What lies ahead for Massachusetts employers as a new administration comes to Washington in 2017? Listen as three distinguished business leaders - Robert Reynolds, President and Chief Executive Officer of Putnam Investments in Boston; Donna Cupelo, region president of Verizon in New England; and Lisa Chamberlain, managing partner of The Chamberlain Group in Great Barrington – share their opinions as part of the AIM Economic Outlook Forum. Moderator is Jeff Brown, Business Editor of WBZ Radio in Boston.
Donald Trump has more social-media followers than the number of votes normally needed to be elected president of the United States.
It’s a statistic that Peter Canellos, Managing Editor of Politico, says helps to explain why the media coverage of the 2016 presidential election, and the election itself, is different from any other in history.
“These changes are themselves a major factor in the 2016 presidential campaign,” Canellos told more than 250 business leaders at the AIM Executive Forum this morning.
“We can’t establish the political dialog, as we did in the past, but we cannot ignore it.”
Recalling his work covering the 2002 presidential race when he was often the only reporter present when Bill Clinton and other candidates spoke, Canellos said that every word a candidate says today is recorded on a dozen iPhones, often held by representatives of the opposing campaigns, and posted online before any formal media outlet can post the story.
“Even if a news organization tries to exercise restraint, or tries to make decision about the news, the conversation is already galloping ahead without them,” said Canellos, who spent 26 years at the The Boston Globe before moving to Politico.
He acknowledged that many people were uncomfortable with the degree of control that “media mandarins” from The New York Times and other establishment publications once exerted over the narrative of presidential campaigns. The new reality of social media, he said, has recast the role of reporters to one of monitoring the veracity of campaign statements, tracking the connection between money and politics and looking at some of the issues “that candidates seek to avoid.”
Canellos believes the two major political parties will survive an election with two relatively unpopular nominees, but that each will change significantly.
“If you look at the history of the country the two parties’ positions have shifted dramatically. Who would have thought that the Democrats would be the party of Wall Street now? And the migration of working- class blue-collar voters to the Republican party seems to have accelerated strongly with the Trump nomination.”
The Democrats, according to Canellos, will have to sort out whether their future lies with the insurgent wing represented by Senators Bernie Sanders and Elizabeth Warren, or the establishment block led by Hillary Clinton.
“On the Republican side there will be quite an identity crisis. Even if Trump is elected, there will be questions within the Republican party about who they should be and what they should be,” he said.
Canellos said that early predictions that Democrats would regain control of the U.S. Senate appear to have been premature. Control of the Senate is now “a 50-50 proposition” as senators such as John McCain who trailed badly in the polls during the summer appear to be making up ground.
He believes the long-term legacy of the 2016 presidential election will be a sustained debate over the plight of middle-class workers, especially in traditional manufacturing areas now struggling to find new ways to grow.
“Trump has played a role in putting that constituency front and center...Even some of the Democratic proposals like free college tuition and retraining through community colleges are responding to that constituency."
The 2016 Associated Industries of Massachusetts Economic Outlook Forum featured a panel of experts looking at prospects for the Massachusetts economy. The panel, moderated by WBZ radio Business Editor Jeff Brown, included Jay Ash, Secretary of Housing and Economic Development; Martha Sullivan, President and CEO of Sensata Technologies in Attleboro; and Dr. Howard Grant, President and CEO of Lahey Health in Burlington.
Associated industries of Massachusetts President and Chief Executive Officer Richard C. Lord delivered his annual State of Massachusetts Business address on January 15, 2016 to more than 250 business leaders from throughout the commonwealth.
Lord said the decision by General Electric Company to base its headquarters in Boston underscores a coalescing of economic activity in major global cities, a development that simultaneously benefits Massachusetts and challenges leaders to spread the benefits beyond Route 495.
The decision by General Electric Company to base its headquarters in Boston underscores a coalescing of economic activity in major global cities, a development that simultaneously benefits Massachusetts and challenges leaders to spread the benefits beyond Route 495.
GE’s blockbuster announcement was topic number one this morning as business and government leaders gathered for the annual Associated Industries of Massachusetts Economic Outlook Forum in Waltham.
AIM President and Chief Executive Officer Richard C. Lord said metropolitan areas like Boston, with its rich array of universities, hospitals and financial resources, enjoys its own economic gravitational pull in a rapidly changing economy. That pull, he said, raises two important questions for Massachusetts.
“First, as anyone who sits in Expressway traffic or waits for the T in January will tell you, rapid growth strains the physical and financial resources of the state and its citizens. And then talk to young people trying to afford housing close to their jobs in a city where the Alston-Brighton triple decker in which Ted Williams once lived now sells for more than $1 million with units that rent at more than $2,000 per month,” Lord told more than 250 people who attended the forum.
