Employment gains eluding Romney

In the closing weeks of the 2002 campaign for governor, Shannon O'Brien suggested the state help its emerging companies rather than chase big out-of-state firms she described as "distant dinosaurs." Soon afterward, the Democratic candidate had a dinosaur problem.

Republicans dressed in dinosaur costumes hounded her at campaign stops. A political ad charged her with "dinosaur thinking." Her opponent, Mitt Romney, ridiculed the remark in a speech by noting, "There are 13 Fortune 500 dinosaurs located in Massachusetts."

A little more than two years later, Romney has his own "dinosaur" problem as takeovers shrink the state's Fortune 500 list, gobbling up signature companies and costing Massachusetts thousands of jobs. Two "dinosaurs" cited by Romney in 2002, FleetBoston Financial Corp. and John Hancock Financial Services Inc., have vanished through mergers from the Fortune list. A third, Gillette Co., is set to follow with its pending takeover by Procter & Gamble Co. of Cincinnati.

These developments have not been good news for Romney, already saddled with a glacial recovery that has left the state with about 46,000 fewer payroll jobs than when he took office in January 2003, according to the most recent employment statistics. Halfway through his term, the former venture capitalist, who boasted of speaking "the language of business," appears vulnerable on an issue that was supposed to be his strength: job creation.

But Romney, whose first two years were dominated by the state's budget problems, is bringing a renewed focus to his jobs policies. Yesterday, at a Greater Boston Chamber of Commerce breakfast, he proposed what he called a comprehensive plan of tax cuts, business incentives, regulatory overhaul, and marketing aimed at boosting job growth. In addition, he made jobs a key theme of his recent State of the State address and unveiled, shortly after the Gillette merger disclosure, a low-interest loan program with Citizens Bank aimed at boosting job growth.

"The governor is doing everything he can to create jobs in Massachusetts," said Romney spokeswoman Shawn Feddeman, noting that the state has added more than 20,000 jobs since the labor market hit bottom a year ago. "It takes time to right a ship."

Trends driving job growth and mergers are largely out of any governor's control, analysts said. But Romney's handling of the economy has become an easy target for critics because of the expectations raised in the last campaign, when Romney, among other claims, asserted he would have ready access to corporate executives who could bring jobs to Massachusetts.

So far, the governor has yet to meet the high standards he set for himself, interviews with economists, business leaders, and economic development officials suggested. Many businesses complain they receive mailings, phone calls, and recruiting inquiries from other states but rarely get similar attention from Massachusetts, said Brian Gilmore, spokesman for Associated Industries of Massachusetts, the state's biggest business advocacy group.

"The number one rule in economic development is to maintain the jobs you have," Gilmore said, "and the perception is the state doesn't care."

Other business leaders say they expected Romney to move more aggressively on their concerns. In 2003, for example, when municipal governments sought to soften residential tax increases by increasing the property tax burden on businesses, then-House Speaker Thomas M. Finneran, rather than Romney, put the brakes on the plan until a compromise was reached.

In addition, Romney has eliminated so-called tax loopholes, which has boosted corporate tax bills by $210 million. He proposed closing another $170 million worth this year.

The administration says it wants to end practices that allow corporations to unfairly avoid taxes, but business officials say the effect is to raise costs and hurt competitiveness.

Joseph Campanelli, a Romney supporter in the last election and chief executive of Sovereign Bancorp's New England division, said he expected a faster start for Romney.

"Coming out of a business environment, I'd have expected him to be involved. I'd have expected to see lots of business issues being addressed," said Campanelli, adding that he believes Romney is now doing a better job. "As a region, we let politics and special interests get in the way of progress. We have to find ways that make development in our area more attractive."

Administration officials say Romney's policies are making the state more attractive to business.

Feddeman, the governor's spokeswoman, cited several Romney accomplishments, including closing multibillion-dollar budget gaps without raising taxes; signing a "stimulus" bill of business tax breaks and economic development grants; and, with US Senator Edward M. Kennedy, putting together a $260 million package aimed at keeping open Hanscom Air Force Base in Bedford, and the US Army Soldier Systems Center in Natick, both key drivers of the state's technology sector.

In addition, said Feddeman, Romney played roles in the relocation and expansion of many companies. Among them: JetBlue Airways at Logan Airport; Straumann AG, a Swiss dental implant maker, in Andover; and Silver Line Building Products Corp., a New Jersey window maker, in Fall River. These three companies alone are projected to create about 1,300 jobs.

Una Ryan, chief executive of Avant Immunotherapeutics Inc. and chairwoman of the Massachusetts Biotechnology Council, credited Romney with persuading her company to locate a pilot manufacturing facility at the Advanced Technology & Manufacturing Center in Fall River, a University of Massachusetts incubator. Although the plant initially created just 12 jobs, it is considered a milestone for the state, which is trying to capture manufacturing jobs as biotech moves from research and development into production.

"Massachusetts is finally beginning to look competitive," Ryan said.

Romney critics noted, however, that the governor had earlier vetoed funding for the Advanced Technology and Manufacturing Center, which, in addition to Avant, houses other emerging companies. The Legislature overrode the veto to provide the money, about $1 million.

Administration officials said Romney believes the Fall River incubator should be financed out of UMass's state funding of nearly $400 million, rather than get an additional appropriation.

But critics say Romney's moves in Fall River reflect economic policies that are more style than substance.

"There is no vision," said state Representative Michael J. Rodrigues, a Westport Democrat and House chairman of the Labor and Workforce Development Committee. "No one is putting together a long-term economic development plan for the state."

As politicians debate who is creating or losing jobs, economists say it's mostly academic, since state economies are at the mercy of national and global trends. Governors have virtually no influence over these forces, and, at best, might improve business conditions so that states make the most of job growth when trends turn favorable, economists said. Such efforts could include improving education and upgrading transportation, but these rarely pay off in jobs over an election cycle.

Analysts said Romney has taken some steps to improve long-term business conditions, such as pushing to improve math and science education.

Still, said Andrew Sum, director of Northeastern University's Center for Labor Market Studies, the challenges facing Massachusetts run deeper than Romney's two years in office, and require efforts beyond what any single governor can accomplish. In the past 16 years, he said, the nation added about 25 million jobs, a growth rate of 24 percent, while Massachusetts payrolls grew by just 34,000, or 1 percent.

"We can't be nonchalant about this," Sum said. "What's fundamental is, can the state really compete in this global economy? The jury is still out."

Robert Gavin can be reached at rgavin@globe.com. Sasha Talcott of the Globe staff contributed to this report.