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Connecticut's Industry Cluster Initiative, as reported in the July issue of "The Economic Digest", focuses on six major industry clusters, including Tourism. Governor John G. Rowland earlier this year released a plan outlining the state's economic development strategy for the tourism cluster. This cutting-edge, comprehensive strategic development plan is the first of its kind in the country for the tourism industry, which is becoming an increasingly important economic driver for Connecticut, as well as other U.S. states and nations worldwide.
In an attempt to strengthen Connecticut's economy and create new jobs, the Connecticut Tourism Council, the industry-led oversight board to the State's tourism effort, and the Department of Economic and Community Development worked extensively with Arthur Hill Diedrick, the State's Chairman of Development, and the industry to develop a comprehensive strategic plan for the Tourism Industry Cluster. The strategic plan encompasses recommendations for Connecticut's tourism product development and strategic marketing efforts.
Tourism is now big business for this state. In the face of significant economic challenges within industries that have traditionally led our state's economy, the tourism and entertainment sector is demonstrating rapid growth and job creation. Connecticut is a national leader in its strategic planning process, the result of a very effective public-private partnership.
By filling gaps and expanding our tourism product mix, Connecticut can attract more repeat visitors as well as new visitors and lengthen their stays in the state. Additionally, the tourism industry can be a positive addition to a region's economy by creating jobs and revenue, recreational offerings for residents and enhancing community pride.
Currently, tourism employs over 114,500 Connecticut residents, 7.72 percent of the workforce. An industry study conducted by the University of Connecticut forecasts an additional 9,000 jobs in tourism by the year 2000. Continued growth is predicted by the year 2005, with an additional 18,000 new jobs compared to today. The industry's economic impact is expected to rise from today's $4.9 billion to an estimated $5.6 billion over the next eight years.
Tourism is among those industries having the largest impact on other state industries through its intensive use of local suppliers. The University of Connecticut's economic analysis gives the tourism industry high marks in its use of local suppliers with a Regional Purchase Coefficient (RPC) - the proportion of an industry's purchases that are made locally - of nearly 82 percent.
The vision for tourism's product development is, "To work in full partnership with Connecticut's business community to facilitate the retention and appropriate expansion for the State's tourism product and encourage strategic new investment to ensure that the tourism industry continues to flourish and contribute optimally to the economy and community."
Product Development is Key
The Strategic Plan identifies two "Flagship Initiatives": 1) actively and strategically build Connecticut's tourism product; and 2) enhance tourism's infrastructure, including transportation, information and education systems
It is interesting to note that Tourism's priority issues focus on similar recommendations advanced by the other five leading industry clusters. Twenty-two recommended action steps serve to organize the tourism cluster development effort. It is recommended that tourism product development be encouraged in three ways: expansion of existing businesses, small business start-ups and attracting new investment. Major demand-side trends identified by industry research should continue to guide the selection of strategic investments.
Strategic Investment Niches
Based on the findings of the strategic plan research, the team identified five high priority tourism niches for investment opportunities: large-scale family-oriented entertainment; urban entertainment destinations; heritage tourism; convention tourism; and educational tourism. Also noted as priority opportunities: cultural tourism; rest and relaxation; and nature tourism.
Major Tourism Trends
Strategic investment will be encouraged in areas and products which meet market demands and growth as well as consumer tastes. Compatibility with tourism trends is also a criteria for economic development assistance for tourism.
Current major trends indicate that tourism has become global; consumers in general have less time; consumers are looking for and expect more value for their tourism dollar; cultural heritage tourism is on the rise; and ethnic markets are a major emerging market.
Implementation Underway
Implementation of the many action steps outlined in the plan is already underway. With DECD's reorganization, Rosemary Bove has been named as Tourism's account executive to help coordinate the effort's of the Industry Cluster Initiative and the Connecticut Tourism Council.
DECD, the Connecticut Tourism Council and industry-wide representatives worked closely with the consulting firm of SRI International (formerly Stamford Research Institute) in crafting the strategic product development plan. Over 100 interviews were completed with state businesses, community leaders, and government officials, as well as industry leaders in other states. The year-long process employed a five-part strategic planning methodology.
Although employment growth has been much weaker than in the State as a whole since the latest recession, the Hartford Labor Market Area (LMA) may finally be showing signs of life.
Between 1989 and 1992, Hartford area employment dropped by 64,500, accounting for almost half of the 139,400 jobs lost statewide. From 1992 to 1996, the State recovered 56,600 jobs, but the Hartford LMA lost an additional 1,000 workers despite small gains in 1994 and 1996. While State employment turned around beginning in 1993, the Hartford region continued to struggle with declines in the manufacturing and insurance industries, reaching its lowest employment level in 1995. But as the Figure on page 4 shows, the area appears to have turned the corner with a 0.48 percent job gain last year. The combination of a sharp curtailment in manufacturing job losses (to only 400 or -0.4%) and strong job growth from the services industry (+6,300, 4.0%) helped to add a net 2,800 new jobs into the region in 1996.
1992 to 1996
Mirroring the State's trends, employment grew in the Hartford region between 1992 and 1996 in every industry but manufacturing and finance. During that time, Hartford area manufacturing employment declined 14 percent while the State's shrank by 10 percent. Most of the manufacturing job losses in the Hartford region came in the transportation equipment sector, with cutbacks at major manufacturers such as United Technologies having a dominant influence on the area. The steepest employment decline came in the textile industry with a 25 percent job loss. On the up side, electronic equipment manufacturers added 900 new workers, a gain of 20.5 percent.
