Growth Stories: How Businesses Are Making It in Connecticut
The challenges of the post-recession years appear endless at times for Connecticut businesses. From high taxes to incessant government mandates to lawmakers who are seemingly indifferent to the daily struggles of businesses, it’s a never-ending battle.
In spite of those obstacles, many Connecticut companies are growing, thanks to strong national and international markets, a willingness to adapt and innovate, and stubborn self-belief and persistence.
From 2011 to 2015, business was essentially flat at Jonal Laboratories, a Meriden-based manufacturer of rubber and silicone seals and other aircraft parts.
Then sales orders exploded, tripling in less than five years, explains Marc Nemeth, president of Jonal and the son of its founder.
“We were on a lot of good programs that started to take off,” Nemeth said.
“We’re highly tied into Pratt & Whitney and their F135 engine. We were at a good place at the right time.
“It’s the best time in 60 years to be in the aerospace business.”
The Lee Company of Westbrook, a leading supplier of miniature precision fluid-control products for the aerospace, automotive, and medical industries, saw 5% growth in the last year.
That’s slightly less than over the past decade, says Marietta Lee, the company’s vice president and corporate secretary.
“We sell our products globally,” Lee said. “Our growth is largely outside the state. We have very few customers based in Connecticut.”
Horst Engineering, a 73-year-old, third-generation manufacturer of precision-machined aerospace components, recently announced plans to consolidate its three Connecticut locations into a 100,000 square-foot facility in East Hartford.
President and CEO Scott Livingston says contracts with multinational companies with international operations are driving much of Horst’s growth, with exports doubling in the past five years.
“We have benefited from a super-cycle in the aerospace manufacturing industry,” he said.
“A strong American economy is the base of that business, but the real growth has been around the world as the middle class grows and more people fly, particularly in the Middle East and Asia.
“Couple that with an unprecedented development cycle that was spurred by the need to replace fleets with more fuel efficient, more reliable, and quieter aircraft and you have a recipe for growth.
“As a small supplier in a global supply chain, we count on that trickle-down effect.”
Horst, Lee, and Jonal are among many Connecticut manufacturers benefiting from global growth in the aerospace industry.
“Airbus in Europe and Boeing in the U.S. are the two big dogs, and they have a seven- to eight-year backlog for planes,” Nemeth said.
“Both predict building close to 30,000 new planes over the next 20 years. That, plus the defense buildup, is driving our industry’s growth.”
Connecticut companies outside the aerospace sector are also experiencing strong growth.
Fairfield-based Bigelow Tea has grown 4% to 5% annually over the last five years.
“It’s an alignment with quality products, quality people, and a very passionate, genuine message of never compromising on anything to do with quality,” says president and CEO Cindi Bigelow.
It takes constant vigilance to succeed in a challenging climate, she added.
“You have to stay relevant,” she says. “You have to be familiar with trends outside your own industry, including the ingredients people are interested in.”
For example, Bigelow now puts probiotics in some of its teas.
“It’s all about integrity,” Bigelow said. “It’s about putting enough probiotics in our teas so that it is substantial and not just something on the label.”
Ari Santiago launched technology solutions company IT Direct in the bedroom of his Hartford apartment in 2002. He had one employee, who worked from the couch in the apartment’s living room.
Today, IT Direct owns an 18,000 square-foot office building in West Hartford and employs 42 people.
“Connecticut has been great for us in a lot of ways,” Santiago, the company’s president, says. “Over the last eight years we’ve grown eight fold.
“It’s a sophisticated market, people are highly educated, we don’t have the congestion and traffic of a Boston or a New York—quality of life is a big part of being here and the education system is also really good.
“I see what we have continuing. We’re fortunate in what we do—help people leverage technology to reach their business goals. I don’t see tech becoming any less important for businesses.”
In terms of trends, Santiago sees a growing surge of mergers and acquisitions in Connecticut, driven by capital from both inside and outside the state.
“Given the low interest rates, there’s lots of money looking for something to do,” he said.
“There’s more capital out there right now to invest in businesses than I’ve ever seen in my 20 years in business.”
If there’s one issue that keeps Santiago up at night, it’s finding skilled workers. It’s a challenge he shares with employers across the state and country.
“People always have been and always will be our biggest challenge,” he said.
“We’ve invested a lot of time and resources on recruiting and retention. People are really what makes the difference.”
As with many of the state’s manufacturers, the skilled worker shortage is a major challenge for The Lee Company.
“We are finding it increasingly difficult to hire skilled machinists,” says Marietta Lee.
“The state can help us by continuing to support trade schools and community college manufacturing programs.”
For Jonal’s Nemeth, Connecticut’s high cost of doing business is a major obstacle to growth, particularly in a highly competitive, global environment.
“I try to explain to politicians that as the cost of business rises in Connecticut, the amount of business we can look at—the scope of it—becomes smaller,” he said.
“If we’re looking to supply Airbus with seals, they have suppliers with facilities in North Africa.
“We have a skilled and educated workforce, but at some point, business doesn’t come here, it goes somewhere else.”
Bigelow Tea has factories in Connecticut, Boise, Idaho, and Louisville, Kentucky. Production costs are 30% higher in Connecticut.
“Lawmakers need to ask, ‘What are we doing as a state to lower costs and make it more affordable for businesses?'” says Cindi Bigelow.
“It’s about listening to what businesses need to stay in the state. A lot of businesses are going to other, neighboring states and down south.
“What are we doing to keep business and draw business to our state?”
Bigelow says a focus on controlling costs—which includes an ambitious sustainability program—helps drive value and growth prospects.
“We’re always going to give our employees raises and good benefits, but we find other ways to control costs,” Bigelow said.
“Luckily, we are a frugal company. There’s not a lot of fat. We are careful to control our costs and watch every dollar we spend.”
As a small business, Livingstone says he “remains frustrated that we don’t get the respect of Connecticut policymakers.”
“There are other states that are much more growth oriented and business friendly,” he said. “Connecticut may have a skilled labor base and a knowledge economy, but we can’t take it for granted.”
Connecticut’s educated workforce helps offset some of the high cost of doing business, Livingston says, adding that lawmakers must be more sensitive to the challenges job creators face.
“In Connecticut, lowering the overall cost of doing business would be the biggest benefit to encouraging growth,” he said.
“Reducing the burden on businesses and business owners by backing off on taxes—income tax, sales tax, payroll taxes, healthcare mandates, etc.—are vital.
“Increased mandates like paid FMLA are only going to hold back businesses because we can’t find enough people to increase capacity at a faster rate.
“If you keep trying to squeeze water from a stone, then the slight growth our state has will stall or reverse.”
Santiago says the business community must be more solutions-oriented in advocating for policies that drive job and economic growth.
“There are a lot of great things happening in Connecticut,” he said. “They’re not that hard to find.
“The business community needs to have a bigger voice about impacting positive change.
“Let’s engage in a positive way and advocate for solutions.”
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