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Meet the New Boss
Publisher Art Diedrick steps into a powerful new role as Rowland's development chief
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Business New Haven
9/11/1995
By: BNH
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When Gov. John G. Rowland appointed Arthur Hill Diedrick acting commissioner of the Department of Economic Development (DED) shortly after assuming office, many Connecticut business people doubtless assumed the latter was warming the seat until a “permanent” commissioner was hired. Surprise: Last month a new commissioner was appointed, and Art Diedrick will be his boss. In a move with far-reaching implications, Rowland has placed Diedrick at the helm of a new, combined department of housing and economic development, with a new, unprecedented title: chairman of development for the office of the governor. While those changes were coming into focus, Diedrick made headlines on his own when DED rubber-stamped a recommendation that the commissioner's own company - the New York-based Communications International, which publishes Connecticut Magazine - be awarded the $300,000-per-year contract to produce the state's tourism guide (see accompanying story, page 10). That company, which Diedrick founded in 1975, also produces regional and in-flight magazines as well as trade publications. From 1962-75 Diedrick worked for Cowles Communications Inc., where he rose to president of the magazine division. A product of Deerfield and Yale, Diedrick is a U.S. Air Force veteran who resides in Morris.
Philosophically, what ought to be the role of government vis-á-vis private enterprise?
I'm not laissez-faire. But government - if it's properly directed and doesn't overstep - should be very active in helping business development and business growth and attracting businesses to the state, and should be very pro-business. There are certain incentives we can give to stimulate growth.
Explain the new arrangement under which you assume a brand-new position and Peter Ellef succeeds you as DED commissioner.
The Department of Housing is being merged effective October 1 with the Department of Economic Development, to be called the Department of Economic and Community Development. Peter [Ellef] will be commissioner of that agency with a deputy commissioner, Peter Dibble, who's in place right now, and also Rich Cianci, who is currently commissioner of housing. He'll be the deputy commissioner for housing. For my role, the basic concept the governor had is we have to have coordination between the economic instruments of the state - be it housing, DED, the Connecticut Development Authority, Connecticut Innovations Inc., Connecticut housing & Finance Authority - and as the chairman of development for the office of the governor, I will be coordinating those agencies and authorities.
Other responsibilities?
I will be very active in attracting businesses to the state and having great contact with [businesses] in the state as we try to keep them and expand them here. I'll also be looking overall at policies and making recommendations to the governor, whether it's on new taxation that might be effective in stimulating business, or new policy directions.
Is that a logical marriage between economic development and housing, and do other states combine the two?
Some do and some don't. Very few do. But we thought it was important in looking ahead, [considering] where Connecticut has been in a no-population-growth situation.
Does your new title become effective October 1 at the time of the merger?
It's effective now. We're already trying to get things lined up, working on the coordination between housing and economic development; we've been working on that for several months.
What kind of economic development commissioner will Peter Ellef be?
He was with Cigna, where he was responsible for reorganizing a number of their departments. Peter's strengths, in addition to his business background, lie in his experience with mergers and administrative experience.
Ellef will report both to you and the governor. Isn't it almost axiomatic in management that employees can't serve two masters? How will this actually work?
I'm not sure I agree with that management axiom. First of all, there's no conflict in thinking between myself and the governor; we have agreed on what the direction will be. In day-to-day operations, Peter may get a call from the governor's office about this or that, but Peter and I will have daily contact, and I don't see that as a problem.
We've heard the governor say that business people had complained to him that they thought there was favoritism in the awarding of CDA loans, and that CDA was too much a 'freelance' operation, lacking objective, transparent criteria. As acting DED commissioner, did you see that, or any residue of it in the past?
There are always political considerations. For example, when the former administration took over the Hartford Civic Center, there were a lot of political considerations taken into account. But I think the Rowland administration has a different approach. For example, the amount that was given away in grants to businesses has now stopped. Since we've been there, we have not initiated or given any grants, other than prior commitments by the prior administration. We're not going to give grants; we want to get the money back so that we can recycle and get off this bonding treadmill that got worse and worse during the [Weicker] administration. [Then] there was bonding of about $1 billion a year; [Rowland] has vowed to get that down to about $500 million a year. Servicing that debt represents about 18 percent of the budget. What we're trying to do is reduce that, so that future generations aren't paying for people trying to buy our way out of a recession now, and get those moneys back to use for business development in the future.
As a state, we still have little or no economic growth. The overall premise of the Rowland approach to economic growth has been to bring government under control - including reducing corporate and personal property taxes, cut red tape - and growth will follow. We've done that, and still no growth. At what point does someone raise a red flag and say, 'What is Plan B?'
First of all, this administration only took office in January, and its first budget became effective only in July. The tax cuts - reducing corporate taxes 7.5 percent by the year 2000, the reduction by 20 percent in what corporations have to pay for workers compensation - these things are not instant answers. The area where we're getting hurt the most in Connecticut is on these defense-contract cutbacks. There are plenty of businesses coming into the state of Connecticut and plenty of growth by businesses already here. But the defense cutbacks are almost impossible to overcome, and something over which we have very little control. Were it not for that, I think you'd see us already in a slight growth mode. And as these policies take effect in the next six months to a year - unless there's a serious national recession - I think you'll see that we're growing.