Although real average manufacturing weekly earnings in the Hartford area have been declining since 1993, workers have been paid at a higher rate than the average statewide. Cost of living adjusted pay (in 1982-84 dollars) was $445 in 1996 in the region, while it was $371 in the State.
The Hartford area's share of statewide employment in the finance, insurance, and real estate (FIRE) sector was 58 percent in 1992, but dropped to 53 percent in 1996, and the labor market area suffered greater FIRE job losses than the state as a whole (16% vs. 8%) between 1992 and 1996. In fact, the Hartford region lost 13,300 FIRE jobs, while the balance of the State actually gained 1,500 FIRE jobs over the five-year period. Large declines occurred at insurance companies (-10,100), while the finance (-3,400) and banking sectors (-4,300) had their shares of losses as well. The only finance industry group to gain jobs over this period was stock brokerages and investment advice firms, which added 900 workers, growing 41 percent since 1992 due to the rapid increases in mutual fund and stock money flowing into the investment markets in recent years. The real estate segment, after declining in employment since 1993, rebounded last year.
Industry Outlook
Interestingly, and not yet noticed by many, manufacturing employers in the Hartford area have begun to add jobs. The industry's employment in the Hartford region in July 1997 was 2.4 percent higher than last year, while statewide manufacturing jobs were unchanged over the same period. Kaman Aerospace Corporation, which makes helicopters in Bloomfield, recently won a major contract from the Australian government that could be worth $400 to $500 million and add 150 more jobs. However, this once dominant industry is not out of the woods yet as Pratt & Whitney closed its Rocky Hill plant, and is planning on eliminating about 2,500 white-collar workers worldwide (including roughly 1,500 at its Connecticut operations) by 1998. The Stanley Works also announced that it is moving its hardware division in New Britain to Virginia, affecting 150 workers.
Transportation and public utilities sector employment has been growing steadily, although not as robustly as in the State overall. Over the year, the region's jobs increased by 1.1 percent, while the State's rose 4.2 percent. The outlook looks good as United Parcel Service, package shipping giant, plans to open a new sorting hub in Windsor Locks that will be able to handle 20,000 packages per hour. The project will be completed by 2003, and will add 450 employees.
While statewide FIRE employment appears to have bottomed out, the Hartford area finance, insurance, and real estate industries are still vulnerable to more downsizing. From July of last year, 4.4 percent of FIRE jobs were eliminated in the region. In addition, Aetna is planning to cut 900 Connecticut jobs because of the merger with U.S. Healthcare, and ITT Hartford is likely to lay off 140 employees in the property-casualty office due to reorganization plans. On a positive note, Aetna will be adding 400 workers in its new service center in Hartford. Also, Fleet bank opened the banking industry's first office devoted to financing insurance company real estate investments, and a new service center in East Hartford is currently hiring new workers.
The retail trade sector in the region, unlike statewide, has shown very weak employment growth in recent years because of many closings of general merchandise and apparel and accessory stores (such as G. Fox, Sage-Allen, and D & L). In July, the region had 3.6 percent fewer retail jobs than last year, even as the rest of the State added 1.4 percent more jobs. Despite the Westfarms and the Buckland Hills Malls generating more new jobs, and the opening of yet another Wal-Mart store in Cromwell, the area has to contend with the Ames department store closings and Dairy Mart headquarters moving out of the State.
Services industry employment in the area and across the state is expected to continue to climb. This July, the Hartford region had 1.5 percent more services jobs than last year, while statewide employment increased by 3.3 percent. PRT Inc., a New York software company, has selected Windsor as its site for a regional development center, which will add 200 staff by next year. U.S. HomeCare, a home health care firm, is moving its headquarters from Hartsdale, New York to Hartford and plans to create at least 340 new jobs (285 of which will be part-time paraprofessional positions) by the end of 1998.
In summary, Hartford area employment trends may, at best, still be considered flat. Even as of this past July, the Hartford Labor Market Area lost a total of 2,600 jobs (-0.4%) while the State gained 33,000 (+2.1%) over July a year earlier. However, while the region's economy is still lagging most other areas in the State, the insurance industry is expected to stabilize and more firms are scheduled to move in, bringing in new jobs. Hartford area employment may slowly but surely be coming to life once again, but it is not yet evident in the numbers.
July: Housing Permits Increase
The Connecticut Department of Economic and Community
Development announced that Connecticut communities authorized
871 new housing units in July 1997, a 14% increase compared to July of 1996 when
764 were authorized.
The Department further
indicated that the 871 units
permitted in July 1997 repre-sent
a decrease of 1.7% from the 886 units permitted in June
1997. The year-to-date permits
are up 29.3%, however, from
4,245 through July 1996, to
5,487 through July 1997.
Reports from municipal
officials throughout the state
indicate that Fairfield County
with a 49.6% showed the greatest
percentage increase in July compared to the same month a
year ago. Litchfield County followed with a 47.1% increase.
Fairfield County documented
the largest number new, authorized units in July with 199. Hartford County
followed with 187 units and New Haven County had 176 units. Newtown led all Connecticut
communities with 26 units, followed by Milford with 22, and Monroe and Shelton
both with 20.
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