How bad is Connecticut’s inability to decide what it wants to be and how it should navigate there? When it comes to support for business, we can’t even agree that grim news is grim news, much less how we should react to it.
Alexion’s bombshell Tuesday, word that the New Haven drugmaker is moving its headquarters and 400 jobs to Boston, was exhibit A.
We have one camp — dominated by Republicans and the state’s skeptical, fed-up taxpayers — saying this is terrible and it shows how lame Connecticut has become.
They say the Alexion shock proves we need to stop showering favored companies and industries with money in an effort to build up cities. “It’s almost like you’re paying someone to marry you,” quipped J.R. Romano, the Republican state chairman. “It never lasts.”
On the other side, we have a camp saying, hey, you win some, you lose some, it’s all part of the game — and we’re far better off than we would have been if we had never supported Alexion. That’s mostly Democrats and people who see virtue in the way Connecticut runs.
Both camps have it half right and half wrong. Alexion pulling up stakes is really, really bad news. But that doesn’t mean we should halt the work of building up cities, enticing key companies and backing targeted industries.
To hear both sides talk about it is to witness a state that’s truly divided on economic policy. That chasm hurts Connecticut’s ability to attract giant prizes such as the $5 billion Amazon headquarters that every city in America is prepared to bleed for.
“This is all good. There is nothing here that is surprising,” said Matthew Nemerson, the New Haven economic development chief. “It all worked.”
Huh? He’s talking about Alexion’s departure?
“We suddenly have the hottest marketing opportunity in the country for companies that are outgrowing their little space in Baltimore, in Brooklyn, in Pennsylvania.”
By “all good,” Nemerson doesn’t mean he hoped Alexion would turn its back on New Haven. He means the game worked for Connecticut because we ended up with a great building in a redeveloped city, the better to attract growing companies.
He points out that the original plan was for Alexion to occupy just over half of a much smaller building. We’ll still have more than that after the company moves its flag. Besides, everyone knows it's impossible to compete against Boston and Cambridge’s Kendall Square for drug discovery. From Connecticut alone, Pfizer and Bristol-Myers Squibb have moved thousands of scientists there.
Gov. Dannel P. Malloy defended the state’s high-profile corporate incentive program that has seen some embarrassments and some victories.
But as Sen. Len Fasano, R-North Haven, and Rep. Themis Klarides, R-Derby, see it, the Alexion exit serves as an illustration of what not to do. They’re the Republican leaders of the Senate and House.
“This is why we shouldn’t pick winners and losers,” Fasano said Tuesday after he and Klarides unfurled a budget proposal in hopes of settling a hopeless stalemate at the Capitol. “It’s not a total, dismal failure. There’s an asset that came out of it … but it’s very disappointing.”
Klarides didn’t disagree the Alexion development has value, but said, "That’s not the story at this point. That's what the leadership in this building has stuck their heads in the sand about."
Her view is that Boston and New York are stealing our companies because “they’ve actually made some progress on their tax structures and moving forward and we have not. That’s the difference.”
Unpacking the details, first of all, it’s hard to see Alexion’s move as anything other than a massive letdown for a struggling state.
Let’s see, we have homegrown company in drug development, one of the key industries Connecticut has singled out as our sweet spot. The company is worth $32 billion on the stock market, in the top 200 among all American companies, ahead of Stanley Black & Decker, for example, even though it only has basically one income-producing product — an obscenely high-priced drug called Soliris for a rare blood disease no one can name.
Trading on its speculative value, Alexion has hired employees like a lottery winner buying drinks — exactly what any self-respecting region needs, a company that generates buzz well beyond its profits.
The state hands the company up to $51 million in tax credits, loans and grants to move into a $100 million building dripping with features that scream “science.” It sits in the best city the state has to offer, as the centerpiece of a redevelopment that ties the world-famous, prestigious Yale-New Haven medical complex back into a thriving downtown with a world-famous, prestigious Yale University.
I’m in the camp that says this is worse than General Electric moving its headquarters to Boston from Fairfield, which amounted to 300 lost jobs. It could be worse than Aetna moving its head office to New York, which will cost just a few dozen jobs — unless the Hartford health care management company slowly bleeds its local work force of 6,000 people.
Despite that, the Alexion deal wasn't bad at all, as these things go — it would have amounted to about $63,000 per job if it all went perfectly for 10 years. It ended up costing a paltry $12,500 per job after Alexion hands back all but $5 million of the state money. Compare that to at least $230,000 for much lower paying jobs that Wisconsin is prepared to give electronics-maker Foxconn, or the $31 million Connecticut paid to open a Bass Pro store in Bridgeport.
Connecticut absolutely needs to restructure how it raises and spends money. But Alexion isn’t moving because of taxes and it isn’t an illustration of this need. Companies move for lots of reasons, including where the CEO wants to live, and Alexion has a new CEO, its fourth in four years. .
“The research that’s being done in Connecticut is top flight,” Malloy said, “and that’s the portion that’s remaining in Connecticut.”
Or, as Nemerson sees the picture, it was a miracle that Alexion made it this far in Connecticut considering all the times it almost moved. “You can’t really cry,” he said, “when the string of miracles runs out.”
Courant Staff Writer Russell Blair contributed reporting.