Region's biotech boom could bring bad news
Luther Turmelle, Register Business Editor May 27, 2002
The foundation of Connecticut's gleaming high tech economy developed la few cracks last week.
Companies in two segments of the technology-driven economy that the state promotes so aggressively — biotechnology and pharmaceuticals — served up some old fashioned bad news Wednesday.
First, drugmaker Bayer Corp. said it plans to cut between 400 and 500 jobs at its West Haven facility through the end of next year. The company — which laid off 125 people before the ink on the press releases had dried — said it will phase out its manufacturing and packaging operations in Connecticut by the end of 2003, moving part of it to Kansas.
Shortly after Bayer made its announcement, New Haven-based biotechnology firm CuraGen announced it was delaying its plans to move to Branford for a year.
The biotechnology firm, which develops pharmaceuticals based on gene research, had originally planned to break ground on the project this summer. CuraGen wants to consolidate its facilities in New Haven and Branford into one campus.
Now, the company will begin work on the Branford facility in the summer of 2003.
Given the still uncertain climate for raising capital — where there are no longer any slam-dunks when it comes to attracting investors' money — "the move was a prudent one," said Victor Budnick, president and executive director of Connecticut Innovations. The Rocky Hill-based quasi-public agency has supplied venture capital that has fueled much of the New Haven area's biotech boom.
Conventional wisdom about Bayer's pulling manufacturing out of West Haven says it was largely because of last year's decision to pull the company's drug Baycol off the market. Baycol was packaged in West Haven.
Still, it's easy to panic and think our economic sky is falling.
After all the state and various entities do a good job promoting the positives of a technology driven economy in Connecticut. The slick brochures and catchy radio advertisements accentuate the positives of the state being a tech haven, especially the part about high-paying jobs.
But in all the glitz and gladness about how Connecticut's economy has shifted from old school manufacturing to the so-called "knowledge-driven economy," it's easy to lose sight that no industry is immune from declines.
The fallout from Wednesday's news in these parts was swift. So was the finger pointing at what was the real reason for our misfortune.
State lawmakers from West Haven blamed Bayer executives and suggested they ought to take pay cuts. Harry Armstrong, a Register reader from West Haven who-e-mailed me, blamed what he called "the tax hell known as Connecticut." But Budnick, who is an old hand at the ebb and flow of the tech game, urges patience and a little common sense.
"I don't think we should be in a race to the bottom," Budnick said, referring to those who would try to dramatically overhaul the state's tax structure in an effort to compete with less costly part of the country.
He favors having Connecticut focus on technology-driven niches in the manufacturing sector.
"You want niche manufacturing that matches up well with our highly educated workforce," he said.
Budnick also stressed the importance of diversification of companies within technology sector, which is a point well taken.
In our rush to anoint biotechnology as New Haven's economic savior, we would do well to remember what over-reliance on the insurance and defense industries did to this state during the last recession. A region that lives by biotech could very well see itself die by biotech if we're not careful.
Luther Turmelle's column appears weekly. He can be reached at lturmelle@nhregister.com or at 789-5751. |