“Second, and most important, what happens to the economy outside Boston? How do we as a “common wealth” address the widening imbalance between the economically thriving ‘eds and meds’ economy of Greater Boston and the more traditional economy that dominates the commonwealth from Route 495 to Berkshire County?”
Secretary of Housing and Economic Development Jay Ash compared the importance of GE’s move to the Celtics’ acquisition of all-star forward Kevin Garnett in 2007.
“The Celtics were already a good team, a playoff team, but when Kevin Garnett came, he was a Hall of Famer who put the Celtics over the top,” said Ash, who led the commonwealth’s efforts to land GE and its 800 headquarters and research jobs.
The key to the deal, Ash said, was cohesive approach adopted by Governor Charlie Baker, a Republican, and Boston Mayor Matry Walsh, a Democrat.
“I’ve been in politics all my life and I’ve never seen two leaders working so closely together, let alone leaders from different parties working so closely together,” he said.
Ash made his comments during a panel discussion on prospects for the Massachusetts economy in 2016.
Martha Sullivan, Chief Executive Officer of Sensata Technologies in Attleboro, said developing engineering and other technical talent remains a priority for her century-old company, which makes many of the sensors that are the basis of what GE and others call the “industrial Internet.”
Sullivan said that companies must have a vision that attracts talent.
“You have to have a culture that is welcoming, with a diversity of talent, thought and background,” she said.
Dr. Howard Grant, President and Chief Executive Officer of Lahey Health in Burlington, said the Massachusetts economy is being held back by health-care costs that run 36 percent more than the national average. It doesn’t have to be that way, Grant said, if employers and consumers seek treatment in moderately priced community hospitals where medical outcomes match those of expensive academic medical centers.
“We need to do something about that,” Grant said.
Lord said in his annual State of Massachusetts business address that it’s good to be Massachusetts at the dawn of 2016:
- The commonwealth is likely to approach full employment this year.
- Massachusetts employers added almost 68,000 jobs during the first 11 months of 2015.
- Economic output grew 25 percent faster than the nation as a whole, and per-capita personal income remains the second highest in the United States, 128 percent of the national average.
- AIM’s widely followed Business Confidence Index remains solidly optimistic, despite a marked slowdown in foreign export markets.
- Massachusetts posted a record-breaking year for venture capital funding in 2015, with $7.4 billion invested across 531 deals.
- And Bloomberg just named Massachusetts the most innovative state in the nation.
An economic recovery that finally feels like a recovery provides Massachusetts policymakers with a rare opportunity to address the long-tern structural issues that will shape the Bay State business climate for the next century, the president of Associated Industries of Massachusetts said today.
Richard C. Lord, in his annual State of Massachusetts Business address, said that the future of Massachusetts is built upon an encouraging present, much as it was 100 years ago when AIM was founded by a visionary group of industrialists. He said that AIM will begin its second century by seeking solutions to persistent challenges to economic growth such as the shortage of skilled workers, harnessing innovation and the ability to compete in global markets.
“Associated Industries of Massachusetts begins a yearlong celebration of its 100th anniversary today by honoring the determination of our founders to solve the big issues that determine the ability of Bay State residents to create a life for themselves and their families. AIM embraces with our founders the dictum of Theodore Roosevelt, who said ‘We should not forget that it will be just as important to our descendants to be prosperous in their time as it is to us to be prosperous in our time.’ ” Lord told an audience of 250 people at the AIM Economic Outlook Forum.
Speaking one day after new Governor Charlie Baker took the oath of office in Boston, Lord outlined four key long-term growth strategies for Massachusetts contained in AIM’s Blueprint for the Next Century, a document intended to commemorate the organization’s centennial:
- Government and business must develop the best system in the world for educating and training workers with the skills to allow Massachusetts companies to succeed in a rapidly changing global economy.
- Massachusetts must create a competitive economic structure across all industries, geographic regions and populations rather than picking winners and losers.
- Establish a world-class state regulatory system that meets the highest standards for efficiency, predictability, transparency, and responsiveness.
- Massachusetts must find a way to moderate the substantial burden that health care and energy costs place on business growth.
Lord said the strategies are intended to create an economy that benefits all Massachusetts residents and spreads prosperity to all corners of the state. He noted that one of the immediate challenges for policymakers is to address the economic imbalance that has developed between the thriving Cambridge-Boston innovation beltway and the rest of the commonwealth.
He told the audience that “at a time when there is frequent discussion of income inequality, and the need to create what Boston Mayor Marty Walsh last month called an inclusive recovery that makes us better and not merely bigger, it is important to remind ourselves that the Massachusetts economy boils down to the nexus of a person, a job and an employer,” he said.
A panel of business leaders responded to Lord’s speech.
