G^a A/v^ (Hf,^.- UMASS/AMHERST 312Dbb D273 flBbfl T JLLtyilUlf SEP241991 ersitv 01 Aostecf fry Governor William Weld Senator John E Kerry F. January 28, 1991 World Trade Center Boston, Massachusetts 4v^/t.4^ Digitized by the Internet Archive 2013 in http://archive.org/details/growthconferenceOOweld March 13, 1991 Dear Friend: As you are aware, on January 28, 1991 we jointly sponsored a day-long conference on the state of the Massachusetts economy. We are pleased now to make available this record of the proceedings of the conference. Few residents of Massachusetts would dispute the need to revitalize our state's economy and create new jobs and new incomes for our people. The two of us decided to join forces in sponsoring the January 28 conference because of our shared belief that there is overwhelming, bipartisan support for action by government and other institutions that will support job-creation in the private sector. The real question, of course, is what kind of action is both necessary and effective to support growth in the private sector. The January 28th conference brought to the surface a number of opinions and ideas—some conflicting, many of them not. The conference proceedings record this great diversity of ideas; our task now is to take action. The Governor's staff is already evaluating the ideas you generated at the conference and is assessing what can be implemented. Senator Kerry's office will begin a series of Senate Banking Committee hearings on congressional action at that time as well. We are indebted to all of our conference moderators and speakers for their time and thoughtfulness, including Deputy Secretary of the Treasury John Robson, Federal Reserve Governor John LaWare, and Senator Edward Kennedy. We are particularly grateful to our three conference organizers: Secretary of Economic Affairs Daniel Gregory, former U.S. Senator Paul Tsongas, and Paul O'Brien, President and Chief Executive Officer of New England Telephone. New Paul O'Brien's England Telephone staff organized the conference logistics and is We responsible for the publication of this document. could not have staged the conference without them, and we thank them all. Sincerely, (fa* djzJl^- ' William F. Weld John F. Kerry Governor U.S. Senator TABLE OF CONTENTS OPENING REMARKS I. Mayor Raymond L. Flynn 1 Governor William F. Weld 5 Senator John F. Kerry 10 THE CREDIT CRUNCH AND THE MASSACHUSETTS ECONOMY II. Introduction by Secretary Daniel S. Gregory 21 Executive Office of Economic Affairs Deputy Secretary John Edwin Robson 23 U.S. Department of the Treasury Mr. Richard Syron, President & CEO 29 Federal Reserve Bank of Boston Mr. John LaWare, Governor 40 Federal Reserve Bank Senator Edward M. Kennedy 52 U.S. Senate Excerpts of Remarks by Panelists: & Mr. William Crozier, Chairman President 57 BayBanks Mr. John Gould, President & CEO 59 Associated Industries of Massachusetts Mr. John Faherty, President 60 State Labor Council, AFL-CIO Mr. Mitchell Kertzman, CEO 61 Powersoft Corporation Ms. Sara Johnson, Economist 62 Data Resources, Inc./McGraw-Hill TABLE (Continued) ii GROWTH PROSPECTS BY INDUSTRY III. & CEO Introduction by Mr. Paul O'Brien, President 63 New England Telephone Summaries by Group Leaders: Manufacturing 67 Herb Ahrens, Vice-President for Manufacturing Polaroid Corporation Health Care, Biotechnology, Medical Equipment 72 Dr. Mitchell Rabkin, President, Beth Israel Hospital Banking and Financial Services 76 & John Hamill, President CEO, Shawmut Bank High Technology—Electronics, Computers, Telecommunications 82 Ian Davison, CEO, Octocom Systems Construction and Development 85 Thomas Flatley, President, Flatley Company Higher Education 89 Elizabeth Kennan, President, Mount Holyoke College Tourism and Services 92 Thomas Kershaw, President and Owner, Hampshire House Energy and Environment 96 John Rowe, President & CEO, New England Electrical Systems RECOMMENDATIONS FOR ACTION IV. Introduction by Senator Paul Tsongas 99 Synopses by Panel Moderators: Securing Capital To Finance Growth 101 Lynn Browne, Senior Economist, Federal Reserve Bank of Boston Making Government More Responsive to the Needs of Business 104 Micho Spring, President, Boston Telecommunications TABLE (Continued) iii Training and a Quality Workforce 106 John Rennie, CEO, Pacer Systems Ensuring Continued Business Innovation 116 Thomas Claflin, Managing Partner, Claflin Capital Management Increasing Exports 119 Michael Campbell, CEO, Nova Technologies CLOSING REMARKS V. Governor William Weld 125 Senator John Kerry 133 APPENDIX VI. 139 The Conference Agenda A Survey