Economic Recovery Provides Opportunity to Address Long-Term Challenges

Posted by Christopher Geehern on Jan 9, 2015 9:46:38 AM

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.

lord_alternate.mediumRichard 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.

Topics: Massachusetts economy, AIM Executive Forum

Baker Pledges Regulatory Review, Action on Health Costs

Posted by Christopher Geehern on Nov 14, 2014 9:41:00 AM

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.

Baker2014“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.”

Topics: AIM Executive Forum, Charlie Baker

The Governor's Race - By the Numbers

Posted by Christopher Geehern on Sep 19, 2014 9:37:27 AM

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.

paleologos.good.smallThe 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.

Topics: AIM Executive Forum, Election 2014

Fiscal Watchdog - Mission Not Accomplished on Budget Crisis

Posted by Christopher Geehern on Mar 14, 2014 11:59:00 AM

 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.

ConcordRobert 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.

Topics: Budget, AIM Executive Forum, Fiscal Policy

Raytheon Executive Warns Employers on Cybersecurity

Posted by Christopher Geehern on Sep 20, 2013 9:15:00 AM

The next victim of cyber crime or cyberterrorism may be a patient driving to a Boston hospital for a doctor’s appointment.

DugleLynn 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.

Topics: Cybersecurity, Issues, AIM Executive Forum

Cybersecurity and Employers - You're Going to Need a Bigger Lock

Posted by Christopher Geehern on Sep 9, 2013 9:01:00 AM

“Our country will, at some point, face a major cyber event that will have a serious effect on our lives, our economy and the everyday functioning of our society.”

CybersecurityThat sobering assessment came last week from outgoing Homeland Security Secretary Janet Napolitano.

“While we have built systems, protections and a framework to identify attacks and intrusions, share information with the private sector and across government, and develop plans and capabilities to mitigate the damage, more must be done, and quickly,” Napolitano said in a speech to the National Press Club.

It’s a message that government, employers and average citizens alike should take to heart. A recent study by the Center for Strategic and International Studies and the computer-security firm McAffee estimates that cybercrime and cyberespionage cost the U.S. economy more than $100 billion and 508,000 jobs each year.

It was more than a bit ironic that that Napolitano made her comments just as a hacker group called the Syrian Electronic Army gained control of The New York Times, Twitter and Huffington Post UK. The same group, a hacker collective that supports Syrian President Bashar al-Assad, claimed responsibility several weeks earlier for breaching the network of The Washington Post with a sophisticated phishing attack that resulted in one staff writer’s personal Twitter account being used to send out a Syrian Electronic Army message.

The computer networks that run the nation's electricity grid, financial system and national defense are under attack. So are the systems that run your company.

The collection of computer systems, telecommunication networks and mobile devices that, grouped together, make up the cyber realm are an increasingly popular target for nation states, criminal syndicates and even lone hackers sitting in coffee shops thousands of miles away. These hackers are pulling out personal identities, engineering specifications, social security numbers, money from banks and intellectual property - the blueprints for jobs in the next generation.

“Intuitively, I think each one of us understands that there's been a substantial expansion of the cyber domain from the desktop computer and traditional computer network to now, every air traffic control tower, warehouse, smart phone and even the automobiles we drive," said Lynn Dugle, President of Raytheon Company’s Intelligence, Information and Services business, who will discuss the global cyber threat at the AIM Executive Forum on September 20.

"This has meant more opportunity and productivity for our society but it has also meant more threats to the data, operations, machines and devices we have come to rely upon. As a result, every company, organization, and agency who presumes to have intellectual property, confidential information or essential operations on a network has an obligation to understand how that network is being used and how that network is being accessed."

The breadth of the cyber threat was underscored in February when the private security firm Mandiant issued a report detailing the ongoing campaign by the Chinese government to hack into American government and corporation Web sites. Mandiant asserted that its three-year investigation showed that a unit of the Chinese military, PLA Unit 61398, had breached 115 U.S. companies across 20 industries in sustained attacks of a year or more that in one case stole 6.5 terabytes of information from a single company. 

The Depository Trust & Clearing Corp., which processes U.S. stock trades, has identified cybercrime as the most significant threat to markets and governments around the world. A study by two financial industry organizations found recently that 53 percent of securities exchanges surveyed had been hit by a cyber-attack in the last year. About 89 percent of exchange executives said it represents a systemic risk.

