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Economy Boom times for state companies

August 30, 2018

Against a backdrop of U.S. corporate earnings jumping 7.7 percent in the past year, aggregate profits spiked by nearly 10 times that margin at publicly traded companies based in southwestern Connecticut.

Of just over 50 local corporations tracked by Hearst Connecticut Media, all but 15 reported improved earnings for their most recent fiscal quarters ending between June and August.

While the 75 percent overall gain among local companies was padded by a few big changes on a year-over-year basis — notably more than $1.3 billion in combined improvements at Frontier Communications and Berkshire Hathaway’s reinsurance divisions based in Stamford — removing those outliers still left southwestern Connecticut companies with combined earnings three times higher than the U.S. average as calculated Wednesday by the U.S. Bureau of Economic Analysis.

In quarterly reports this past spring and summer, executives have cited the Tax Cuts and Jobs Act enacted last December for boosting results and confidence among their customers, whether other businesses or consumers, including at Stamford-based United Rentals, a local and national bellwether for overall economic sentiments.

“Our customer confidence index — and we track that — remains robust,” said United Rentals CEO Michael Kneeland last month during a conference call with investment analysts. “We have legs left to this cycle and we are excited about that.”

‘Faster than the economy’

But in addition to the expected longer-term benefit of the new 21 percent U.S. corporate tax rate, some companies have been reluctant to hire at the pace they did in the run-up to the 2008 market collapse, which resulted in mass layoffs.

At Frontier, which has maintained its Connecticut employment commitments while cutting elsewhere in the country, CEO Dan McCarthy described a month ago new information technology systems the company hopes will allow customers to install and troubleshoot home-based network systems themselves, removing the need for field technicians to visit.

“There’s enormous costs that are associated ... over time in truck rolls,” McCarthy said. “It’s really a fundamental difference in how we want to operate the business, and as we operate the business differently, it translates into activity decreases, and the activity decreases allow us to realize outsourced savings, lower overtime, lower third-party costs associated with field operations ... and a number of things that are, we think, too high today.”

But others are hiring up full bore, including XPO Logistics as it builds up a massive trucking operation in North America and globally — the Greenwich-based company carted some 360 tons of equipment from point to point during last month’s Tour de France bicycle race — while nearly tripling profits in the second quarter to $138 million.

“We’re growing the business faster than the economy, and we expect to continue,” said CEO Brad Jacobs in early August. “We added about 200 sales and sales support people since October, and obviously that’s an expense right away ... but they are ramping up. And we hired 2,500 new dock workers — again, they take time to ramp up, but they are ramping up.”

Earnings to jobs ratios

While some Connecticut corporations are major local employers, others have a relatively minuscule presence compared to the employment and financial muscle they flex nationally or abroad. United Rentals lists three jobs at its Stamford headquarters — including one to lead its global tax oversight — of nearly 850 open jobs nationally. Of more than 300 jobs at the crane and heavy equipment maker Terex, only two are at its Westport headquarters; of more than 400 at Praxair in Danbury, just one opening for a permanent job is listed as the company readies to combine two cadres of executives via a merger with its European rival Linde Group.

Still, for other local corporations like Gartner in Stamford, Interactive Brokers in Greenwich and Sikorsky Aircraft in Stratford, dozens of the highest-paying jobs they have to offer are in the local offices where they run their operations. It adds up to hundreds of open corporate jobs in southwestern Connecticut — and with most of those companies in a period of unprecedented profitability, giving ample opportunities both to the new and old guards alike.

“We hired a bunch of salespeople beginning in (the fourth quarter),” said Gartner CEO Gene Hall in July. “When they came on board, we had to have some managers for them. We generally promote our managers from our highest-performing sales people, which we did.”

Alex.Soule@scni.com; 203-842-2545; @casoulman

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