The Daily Record: David Cote’s formula for competitiveness

The Daily Record column, published April 25, 2014

By Donald C. Fry

Seeking a national champion for making our business climate more competitive? Consider David Cote, CEO of Honeywell.

Cote, who was Chief Executive Magazine’s 2013 CEO of the Year, knows a thing or two about innovation and global competitiveness. Since he took the helm as chairman and CEO of Honeywell in 2002, he coached the international corporate giant through a transformation that has generated a 75 percent increase in sales during his tenure.

Away from his corporate office, Cote persistently champions what he terms an “American Competitiveness Agenda.”  His recommendations for our nation on debt reduction, tax reform, education, infrastructure and other prerequisites for a strong business climate should resonate with Maryland business leaders and public policymakers seeking a more competitive environment for business growth and job creation in our state.

Cote will bring his competitiveness message to Baltimore on May 22, when he will be the keynote speaker at the Greater Baltimore Committee’s annual meeting.

Having emerged from a modest upbringing in a New Hampshire mill town to climb through the ranks at GE and to steer TRW, Inc. before joining Honeywell, Cote exemplifies the American dream. He speaks with a heavy New England accent and is quick to smile, but he is solidly committed to ideas that make his company a global leader and that can make America more competitive in the global community.

Among other things, he served on the National Commission on Fiscal Responsibility and Reform, otherwise known as the Simpson-Bowles Commission and is on the steering committee of the Fix the Debt campaign founded by Alan Simpson and Erskine Bowles.

Cote’s ideas for making America more competitive apply to Maryland as well and relate to core pillars for competitiveness promoted by business and civic leaders in the Greater Baltimore Committee’s 2010 report “Gaining a Competitive Edge” and its 2013 report, “Compact for Competitiveness.”

Cote emphasizes the need for a government that enables business in addition to regulating it. An overall theme he advises is working collaboratively to come up with solutions for the future and not resting on achievements of the past.

Cote talks about focusing immediately on six basic elements for strengthening competitiveness, most of which should strike a chord with Maryland business advocates:

Debt Reduction

Cote emphasizes debt reduction and tax reform as the number one issue that can no longer be ignored by national policymakers. Maryland must find a way to do the same. For more than a decade, Maryland has been addressing a tenacious “structural deficit,” balancing budgets by borrowing special funds to shift to the general fund and by converting operating expenses to long-term bond debt. Business leaders at the GBC have also identified tax reform as Maryland’s immediate top priority for making the state more competitive for business growth.

Focus on Math and Science Education

“We need more engineers, not lawyers,” Cote says. While STEM education – science, technology, engineering and math – has been widely recognized as a priority, efforts need to be coordinated.  Cote notes that more than 100 federal STEM programs are fighting for funding without any coordination with one another. In Maryland, ensuring that efforts are coordinated to advance and align STEM education is a top priority of business leaders as well.

Infrastructure Development

Cote cites the need for upgrading transportation infrastructure, air traffic management, and broadband infrastructure as priorities. For Maryland business leaders, better funding and planning for transportation infrastructure has been a long-time top priority. Providing access to broadband services in all areas of the state is necessary to promote economic prosperity.

Energy Policy

Cote says a thoughtful energy policy comprising both generation and efficiency will provide the low-cost power needed to sustain good GDP growth. Maryland, as well as the nation, needs to focus on generation, conservation, and alternative energy sources in the development of a comprehensive energy agenda.

Free Trade and a Thoughtful Relationship with China

When asked if China should be viewed as a partner, a competitor, a customer or a supplier, Cote – whose company derives more than half of its sales outside the U.S. – answers “yes” to all of them. In Maryland, China is the Port of Baltimore’s largest export trading partner and 4th largest import trading partner.

Tort Reform

“We have let the pendulum swing too far in an attempt to root out society’s inequities, to the point where our tort system is a mystery to the rest of the world,” says Cote. He recommends working “to achieve a better balance providing fairness for people who have suffered inequities while also providing fairness for the companies that invest and provide jobs.”

Cote’s six issues offer a compelling “To Do” list. But nationally and in Maryland, compelling strategic recommendations are empty aspirations unless private-sector and government policymakers together build a consensus agenda for competitiveness, agree Cote and business leaders at the GBC who propose the development of a “compact for competitiveness” with state government leaders.

As Cote once put it: “We must create a culture where we’re going to get things done so that when we agree on something, it actually happens.”

Donald C. Fry, president & CEO of the Greater Baltimore Committee, writes a monthly column for The Daily Record. His e-mail address is donaldf@gbc.org.

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