John Regan says Associated Industries of Massachusetts (AIM) lately surveyed a cross-section of its members relating to the financial system, the path they consider it’s going to take, and the steps they’re themselves taking in consequence.
Roughly 75% of these surveyed anticipate an financial contraction earlier than the top of 2020, and a sampling of the gathered remarks hints strongly at an undercurrent of warning, if not outright concern:
• “Scaling back on hiring plans; slowing down sure capital expense/gear purchases until we get a clearer image of what the subsequent six months will convey.”
• “Concentrating on expense discount … evaluating intently the need to substitute positions.”
• “Diversifying our service choices.”
• “We now have briefly eradicated extra time, which was formerly unlimited.”
Slicing via all that, Regan stated AIM’s members are wanting at the circumstances, gauging how they may effect things short-term and long-term, and, by and enormous, deciding to not take on too much till the image becomes a lot clearer.
And, as the group’s new president and CEO — he took the helm in Might — he is primarily advising the state to do the identical.
“A potential takeaway from the survey for state policymakers as they start contemplating billions of dollars in new spending is that this might be a troublesome time forward for the state financial system,” Regan informed BusinessWest. “Businesses are assuming a defensive posture, and vital tax will increase — past the $1 billion for the new paid household and medical depart system — even for worthwhile causes, might harm the general financial system, most particularly the manufacturing sector.
“This won’t be the time to actually go all in on a lot of totally different tax proposals,” he went on, itemizing every part from new spending initiatives to the so-called ‘millionaires’ tax,’ a step he believes will pose dire penalties for the Commonwealth. “Legislators ought to do what our members who answered the questions are doing — delaying their formidable agenda and letting the things they’ve already accomplished take their course and put some away for a rainy day.”
Passing on members’ considerations concerning the financial system and urging caution on the subject of business-related legislation are two of the various strains on the job description for AIM’s president, stated Regan, who moved to the corner office after a dozen years as AIM’s government vice chairman of Government Affairs and virtually 20 years with the agency in that realm.
Another line on that job description includes presiding over annual ceremonies such because the one staged earlier this month at Wistariahurst in Holyoke, at which three area corporations — MGM Springfield, American Saw, and Peerless Precision — have been introduced with Subsequent Century and Sustainability awards for his or her efforts in creating the subsequent era of economic opportunity for state residents.
A couple of hours earlier than that ceremony, Regan sat down to talk with BusinessWest about quite a lot of subjects, together with his appointment, the state of AIM and its three,500 members, and even his ideas on how one can achieve more stability between east and west in the Commonwealth.
However the situation of the financial system and the results of that aforementioned survey quickly dominated the dialog.
Regan noted that, general, the state’s financial system continues to broaden, albeit at a slower tempo than earlier in the yr. Meanwhile, AIM’s Business Confidence Index, usually a dependable barometer of financial circumstances, stays in optimistic territory (58.9), though it has lost almost 4 points over the past 12 months. Unemployment stays low (2.9%), and personal employers created almost 7,000 jobs between August 2018 and August 2019.
Still, there are some ominous warning signs of a recession, and quite a few businesses are already starting to feel the consequences of tariffs and other federal and state measures, stated Regan, including that these businesses are starting to play defense — and the state should do the same.
Background — Verify
If Regan seems to know his approach across the State House — in every sense of that phrase — it’s because he does.
Certainly, before coming to AIM, earlier than serving as vice chairman of Operations for MassDevelopment and main its efforts to repurpose Fort Devens, earlier than directing the Massachusetts Workplace of Business Improvement (MOBD) for five years, and even earlier than serving as chief of employees to the mayor of Marlboro, he worked in the State Home, first as a researcher on the Joint Committee on Banks and Banking, after which as a special assistant to the House Methods and Means Committee.
“I began out on the constituent aspect, and shortly moved to the coverage aspect,” he stated of his work with the Legislature. And, on many respects, he has remained on the coverage aspect ever since.
When requested how he went from working for the state to turning into an advocate for its enterprise group, Regan stated there’s a narrative there. It includes the previous Lunt Silversmith (an AIM member) in Greenfield, he recalled, adding that, as director of MOBD, he was requested to assist convince the state Freeway Division to place up signs that might direct motorists to the corporate’s new showroom facility. Lengthy story brief, he performed an enormous position in getting the indicators up.
“AIM was so impressed that state government truly received one thing executed that they requested if I might contemplate becoming a member of the agency and its Authorities Affairs Division,” he recalled. “On the time, I wasn’t really wanting, but I knew AIM from my days at the State Home — it was a well-respected group and well-regarded in the building — and I assumed this was an excellent opportunity for me.
