New England’s Economic Prospects Pick Up

By: | at 08:00 PM | Channel(s): International Trade  

“In New England we have nine months of winter and three months of darned poor sledding.”- an old New England saying.By George Lauriat, Editor-in-Chief, AJOTOn April 1st, it snowed in Boston. While the calendar says it’s spring, one look out the window says it’s winter. In New England, there have been a number of “springs” since the “Great Recession” started back in the fourth quarter of 2007. Each time it looked like the region might pull out of the recession, another blow fell, and another year of dismal results followed.
It’s easy to argue that the recession began earlier in New England than the rest of the nation, as both the financial and housing markets had already begun the descent into recession. Since that time, with each turn of the calendar there have been unfulfilled predictions that the region is recovering. Part of the reason is the unshakeable belief that it couldn’t get any worse, and more rationally the belief in the resiliency of New England’s highly diverse economic structure.
During the recession the flight of manufacturing accelerated, the robust housing market busted, and white-collar jobs by the thousands fell victim to downsizing. Even as Spring 2011 attempts to break through, there are still real concerns. State & Local budgets are hamstrung, and the flight to greener (or cheaper) pastures continues. But the economy in the six State northeast corner of the US has begun to rise, and in 2011 there are signs this recovery is real.
Company Men: Job flight, job creation
The New England economy is a complex brew of varying vocations: education, insurance, financial services, tourism, healthcare, hi-tech, retail, and construction with forestry, fishing and manufacturing thrown in for good measure. Overall, the regional incomes (over $50,000 for MA and CT) are higher than most in the nation. A fairly unique feature of the New England economy is that since 1960, the per capita income continued undeterred to rise through every significant economic downturn… at least until this last recession.
However, there are fundamental reasons why this last recession hit New England earlier and has lingered longer. Another attribute of the New England economy is that living costs and cost of doing business also have steadily risen over the past five decades, a factor that puts job flight at the top of the list of economic problems. Unfortunately, the only viable solution is job creation with the hope that job creation outpaces exits.
Massachusetts’ native Ben Affleck’s movie “Company Men” (filmed around Boston in 2009) took a look at the recession when a fictional company GTX, a shipbuilder, is forced to down size. One of the consequences of the loss of the employment was the main character lost his upscale house and lifestyle. (Editor’s note: the AJOT was used as a prop in the movie). At the end of the movie, the main character joins a startup company, which is a new beginning to the corporate process.
But the movie all too closely imitated New England life. A few years ago, Evergreen Solar chief executive Michael El-Hillow was the toast of Massachusetts, now he’s just being roasted. El-Hillow established a plant in the town of Devens (at the sight of the former military base) to manufacture solar energy equipment. To establish this new industry the company was given $58 million in tax breaks and aid, including about $21 million in cash. Two months ago, Evergreen Solar announced that they would shutter the Devens’ plant and move production to China, cutting 800 jobs in the process. Understandably, Massachusetts now wants its money back, while Evergreen Solar argues that the State got a pretty fair deal.
Evergreen’s decision to move to China for cheaper labor and lower production costs (and potentially less oversight) underscores what has happened to New England manufacturing for quite a long time…with a little twist. The global economy is nothing new in New England. Historically, textiles and footwear industries that once

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