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October 2005 — Vol. 83, No. 8
CBIA/Blum Shapiro Survey
Connecticut companies challenged but mostly doing well
Connecticut business executives are mostly upbeat about their companies’
prospects despite significant challenges. Among those are the high cost
of doing business here, health benefits and insurance costs, taxes, the
availability of qualified workers, and profitability concerns.
And despite the fact that the state’s economic performance has
lagged the nation’s, most Connecticut companies were profitable
in 2004. They are reinvesting in their businesses, are relying more on
international trade, and continue to value their employees and Connecticut’s
skilled workforce.
Those are among the key findings of the 2005 Survey of Connecticut Businesses,
released in September by CBIA and Blum Shapiro, the largest regional accounting
firm in the state, based in West Hartford.
“Increased reports by executives of profitability and reinvestment
in their companies’ future were an encouraging sign in this year’s
study,” says Carl R. Johnson, managing partner of Blum Shapiro.
“And business leaders continue to value and invest in what they
consider to be one of the state’s most important assets, Connecticut’s
skilled workforce.”
But nearly 70% of the respondents said the cost of doing business in
the state is a serious concern affecting decisions about their companies’
future growth.
“With such a high figure, state leaders need to work more closely
with the business community to create a climate conducive to investments
and job creation,” says Kenneth O. Decko, CBIA president and CEO.
Top concerns: health care, taxes
More than half (58%) of the respondents said their most significant cost
concern is the rising cost of health benefits. Nearly three-quarters (74%)
reported double-digit percentage cost increases over the previous 12 months,
and they expected costs to continue rising 10% to 20% over the coming
year.
Executives also cited taxes as a high concern, specifically taxes on
property (30%), unemployment compensation (22%), personal income (20%)
and corporate income (15%).
“While businesses continue to be profitable, rising interest rates
combined with taxes and double-digit increases in health care costs will
impact their future operations,” says CBIA Economist Peter Gioia.
“Attention to state cost burdens on companies will become more important
than ever if Connecticut is to see continued job-producing economic growth.”
Less optimism about productivity and job growth
The report also shows that business executives are less optimistic than
in previous years about both productivity and workforce growth in their
companies. Twenty percent of respondents expect their productivity to
decrease in 2005, up from only 6% last year. On the other hand, 22% anticipate
higher productivity in the coming 12 months, down from 41% last year.
Those respondents expecting lower productivity attributed the decline
to less business and a weak economy.
Job creation is also expected to slow. Only 25% of respondents expect
an increase in their workforce levels in the next 12 months, compared
with 33% who expected that in 2004. More than half (64%) expect no change
in their workforce levels, while 11% expect to cut jobs.
More than a quarter of executives responding to the survey (26%) said
they had current job openings but would not be filling the positions with
full-time employees. The reasons included the high cost of health care
benefits (cited by 14%), lack of qualified workers (13%), a decision to
hire part-time workers instead (14%), and concerns about a decrease in
business orders (9%).
Respondents looking to fill full-time job openings report difficulty
finding qualified workers for manufacturing positions, especially skilled
machinists (18%), sales (13%), marketing (13%), customer service functions
and entry-level positions (11% each), and engineers (10%).
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