“I never needed to be a lobbyist in that sense that you simply’re out chasing shoppers to characterize individually,” he went on. “The opportunity to return to AIM represented an opportunity to make use of my relationships in the building, however not lobbying for particular person shoppers; at a three,500-member organization, you’re working on policy, not simply individual company issues.”
And through the years, he has advocated for members on points starting from unemployment-insurance reform to non-compete agreements; from pay-equity regulation modifications to paid household and medical depart.
Since taking up as president and CEO, Regan stated he spent much of the first several weeks focusing largely on inner issues, together with membership, advertising, funds, know-how, and hiring his successor in Government Affairs — Brooke Thomson, formerly with AT&T.
“I needed to ensure I understood the elements of AIM I never actually needed to fear about as head of Authorities Affairs,” he famous. “And a part of what the board charged me with was arising with an operational plan for the stability of 2019 by way of 2021.
“It’s not a strategic plan,” he went on, “but simply making we’re capable of explain what we thought we might do and will do, and get that on paper and in entrance of the board.”
Reading the Tea Leaves
Lately, though, he’s more targeted on the Commonwealth’s companies, the unsure state of the financial system, and policy matters, akin to helping to secure a three-month delay in the begin of payroll deductions to fund this system.
Returning to that current survey of members, Regan stated it’s quite revealing and clearly depicts both the priority felt by enterprise house owners and their commitment to behave responsibly, and defensively, in such a local weather.
“They’re doing the belongings you may anticipate,” he famous. “They’re saving money versus investing it, they usually’re solely doing capital tasks that have a very swift return on funding. They’re on the lookout for further, worthwhile product strains which may permit them to weather the storm. But principally, they’re considering ahead and being prepared.”
And this is the mindset Regan believes both the federal and state governments should embrace given each the present circumstances and the likelihood, if not probability, of a recession in 2020.
With the previous, Regan noted that tariffs and the commerce conflict are already taking a steep toll — on manufacturing but in addition different sectors of the financial system, together with agriculture — and the specter of more such actions loom giant over the state and the area.
“Uncertainty round trade, particularly, grows by the day,” he stated. “It looks like day-after-day you get up and there’s one other spherical of tariffs. One among our longest members is Ocean Spray cranberries, they usually’re getting killed by tariffs.”
As for the State House, Regan stated lawmakers there should contemplate the present financial circumstances and the threat of recession as they ponder further mandates and taxes, including what is understood officially as the Truthful Share Modification, but has been dubbed the millionaires’ tax.
That identify conjures up thoughts of rich individuals sitting on a seashore, he advised BusinessWest, however the reality is that the majority of those who can be impacted by this measure, which would impose a 4% income-tax surcharge on annual revenue beyond $1 million, are business house owners, as within the small to medium-sized enterprise house owners who dominate the state’s financial system and especially the Western Mass. financial system.
And recent analysis, including an in-depth report by Bloomberg Information, exhibits that individuals hit with such taxes typically depart for safer havens, taking their revenue with them, he famous.
“Bloomberg discovered that Connecticut, New York, and New Jersey face the most important monetary drains from the 5 million People who transfer from one state to another annually,” AIM wrote in a current weblog submit, citing other states that had handed taxes on excessive earners. “Connecticut lost the equivalent of 1.6% of its adjusted gross revenue, in response to Bloomberg, because the individuals who moved out of the Nutmeg State had incomes that have been 26% more, on common, than those individuals who moved in.”
Regan agreed, and stated these numbers paint a grim picture and present a competitive disadvantage for the Commonwealth, one the Legislature ought to contemplate as it moves closer to joining other states in enacting such measures.
“I adore it when elected officers roll out statistics that present ‘30 states do that’ or ‘20 states do this,’” he stated. “We will inform them we’ve got an entire listing of states which have tried the wealth-tax strategy, and it’s bombed, they usually say, ‘properly, that’s totally different.’
“How is it totally different?” he went on. “How are we not going to experience the same issues that they’ve skilled?”
Returning to that survey of AIM members, a number of of the enterprise house owners polled expressed confidence about driving out what seems to be a storm on the horizon.
“We expect we’ll be immune from the contraction,” wrote one, whereas one other stated, “our business is counter-cyclical; when the financial system contracts, our business often receives a lift.”
These sentiments don’t apply to most businesses, definitely, and Regan is aware of that. And that’s why AIM’s new president and CEO is working arduous to persuade lawmakers to do what his members are doing — what’s greatest for business and what’s greatest for long-term economic health.
George O’Brien may be reached at [email protected]