Hartford - It was a tug of war between Connecticut and Rhode Island over high-tech jobs and millions in tax revenues.

At the center was Yardney Technical Products Inc., the Pawcatuck-based battery-maker whose products have powered generations of defense and aerospace products from torpedoes to bombers to spacecraft. The victor in this 1980 battle was Connecticut, whose multimillion-dollar bonding package neutralized its neighbor's poaching attempt.

"Rhode Island was trying very hard to lure them," Connecticut's commissioner of economic development, Edward Stockton, said at the time. "But our people have been trying for six months to keep them."

The Ocean State went after Yardney again three decades later, and this time it won. Yardney said last fall that the company and its 150 employees will move 33 miles to a former semiconductor plant in East Greenwich, R.I., where it will benefit from an incentive package that Connecticut just couldn't match.

Yardney is one of several recent high-profile business departures that are dragging down a rebound of Connecticut's job market and putting pressure on new Gov. Dannel P. Malloy, who declared after taking office in January that the state "is open for business."

Other dismal state news includes Pfizer's announcement of 1,100 layoffs from its Groton campus, a plan by Hamilton Sundstrand of Windsor Locks to let go 214 unionized machinists and the decision by health care software company AmkaiSolutions to relocate to Westchester County, N.Y. - taking 35 jobs out of Waterbury.

Connecticut's unemployment rate is stuck for the second month running at 9.1 percent, just above the 9 percent national rate. The latest state Department of Labor report shows that Connecticut has regained only a quarter of the nearly 120,000 jobs it lost in the recession. Even before the downturn, the state hadn't experienced sustained net job growth since 1990.

Malloy acknowledged the recent string of departure announcements during an appearance last week at the University of Connecticut Health Center in Farmington. He alluded to Pfizer's decision to move the Groton lab's neuroscience and cardiovascular research units to Cambridge, Mass.

"We can't afford to lose more of those jobs, and we can't afford to lose our opportunity to grow jobs in our state," Malloy said. He then laid out a "new jobs initiatives" plan involving a bigger renovation and expansion of the health center and the recruitment of 50 scientists whose research discoveries, he said, would invigorate the state's high-tech sector.

"This is another bold step that this governor is willing to take that clearly shows his passion for creating jobs in Connecticut," said Catherine Smith, the new commissioner of the state Department of Economic and Community Development.

Yet those inside and outside of state government say that Connecticut has a lot more work to do on the job creation and retention fronts.

"I wasn't impressed by the sense of urgency," Vincent Yevoli Jr., president of Yardney, said Friday, referring to his experiences with state economic development officials to find the company a new home and to obtain an aid package that would compel the business to stay.

"I don't think they do a good job of it," Yevoli said. "They're trying to get new businesses to move in when they can't even take care of the companies that are here."

Malloy and his agency heads are working to address long-heard complaints from the business community, such as their challenges in obtaining some permits and navigating through multiple state agencies. The governor's budget for the July 1 fiscal year raises taxes on residents and businesses - but in an effort to stabilize the state's long-term finances.

The governor's success may depend on his ability to change not only the inner workings of state agencies, but also the perception of Connecticut in business circles.

"One of the issues that's been raised about Connecticut for quite some time is that it is anti-business, and unfortunately that perception has not changed," Bonnie Stewart, vice president of government affairs for the Connecticut Business and Industry Association, said last week. "They're not saying that we need a state that cares only about business. But they want a state that does care about business, and right now they just don't have that feel."

State on defensive

The package that lured Yardney across the border included a tax-exempt bond totaling $6 million from the Rhode Island Industrial-Recreational Building Authority to help the firm buy and renovate a 140,000-square-foot manufacturing and research-and-development facility.

Yevoli said Connecticut officials could neither match the Rhode Island offer nor find him a suitable new location within reasonable proximity of Yardney's current facility.

Officials with the economic and community development department said they committed resources to finding Yardney a new in-state site and insist that their $5.5 million assistance offer was just as competitive as Rhode Island's.

Department spokesman James Watson noted that the state gave the company a $250,000 grant in 1994, and pledged about $30 million two years ago to support a proposed joint venture between Yardney and Coda Automotive of California to produce electric car batteries in a former Lego plant in Enfield. But the project wasn't awarded the federal stimulus dollars it needed to start.

Watson also took issue with Yevoli's characterization of the state's efforts. "We have always taken a very proactive stance in retaining companies like this, and we will continue to do so," he said.

Smith, the department's commissioner, said the state had even less control over the loss of Pfizer research jobs to the Boston area. When she and Malloy met with company officials, they were told that Pfizer is consolidating its research units "where they feel there is just a greater mass quantity of scientists they can tap into."

Connecticut lacked for sheer number of brains. "We have great scientists in the state," Smith said, "we just don't have enough of them."

A better offensive game

Executives with AmkaiSolutions, the Waterbury health care software company, have said that their New York move will help the company attract a more highly skilled work force and gain it greater access to the health care marketplace. The firm plans to nearly triple in size once there.

"I think if we had known about the Waterbury situation and had worked on it last year, I think we could have changed their minds," said Smith, who was appointed by Malloy in March.

She said her department is improving the state's communication with existing businesses. "Frankly, we need to be doing a much better job of reaching out to those businesses and being very proactive with them about their needs and what we can do to help," Smith said.

Connecticut also needs a stronger offensive game if it hopes to net new businesses and jobs, Fred Carstensen, director of the Connecticut Center of Economic Analysis at UConn, said Friday.

Carstensen said he has heard numerous anecdotes involving entrepreneurs who made an initial contact with a Connecticut state official but more or less "couldn't get a returned phone call," and went elsewhere. Business people report different experiences from states such as Texas, which will dispatch a development team or quickly put their governor on the phone to do a sales pitch, he said.

Ramping up

Malloy has several job growth strategies under way. His new budget that starts July 1 will consolidate 81 agencies into 56, folding multiple development and work force boards into Smith's Department of Economic and Community Development.

This consolidation would address concerns about "red tape and bureaucracy" that the governor is aware of, said spokeswoman Colleen Flanagan. Malloy is working with the state departments of Environmental Protection and Administrative Services to speed up permitting and other processes, she said.

The governor also created a "First Five" initiative that will offer tax credits and other incentives to the first five businesses that create 200 new full-time jobs in the next two years. Malloy is considering expanding it into a "First Fifty."

The new two-year budget would plug a $3.3 billion deficit through a mix of spending cuts and higher taxes to stabilize the state's finances. Business proponents say that the state has been missing that stability.

Employers "are not going to pick a state where they think spending is out of control or not in control," said CBIA's Stewart. "They're going to pick a state where there is some predictability that taxes won't be raised next year or the year after or the year after."

Smith thinks the business and jobs climate is poised to turn around.

"We're not going to have all bad news coming out in the near future," the development commissioner said. "We have a pipeline that looks very good. Some great, great companies that either want to move to Connecticut or expand significantly in Connecticut."

j.reindl@theday.com