|
November 2007 — Vol. 85, No. 9
Connecticut manufacturers facing obstacles that could hurt industry’s future
Challenges include a growing shortage of skilled workers, high business costs
Manufacturing is a major component of Connecticut’s economy and is vital to the state’s prosperity, but the industry is facing hurdles that could jeopardize its future in the state. The availability of a skilled workforce, concerns about future business and economic conditions, and the cost of doing business in Connecticut are among the biggest challenges facing manufacturers. Despite these barriers, manufacturers are expanding, developing new products and realizing profits.
Those are some of the key findings of the manufacturing supplement of the CBIA/
Blum Shapiro 2007 Survey of Connecticut Businesses. The supplement highlights issues confronting manufacturers in Connecticut and raises awareness of what needs to be done to ensure that they can remain profitable and competitive.
“Connecticut manufacturers are facing myriad challenges, both domestically and internationally. But they are highly innovative, resourceful and resilient even in the face of those challenges,” says John R. Rathgeber, CBIA president and CEO. “It’s critically important that state policymakers foster a business climate in which manufacturers can continue to innovate, grow and succeed.”
Cost of doing business
Connecticut manufacturers’ greatest challenge is the high cost of doing business in the state. Specifically, manufacturers responding to the survey said their most onerous costs were those for:
- Health care benefits — 54%
- Payroll — 19%
- Energy — 13%
- Workers’ compensation — 9%
Their most significant tax concerns included the:
- State’s corporate income tax — 23%
- Personal income tax — 23%
- Property tax on real estate — 22%
- Unemployment compensation taxes — 16%
“For the fourth straight year, manufacturers are worried about the high price of doing business in Connecticut,” says Brian Renstrom, partner at Blum Shapiro Consulting LLC. “We know this is a problem. We know state leaders are aware of it. But manufacturers need to take the initiative and figure out what each company can do to streamline its processes and encourage growth.”
Shortage of skilled workers
Another growing challenge for manufacturers is finding enough skilled workers in the state. While nearly three-quarters (74%) of respondents’ companies hired new employees in the last year and almost as many (73%) expected to hire in the next 12 months, 70% reported trouble finding and attracting qualified workers. More than half (56%) said they could not find enough qualified workers to fill jobs. Other hiring barriers were the region’s high cost of living (cited by 40% of the respondents) and housing prices (31%), applicants’ lack of job-readiness skills (24%), and a long commute (12%).
Compounding these challenges is the fact that baby boomers are beginning to retire. Ninety-seven percent of the survey respondents expect 10% of their workers to retire this year, and 95% have that same expectation for next year.
“Our manufacturers are at a crossroads,” says John M. Kirschner, partner and director of the Manufacturing/Distribution Industry Group at Blum Shapiro. “They are quick to invest in new technologies to grow their businesses, but they’re running out of qualified workers. It’s time for business owners and managers, state officials and legislators, and educators to evaluate what they’re doing to appeal to, or even reach, potential new workers.”
Profitability and the economy
Despite the challenges, Connecticut manufacturers are innovating and actively seeking ways to improve their businesses and turn a profit. Nearly three-quarters (72%) of respondents said their firms recorded a net profit in 2006, but many respondents were not confident about future business and economic conditions in the state. A quarter of them expect business conditions for their firms to be poor or fair in the next 12 months.
Respondents’ views of the manufacturing industry as a whole were even less encouraging. Forty-one percent said current business conditions for manufacturing are poor to fair, while 37% reported average conditions.
“Manufacturers are persevering through many difficult challenges,” says Peter Gioia, CBIA vice president and economist. “We need to do all we can to make sure they grow and continue to contribute to Connecticut’s economic strength.”
[back to top]
|
