For Immediate Release
Nov. 3, 2009

DOWN ECONOMY AND RISING COSTS AFFECTING STATE MANUFACTURERS HARDER THAN MANY OTHER BUSINESSES

While many Connecticut businesses struggle with increasing global competition and economic uncertainties, the challenges have been especially pronounced and harmful for the state’s nearly 5,000 manufacturers. 

According to the manufacturing supplement of the 2009 Survey of Connecticut Businesses, manufacturers are struggling, and they don’t expect conditions within their industry or the economy to improve anytime soon. The vast majority (82 percent) of manufacturers have been forced to cut their workforce, compared with 64 percent of overall respondents. Nearly three-quarters (72 percent) said their greatest concern is the high cost of doing business in the state. Compared with Connecticut businesses overall, manufacturers appear to be much more impacted by costs associated with doing business, primarily because of their increasingly global competition.

Other business challenges are national economic uncertainties (57 percent), commodity prices (13 percent), short-term business vitality (13 percent), and a tighter lending climate (8 percent). Manufacturers are positioning themselves for recovery by taking cost-cutting measures and investing in R&D, IT, equipment and growth strategies.

The survey, released today by the Connecticut Business & Industry Association (CBIA) and BlumShapiro, the largest regional accounting firm in the state, highlights the issues of greatest importance to manufacturers in Connecticut and the vital role manufacturers play in providing good, high-paying jobs for nearly 200,000 state residents.

“The success of Connecticut manufacturers is vital for the state’s economy,” says John M. Kirschner, CPA, partner, BlumShapiro. “Connecticut’s manufacturers have suffered significantly during the current economic downturn. It is imperative that the state’s government provide the best opportunities for the state’s manufacturers to be able to succeed, at the same time Connecticut’s manufactures must take the steps necessary to best position themselves when the economy turns around.”

Despite high costs, more than two thirds (68 percent) of manufacturers recorded a profit in 2008, but only 35 percent expect to be profitable this year. More than three-quarters (77 percent) say current business conditions for their firms are fair or poor. Even more (86 percent) say conditions are fair or poor for their industry. 

Other highlights:

• While more than half (56 percent) of manufacturing respondents have reduced employee benefits, almost all, 98 percent, continue to offer health insurance to their employees.

• Both manufacturers (26 percent) and businesses in general (28 percent) identify the personal income tax as their top tax concern. Nearly a quarter (22 percent) of manufacturers say the corporate tax is their greatest concern, while 12 percent identify the tax on personal property as their top issue.

• More than half (60 percent) of manufacturers reported taking their concerns to the Capitol, contacting state senators and representatives regarding business conditions and their ability to survive in the state.

• Transportation costs are a more pressing concern for manufacturers, with 88 percent actively trying to reduce these costs, compared with 66 percent of businesses overall.

• Finding qualified employees is also more problematic. Three-quarters of manufacturers (compared to two-thirds of all businesses) report having difficulty filling key positions.

• Manufacturers are more dependent on acquisitions and international trade than businesses overall.  Key growth areas cited for manufacturers included the use of technology (28 percent), acquisitions (26 percent), R&D (23 percent), and international markets (21 percent).

“Despite a difficult economy, Connecticut manufacturers continue to develop new products and invest in research and development,” says Peter M. Gioia, CBIA vice president and economist. “These are not only keys to turning around companies, they are essential to help turn around the economy.”

Nearly 5,500 surveys were sent to Connecticut businesses in late June 2009. At total of 707 surveys were returned, for a 13 percent response rate. Of these, 201 (or almost 30 percent of respondents) were manufacturers.

CBIA is the state’s largest business organization, with 10,000 member companies.

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For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

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