Results of 2006 CBIA/Blum Shapiro survey:
Businesses battling state’s high costs to stay competitive

(Sept. 12, 2006) Connecticut businesses are innovative, productive and generally positive about their ability to compete and succeed in the state despite the many challenges they face. These challenges include the high cost of doing business here — especially for employee health-care benefits — and other workforce-related issues.

Businesses are becoming more concerned about the retirement of baby boomers and the possibility of a pandemic such as the avian flu, as well as energy conservation, transportation and immigration issues.

Among the other key findings of the CBIA/Blum Shapiro 2006 Survey of Connecticut Businesses, conducted in May and June, were:

• More than half of the respondents (62%) said their companies had developed new products or services within the last year, up from 49% in 2005.
• Executives also said they are considering various strategies to grow their companies: new technology (cited by 35%), direct marketing (26%), strategic alliances (25%) and the Internet (24%).
• Also mentioned as tools for potential growth were acquisitions (18%), outsourcing (15%), and research and development (11%).
  

Executives continue to value Connecticut as a business location, primarily because of the good quality of life here.

Health care concerns

But nearly three-quarters (74%) said the cost of doing business in the state is the greatest challenge to operating a business in Connecticut. Not surprisingly, executives said the most important thing the state can do to keep and attract businesses is to reduce the cost of doing businesses.

For the fifth straight year, executives identified health care costs as their biggest cost concern.

• 80% said their health care costs rose over the last year; 58% reported increases of more than 10%. And 85% expected health benefit costs to continue rising next year.
  
• Still, almost 94% said they provide health care benefits to their full-time employees, up from 91% last year.
  

Property taxes were cited most often (by 37%) as the tax that causes them the most concern. Some of these concerns were addressed by state lawmakers this year, who enacted a five-year phaseout of the property tax on manufacturing machinery and equipment.

Slower hiring
Only 22% of executives said they plan to increase their workforces within the next year, compared with 25% in 2005 and 33% in 2004. Many executives, though, said they currently had job openings they couldn’t fill. The main reason they weren’t hiring full-time workers was a lack of qualified workers, said 40% of respondents, up from 13% last year.

Executives said they were especially having trouble finding qualified workers for skilled machinists and other manufacturing jobs (22%), sales positions (11%), engineers (9%), entry-level jobs (8%), and customer service representatives (9%).

Other issues

• Energy — conservation and “green” practices are common among state businesses, with 69% taking energy-efficiency steps.
• Transportation — even after the legislature’s two-year investments of $3.6 billion, 51% of the survey respondents said much more needs to be done to improve the state’s transportation infrastructure and systems.
• Immigration – 65% said immigrants play a somewhat to extremely significant role in the state economy; 83% said potential changes to immigration law would not affect their hiring practices.
• Pandemic — the possibility of a global pandemic such as the avian flu worried 39% of respondents, but another 30% were neutral on the topic and 31% were not concerned.
  

To view the compete results of the survey, visit cbia.com. For more information, contact CBIA’s Peter Gioia at 860-244-1900 or gioiap@cbia.com. n