“A job with a future remains the only sustainable strategy for raising the long-term economic prospects of thousands of our fellow residents who may not yet be sharing in the recovery.”
Eric Roman, General Manager for Research and Applied Markets for GE Health Care Life Sciences, said Massachusetts was a logical place for the division to consolidate its headquarters and 500 high-value jobs.
“We wanted to pick a place close to customers, education and the strong work force that will allow us to grow both in the short term and in the long term,” said Roman, who will head up the new operation in Marlborough.
“GE is not looking at the short term here, we are making a long-term commitment.”
Patricia Begrowicz, CEO and co-owner of Onyx Specialty Papers in South Lee, said her company just completed a “very strong” fifth year and looks forward to another good year moving forward. Costs remain a challenge, however, as the company now pays half a million more for electricity and $300,000 more for health insurance each year than it did when she purchase the business five years ago.
“We’ve seen positive development on the market side, but the cost side has also grown,” said said.
John Harthorne, founder and CEO of the MassChallenge, said the startup accelerator would not have become a global force outside of Massachusetts. He noted that MassChallenge launched during the depths of the recession.
“We had very deep motivation to save the world,” he quipped.
The enterprise has expanded to Israel and plans to move into London and other markets during the next several years.
Massachusetts Governor-Elect Charlie Baker today pledged to create a business climate in which employers and citizens have confidence that they “can get stuff done here.”
Introduced to a standing ovation from more than 550 business leaders at the AIM Executive Forum, Baker said he would initiate a thorough review of state regulations and move aggressively to control the cost of health care in Massachusetts.
He recalled visiting a family-owned manufacturing company in Northboro that elected to expand and create new jobs in Franklin, Tennessee, rather than in Massachusetts. Permitting the expansion would have taken three years in the Bay State, but the mayor of Franklin asked the company owners “Would you like to start digging tomorrow?”
“The big missed opportunity for us is not attracting new business but hanging onto the businesses that have decided they want to grow,” Baker said.
“What I hear is ‘Boy there a lot of really smart, creative, talented people in Massachusetts, but it sure is a complicated place to get stuff done. That message is, in many cases, the difference between having the next facility built across the street or in Franklin, Tennessee,” Baker said.
He told the audience that he was part of the last major Massachusetts regulatory review, conducted under Governor William Weld, when the code of state regulations turned on its side proved to be as tall as a life-sized cardboard cutout of Celtics forward Kevin McHale.
“I actually think regulatory review is like cleaning your basement – you should probably do it every 10 years, whether you need it or not,” he quipped.
Baker referenced several times the AIM’s new Blueprint for the Next Century, a long-term plan for economic growth and prosperity the association has developed in observance of its 100th anniversary in 2015. Richard C. Lord, President and Chief Executive Officer of AIM, presented the governor-elect with the first printed copy of the Blueprint as the conclusion of his remarks.
Baker, who won election to the corner office on November 4, drew his largest round of applause when he said his administration would be a partner to small business. He said he will establish a Small-Business Council so he can “talk directly as admin to small business what their needs and concerns are so we can respond aggressively.”
Democrat Martha Coakley must win the female vote by at least 10 points and lose the independent vote by fewer than 22 points to become governor, while Republican Charlie Baker must win independents by more than 22 points and also attract 17 percent of Democrats, Suffolk University pollster David Paleologos said today.
The director of the university’s Political Research Center told the Associated Industries of Massachusetts Executive Forum that the race for Massachusetts governor will be affected by gender demographics, the performance of three third-party candidates, a rising population of independent voters, and widespread apathy among the electorate.
Paleologos based many of his observations on the nationally recognized polling that Suffolk did for the 2010 Coakley-Scott Brown Senate race and the subsequent 2012 race between Brown and Elizabeth Warren. With woman expected to make up 53 percent of those expected to vote in the 2014 gubernatorial election, Coakley must do better than the 5 percent gap she posted over Brown with female voters in 2010.
Meanwhile, registered independents have gone from 44 percent of the electorate in 1990 to 54 percent today, according to Paloeologos, while the percentage of registered Democrats has dropped from 43 percent to 35 percent during the same period. Brown beat both Coakley and Warren by double digits among independent voters.
“Martha coakley will win women on election day. The question is by how many and what will the difference be between what she wins women by and what she loses men by?” Paleologos told more than 250 business executes at the Forum.
He later added, “Charlie Baker will win independents on election day. The question is by how many?”
The growing prominence of independents may also allow third-party candidates Jeff McCormick, Evan Falchuck and Scott Lively to swing the balance of a close race for governor, Paleologos said. Third-party candidate drew 5.2 percent of the vote in the 2002 gubernatorial election, and that percentage rose to 9.5 percent by 2010.