of Public Attitudes Toward the Massachusetts Economy MASSACHUSETTS ECONOMIC GROWTH CONFERENCE January 28, 1991 OPENING REMARKS Mr. Daniel S. Gregory Secretary of Economic Affairs To start this conference, it is appropriate that we should be welcomed here today by the Mayor of Boston, Mayor Raymond Flynn, not only because we are in his city, but because of the pivotal role Boston has played, and will play, in the well-being of the Commonwealth. Mayor Flynn. Mayor Raymond L. Flynn City of Boston Good morning, and let me welcome you all to the city of Boston. Let me also express my support for the effort that is being made by people from across the Commonwealth of Massachusetts to try to move forward and to come up with a bold creative approach, a new agenda for dealing with the significant concerns of the economy in Massachusetts. These are going to be really challenging times for us. I think that new approaches to the way we do business in Massachusetts, including a working relationship between government and the private sector, are going to require all of our undivided efforts and attention. Massachusetts and the city of Boston have always had a record of close cooperative ties and working relationships in the past. But I think in light of what is MASSACHUSETTS ECONOMIC GROWTH CONFERENCE January 28, 1991 happening now across the world, in the state and national governments, it's going to require an even more concerted effort in the future. While we are really focusing on stimulating the economy of Massachusetts, I would add one point of concern, from a standpoint of the capital city. Boston is very much prepared to continue to be the economic engine that helps drive the economy of Massachusetts and the region. But, we also have to be mindful of the fact that a city that does not have strong, healthy, and vibrant neighborhoods is a city that is not going to be able to contribute its share to the economy of Massachusetts. So, I hope that we can continue to focus on issues—not only on the expansion of the economic base, but also on some of the systemic problems of poverty, underemployment, and unemployment. Those are going to be major challenges for all of us in the years ahead. There are projects out there that I am sure will be discussed here at length, projects that will have a significant impact on the entire regional economy if we are to move forward on them in Boston. They will get people empowered, get people feeling good about themselves and their state once again. So, today is a new beginning in people's attitudes on what is happening in the Commonwealth of Massachusetts. I want to stress that point because it is so very important. If the message is doom and gloom, it almost becomes a self-fulfilling prophecy. Yes, there are serious economic problems,, but there are no problems that I have experienced in over MASSACHUSETTS ECONOMIC GROWTH CONFERENCE January 28, 1991 twenty-one years of holding public office in this state that cannot be solved when people work together. You are seeing a bipartisan effort here today. You are seeing an effort of business, government, community, and academic leaders. I think it really indicates, in no uncertain terms, that the will is there and there is in fact a feeling of cooperation, esprit de corps, and of people wanting to come together and make things happen. Let me now turn the program over to Bill Weld, the Governor of the Commonwealth of Massachusetts. I feel very confident that the Governor has the right attitude, the right disposition, and the right vision of where this state has to go. Bill Weld is somebody that I have worked with for a long period of time. I find him to be extraordinarily honest. He is somebody who is tremendously committed to working together with others. His effort is not going to be the kind that people are going to watch and criticize. People are going to work with Bill Weld and try to make him one of Massachusetts' finest governors. I want Bill and his Lieutenant Governor, Paul Cellucci, to know that as far as Boston is concerned, we are in their corner and will work with them to ensure that Massachusetts addresses the issue of the economy and emerges from this even stronger than before. Bill Weld, along with Senator Kerry, had the vision of bringing us together, and I want to thank them. Somebody said, "Isn't it a little bit too early in the Weld administration to bring us together?" Actually, as this new administration formulates opinions, I think it is an extremely important, appropriate time to bring us all together so that he, as the leader in