’

The planned high-performance computing center in Holyoke, heading there largely because of the city’s green and inexpensive hydro power, could also draw attention — and perhaps more jobs — to this region.

• Keep young people here — somehow. If this region is ever to develop new sources of jobs, it must have a workforce that is large and attractive enough to entice businesses and emerging sectors to come here. And a big part of this equation is young people.

Many in this constituency will be tempted to leave if there are few job opportunities, equally few chances to move up the ladder, and the perception that there will be no jobs down the road. Thus, companies have to work to engage their existing young employees in the community and make them part of the fabric of this region. They should also support the various young professionals’ groups in Western Mass. that are thus far having great success with helping individuals grow roots in the region.

In the meantime, they should endeavor to create internship and co-op opportunities that will expose young people to the many fine businesses in this area and, in the process, perhaps find their workers of tomorrow. Such internships come with a price tag for the employer in terms of both money and time, but they should be seen as investments, not expenses.

• Continue to grow the ‘eds and meds’ sectors. While this region must continue to look imaginatively toward new and different sources of jobs, it must also strive to support and grow those that already exist, especially health care and education.

These are strong, somewhat healthy sources of employment that must become healthier. Many health-care providers continue to be strapped by insufficient reimbursement. Meanwhile, public colleges and universities, which are becoming more popular as the economy continues to struggle and people seek out the skills to re-enter the workforce, are facing crippling state budget cuts. At a time when many could and should be adding to their faculty and staffs to serve more people, they are instead laying off or implementing hiring freezes.

Elected officials and economic-development leaders alike must understand that the health and well-being of our region is tied largely to the health of these sectors, and respond accordingly.