Small wonder that 78 percent of 400 investors surveyed said they would be “somewhat or very unlikely” to invest in a company with a history of being targeted in cyber attacks.  

“In a modern digitalized world it is possible to paralyze a country without attacking its defense forces: The country can be ruined by simply bringing its Scada systems to a halt. To impoverish a country one can erase its banking records. The most sophisticated military technology can be rendered irrelevant. In cyberspace, no country is an island,” Toomas Hendrik Ilves, President of Estonia, wrote recently.

The threat is not limited to computers. The New York Times reported in 2011 that American and Israeli intelligence were apparently behind a computer worm called Stuxnet that severely damaged Iran’s nuclear centrifuges in 2010, setting back that nation’s controversial nuclear weapons program by several years. The Times asserted that Stuxnet, the most sophisticated cyberweapon ever developed, caused the centrifuges to spin out of control while playing back recordings of normal operations so technicians were unaware of what was happening.

And next time you’re driving down the Mass Turnpike, remember that your automobile is not simply a mass of glass and steel but a hackable network of computer-controlled electronics. Forbes magazine reported last month on the work of a Pentagon-funded project in which hackers have been able to gain control of the braking and other systems of cars that now routinely include Wi-Fi networks such as Onstar and SYNC.

The message to employers – you’re going to need a bigger lock.

AIM Executive Forum Lynn Dugle

Topics: Cybersecurity, Issues, AIM Executive Forum

Harvard, MIT Online Venture Changes Educational Model

Posted by Christopher Geehern on Mar 15, 2013 11:40:00 AM

edX, the non-profit online venture of Harvard and MIT, now serves more than 800,000 students across dozens of countries. That’s more people than the combined alumni of the two universities have had through their history.

edXMore than 30,000 new students enroll to take free courses with edX every week, three times the entire enrollment of MIT.

Anant Agarwal, the President of edX, says the world of massive open online courses is expanding educational opportunity to every area of the globe. But the real revolution, he told the AIM Executive Forum this morning, is the data-driven improvements that online college courses are making to the quality of teaching.

“Our mission is to improve access to learning and improve the quality of learning,” said Agarwal, an MIT engineering professor who has run edX since Havard and MIT launched the company with a $60 million investment a year ago.

“We record every click, when people watch the videos, how long they watch them, how they do on the tests … It’s a kind of particle accelerator for education. We get data in hours that used to take 100 years to gather.”

edX is part of an exploding marketplace of online course platforms  that are rapidly remaking the traditional model of a college education. Agarwal told more than 150 business executives at this morning’s forum that there have been few innovations in the delivery of education since the advent of the blackboard in the 19th century.

“We have not been eating our own dog food,” he quipped.

edX students are able to register for online courses offered by faculty members at institutions such as Harvard, MIT, the University of California at Berkeley, Georgetown, Wellesley, the University of Texas and McGill University in Toronto. Students follow learning sequences that employ a combination of videos, text, discussion groups, virtual labs, instantly corrected tests, and links to free textbooks.

The platform even uses artificial intelligence to allow computers to grade essays.
Initial results indicate that approximately 5 percent of students who sign up for an edX course complete the session and earn a certificate. edX data shows that students who spent the largest amount of time doing exercises and problem sets were most likely to pass the courses.

Agarwal said edX eventually hopes to become financially self sustaining by licensing private versions of its courses to universities and school systems worldwide. He does not believe that edX will replace the experience of attending college, but acknowledges that institutions are struggling to determine how the proliferation of online courses fits into their own degree programs.

He said edX really boils down to placing the Socratic teaching method online.

“For the first time in decades,” he said, “people are paying attention to education.”

Topics: Education, AIM Executive Forum

Employer Needs Drive Online Higher Education Revolution

Posted by Andre Mayer on Feb 21, 2013 2:51:00 PM

Where will your company turn in 20 years for new college-educated hires, and courses for incumbent employees? Your local campus?

Agarawal edxMany experts put the odds below 50-50 that you will come anywhere near an ivy-covered hall for your educational needs.  Higher education is facing the same kind of technology-driven disruptive change that has overtaken other information-based industries such as newspapers, bookstores and video rental. The talk in the field revolves around alternative business models and innovative delivery systems, from new competitors, individual institutions, and consortia such as Cambridge-based edX.

