The U.S. Senate’s overwhelming approval of a $700 billion economic bailout plan last week paved the way for House action and reduced uncertainty about whether Congress would remain paralyzed or act to address the cascading economic crisis.
But even with massive government intervention, many of Connecticut’s largest employers face wrenching adjustments as economic strains build.
Jobs at industrial companies, banks, casinos, malls, hospitals and state government are vulnerable.
• Fairfield-based General Electric, which employs 6,500 in the state, needs to raise capital for its flagging financial services operations in a year in which its stock has lost one-third of its value. Needing to boost confidence before its planned $12 billion sale of new common stock at $22.50 a share, GE tried to buy credibility by attracting Warren Buffett with a sweet investment opportunity. Buffett will buy $3 billion in “perpetual” preferred shares of GE that pay a 10 percent dividend, and he’ll have the right to buy $3 billion in GE shares at $22.25 for five years.
• Connecticut’s major casinos, Mohegan Sun and Foxwoods, are cutting back. Mohegan Sun, which employs about 10,000, has postponed parts of its $925 million expansion, including building a new hotel tower, a House of Blues restaurant and an expanded parking garage. Foxwoods recently announced plans to lay off 700 workers. It now employs about 9,000, while the adjacent MGM Grand hotel-casino has another 2,000 workers.
• Community banks, including Rockville Bank in Vernon and Farmington Savings Bank, have sought to calm depositors’ concerns about the safety of their money. Rockville Bank issued a public statement last week declaring that it was never involved in “subprime” mortgage lending and that only a small percentage of its loans had problems. Farmington Savings Bank bought newspaper ads that cite “troubling … news reports” while touting its $1 billion in assets, clean balance sheet and willingness to lend. The Senate’s bailout bill helps small banks by boosting federal deposit insurance from $100,000 per account to $250,000.
• State government is bracing for significant shortfalls in tax revenue. State Comptroller Nancy Wyman said last week that Connecticut’s budget deficit for fiscal 2009 could top $800 million and that the state should consider covering about half the gap by tapping its $1.4 billion “rainy day fund.” The difference would need to be addressed by cuts suggested by Gov. M. Jodi Rell and the Connecticut General Assembly. That strategy would raise the possibility of a state hiring freeze or layoffs.
• North Haven-based Covidien Ltd., the state’s largest medical device maker and employer of 3,400, recently unveiled plans for a restructuring in 2009 that will cut costs by $50 million to $70 million. The company declined to specify how many it will be laying off, but Covidien spokesman Erik Kraus said the company will provide details in the first quarter.
• The shopping center companies that own Westfarms Mall in Farmington and The Shoppes at Buckland in Manchester are bracing for a retail slowdown this coming holiday season. Shares of Taubman Centers Inc., which owns Westfarms, have been trading in the $45-$50 range since June with no clear downturn. But shares of General Growth Properties Inc., which owns the Buckland properties, have dipped from their $30-$35 range in June to $14 last week.
• Hartford-based St. Francis Hospital and Medical Center, which employs about 4,300 workers, said it will eliminate 50 positions to stabilize its expenses.