The Fleet-Shawmut merger: Many people felt the governor challenged it on the wrong issue - that is, jobs. A more critical issue many believe, is why would the state stand for any bank having 60-70 percent of the commercial business in places like Hartford and New Haven? You're in the publishing business: If you had 70 percent of the advertising revenue, what would your credit policies be? You'd shed the least creditworthy advertisers in favor of increased profit. Translate that to banking, and it throws the whole banking system out of whack.
First of all, government has to be very responsible and fight for its citizenry overall. At the same time, we're not in a dictatorship. We have found the chairman of Fleet, Terrance Murphy, to be very cooperative. Indeed, he said there would be no job cuts. They've also been very responsible in terms of what they're willing to do in terms of various charities and overall economic development within the state. I would be terribly surprised if, after this merger, they would be changing their credit-review policies. You could even make a case that: Shawmut was big, Fleet was big, there's no doubt that with the merger they're bigger. They're planning on spinning off, in the Hartford area, about 25 branches. And there are already several banks talking with them about purchasing those branches. One of those may be an independent bank, and having those 25 branches - and I think what they're talking about is deposits of about $1.3 billion in those branches and loans of about $750 million - if you create a whole new bank at that level, you could argue that the state is better served because now you get back to what a lot of people have missed in the state - namely, a medium-sized bank to serve medium-sized businesses better.
Manufacturers say that one of the things driving manufacturing jobs out of state is high utility costs. Have you looked at, or will you look at, deregulating utilities such as electricity and gas, as Massachusetts is actively exploring and which has been done in telecommunications?
We would certainly take a look at that. Where you're talking about a regulated industry under someone else's jurisdiction, is probably better addressed by the governor than by me.
Does he have a point of view on it?
I think his point of view is that he's open to looking at all the options at this stage.
The governor said during the campaign that the biggest economic-development issue for Connecticut's cities is crime. Now, in places like Hartford and New Haven, violent crime is down. So what's the vision for economic development in the state's larger cities.
What's created the downfall for a great many cities in the U.S. is when we opened up the whole [interstate] highway system under Eisenhower, it created movement of people and retail to the suburbs, which initiated the economic questions in the cities. The question became, is there as great a need for the cities as there used to be? That has to be re-identified. If you take New Haven, for instance, the drug problems that we have in the United States have been an enormously aggravating factor, especially the crime associated [with drugs]. The legislature's passing of the death penalty and much stricter regulations will be a very strong deterrent to criminals, which can only help the cities. In terms of strict economic development, you have to examine it city by city. In New Haven, you have a great university there, you have great entertainment facilities, it's a cultural center within the state of Connecticut. Those are great building blocks for downtown.
On the vacation guide: Has the criticism the decision has received moved you to reconsider either the awarding of the bid or your company's participation in the process?
Absolutely not. It's been made clear that this was cleared in advance and I stayed totally out of it. The second-highest score [in the bidding process] was New York Times Custom Publishing, and I think Connecticut came out ahead because of Connecticut Magazine's participation, instead of an out-of-state company publishing the state's vacation guide. It was cleared with the ethics committee in writing, and everything was totally above-board.
A major cost in any publishing job is printing. I know that Connecticut Magazine was printed for a time out of state.
It's printed at R.R. Donnelly & Sons in Old Saybrook. Has been for years.
Will the vacation guide be printed there as well?
Yes. We're not going to take the business out of state if we can help it.
If we can privatize the lottery, why don't we privatize this? Make a publishing contractor pay the state for the right to produce it, let them sell ads, and let the taxpayers realize a $300,000 a year savings?
I think there's a misconception on something like the vacation guide, where you're printing 450,000 copies. If you could simply turn on the ad faucet to support, that would be a wonderful thing. But I don't think there's enough advertising to pay for this. Indeed, if it were published on an outside basis you wouldn't have nearly as many editorial pages. The state uses this as a real tool. And the contract calls for the state to share in the advertising revenue, which they didn't used to get and which helps to cover the costs on it.
How, when we see the guide your company produces, will we know that it was so much better than what was previously produced that it was worth compromising the credibility of the state's economic development arm?
That's never-never land. I have no more comments about this.
What else, in general, would you like business owners in Connecticut to know about?
In terms of the internal reorganization at DED and the close coordination we've established with the other authorities and agencies in speeding up the whole process [of doing business with the state]. I think there has been fair criticism of the state about moving things along. For instance, we have an individual in DED who's an employee of the Department of Environmental Protection to with remediation issues, which are a big question and a big expense in terms of economic development. So we've been speeding up the permitting process, we've totally reorganized the credit-rating system for companies that come and work with us, our follow-up and our processing has been speeded up - we're moving toward one-stop shopping coming on-line this fall, in terms of being able to find out what regulations are if you want to do business in Connecticut, from the secretary of the state to DED. As we move ahead we'll put all state information on that [system], which will speed up the whole process and make us more business-friendly.
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