The election is likely to be played out against a backdrop of low turnout, perhaps approaching 50 percent. The ballot question on casino gaming may drive some voters, Paleologos said, but he also noted that 53 percent of state senators and 61 percent of state representatives are running unopposed.
The recent bipartisan budget accord in Washington merely postpones the difficult decisions needed to place the United States on a sustainable fiscal footing, the Executive Director of the Concord Coalition said this morning.
Robert Bixby urged 200 people at the AIM Executive Forum to demand that politicians address the ticking budgetary time bomb that sits under the nation’s financial future. It is a time bomb, he said, driven largely by automatic spending increases embedded in the budget by decades of short-term policy decisions.
Those spending increases, combined with expected increases in interest rates on the federal debt, Bixby said, threaten to overwhelm the ability of government to provide the day-to-day services upon which citizens rely.
“It’s running on autopilot and anything you do to address it is politically toxic,” said Bixby, who has headed the Concord Coalition for the past 15 years.
Bixby said that the federal government has historically spent at a level equal to 20 percent of gross domestic product while generating tax revenue at 17 percent of GDP. That level of deficit is at least sustainable with normal economic growth, but Bixby said that the gap between spending and revenue is projected to increase to as much as 4.5 percent of GDP during the next 15 years.
The challenge for policymakers, according to Bixby, is that 60 percent of the federal budget is now consumed by required, automatic expenditures such as social security, Medicare and Medicaid. The cost of those programs is projected to grow faster than the economy. Interest on the debt, meanwhile, is projected to rise from just over $200 billion this year to more than $800 billion in 2024.
“The laws enacted years ago are now driving the federal deficit,” Bixby said.
The bottom line, he continued, is that Congress will not solve the fiscal crisis simply by cutting defense or non-defense discretionary spending. He believes that all issues must be open to negotiation, including a broadening of the tax base coupled with an examination of popular tax deductions for items such as mortgage interest and employer contributions to health insurance.
The budget accord negotiated by Republican Representative Paul Ryan and Washington Senator Patty Murray essentially placed any serious debate about the budget gap on the back burner until after the presidential election of 2016.
“They set out to do a deal that did not do much, and they succeeded,” Bixby quipped.
Bixby served as a member of the Bipartisan Policy Center’s Debt Reduction Task Force (the Domenici-Rivlin commission), which produced a model plan for comprehensive fiscal reform. He frequently speaks around the country on the nation’s fiscal challenges and possible bipartisan solutions, including greater government efficiency, tax reform and improvements in the entitlement program.
The next victim of cyber crime or cyberterrorism may be a patient driving to a Boston hospital for a doctor’s appointment.
Lynn Dugle, President of Raytheon Intelligence and Information Systems, says that “white hat” engineers have hacked the wireless payment systems embedded in Boston parking meters. They have hacked the Toyota Prius or Ford Focus that the patient may drive to the hospital.
And they can potentially hack the pacemaker keeping the patient alive.
The Food and Drug Administration has documented “dozens of cybersecurity incidents affecting hundreds of medical devices,” Dugle told hundreds of business leaders at the AIM Executive Forum in Waltham this morning.
An increasingly networked, mobile and data-driven world economy has put organizations ranging from the U.S. military to the neighborhood restaurant at risk of theft by wire. Dugle said that nation states, criminal syndicates and lone hackers are distorting financial markets, accessing biotechnology secrets and even destroying the equipment on factor floors.
The cost of cyber espionage and cyber crime could be as high as $100 billion annually, according to Dugle, who runs $6 billion business with 17,000 employees charged with protecting computer networks that run the United States government, the military, the electric infrastructure, the financial system and broad swaths of private enterprise. One quarter of all network security breaches occur in retail stores and restaurants; 20 percent take place at manufacturing, transportation and utility companies; and another 20 percent hit information and professional security firms.
Part of the issue, Dugle said, is the sheer volume of data created worldwide. More than 1.8 zetabytes of data were created globally in 2011, equivalent to 36 million years of high-definition television.
“Part of a protection strategy has to do with how much territory you have to protect. The bigger the territory, the harder it is to protect,” Dugle said.
What can employers do to make their operations secure? Dugle offered a three-part prescription:
- Defend against Advanced Persistent Threat, which is a sophisticated and often invisible effort to target a network. Dugle urged companies to audit and defend the most accessible entry points to their networks, most often employee smart phones and laptops.
- Reduce Threats from Insiders . The best security standards and protocols in the world are meaningless if the people using them bend the rules, refuse to follow them or circumvent them. Leaks from former National Security Agency contractor Edward Snowden illustrate the magnitude of the threat from inside, Dugle said.
- Train employees to minimize cyber threats. Raytheon has initiated bi-annual cyber training programs for 68,000 employees, according to Dugle, and has reduced by half employee click-throughs on malicious emails.