Employers, in fact, are at the center of this change. The established higher education model has been unable to keep pace with employers’ programmatic needs, or to provide sufficient flexibility in terms of timing and location. It also tends to be pretty expensive. Today's career-oriented undergraduates, and especially older "nontraditional" students, are attuned to these issues.  It's hard to imagine a more "traditional" college student than Heisman Trophy winner Johnny Manziel – yet "Johnny Football" is reportedly taking all his Texas A&M courses online this semester.

The headlines focus on elite private research universities going online, but they may actually be among the least affect by the disruption. The larger impact, one expert notes, will be on less prestigious institutions that "face disintermediation in their existing relationships among employers and students."  With the number of high school graduates dropping in Massachusetts and the northeast, these comprehensive campuses will be hard-pressed to fill their classrooms by attracting more "nontraditional" and graduate students.

That's what is so important about edX, which began with MIT and Harvard, now includes major state universities (UC-Berkeley, Texas), and is bringing in community colleges (Bunker Hill, Mass Bay).

And that's why AIM's March 15 Executive Forum with Anand Agarwal, President of edX, should be of interest to all employers. It's not just about the future of one of our state's key economic sectors and resources, or about a tradition-bound industry moving towards a new business model – it's about new opportunities for employers and employees in an increasingly competitive knowledge-based economy.

Register for the Executive Forum with Anant Agarwal of edX

Topics: Education, Technology, AIM Executive Forum

UMass President Learned Early to Connect Education, Economic Growth

Posted by Christopher Geehern on Nov 2, 2012 1:09:00 PM

Robert Caret, President of the University of Massachusetts, learned the close connection between education and economic growth while growing up in Biddeford, Maine.

It's a lesson he has retained throughout a distinguished academic career known for establishing close ties between universities and business. Caret will speak at the AIM Executive Forum November 16 in Waltham.

Register for the Executive Forum with Robert Caret

Topics: Business Center, University of Massachusetts, AIM Executive Forum

Davey Calls for Long-Term Transportation Funding Solutions

Posted by Christopher Geehern on Mar 30, 2012 3:45:00 PM

How significant are the financial challenges facing the Massachusetts transportation and highway systems?

“The people mowing the grass are paid from the capital budget,” Transportation Secretary Richard Davey told more than 200 business leaders at the AIM Executive Forum this morning.

Davey said the plan announced this week to close a $185 million deficit at the MBTA is merely a prelude to a broader debate about how to solve a $1.3 billion annual shortfall in funding for roads, bridges and mass transit in the Bay State. The Department of Transportation (DOT) continues to squeeze savings and efficiency from its three-year restructuring, according to Davey, but he said no amount of administrative overhaul will solve the long-term financial puzzle.

“This system we have currently is one we cannot afford,” said the secretary, who took over the top job at the Department of Transportation in August after serving as general manager of the T.

The Patrick administration announced a plan Wednesday to raise MBTA fares by an average of 23 percent and to eliminate four bus routes and some weekend commuter rail service. Subway fares would climb to $2 from $1.70 – a 17 percent increase – and the cost of a bus ride will climb to $1.50 from $1.25, a 25 percent jump.

Davey called the fare hikes a one-time solution that will still leave the T with a deficit of between $100 million and $110 million next year. At the same time, he said, the T spends approximately $300 million a year less than it should to maintain its system.

The commissioner demurred when asked to endorse a single long-term solution to the financial crisis but said that the commonwealth will need a user-based system to raise revenue. He noted that Governor Deval Patrick’s proposal three years ago to raise the state gasoline tax generated significant opposition.

Davey said that the Department of Transportation has four primary objectives:

  • Driving reform to save money and improve service – DOT has its lowest staffing levels in 15 years, has overhauled its retirement system and is using electronic tolling and other technology to deliver services with fewer people.
  • Make reform visible to citizens – DOT is already using electronic highway signs to provide commuter information and is exploring the possibility of allowing consumers to renew licenses with smart phones.
  • Transparency – The T conducted 30 public hearings and reviewed 6,000 comments before finalizing its fare proposal.
  • Running DOT like a business – The agency has been merging functions and facilities, and rewarding employees for creative ideas that boost efficiency.

Topics: Events, AIM Executive Forum, Transportation

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