Manufacturing Supply Chain Report Highlights Policy Opportunities


Connecticut has significant opportunities to strengthen its supply chain and address the main challenges facing manufacturing according to a new report.

Produced by Ernst & Young for the business growth firm CONNSTEP, the Innovate to Compete report assesses the major characteristics of Connecticut’s manufacturing supply chains in aerospace, ship building, and medical devices.

Those three sectors employ more than 54,800 people—35% of the manufacturing workforce—and account for $16.3 billion or 5% of the state’s GDP.

The report analyzes the sectors using four factors of supply chain resilience: innovation, in-state sourcing of manufacturing inputs, employment/workforce pipeline, and cost, weighing Connecticut’s experience against 15 other states with the largest number of workers in each area.

“As a result of their importance, the health of these strategic sectors is the foundation for growth and the creation of well-paying jobs in Connecticut’s manufacturing sector,” the report notes.

Workforce Challenges

CONNSTEP president and CEO Beatriz Gutierrez and EY partner and principal Andrew Phillips released the report Feb. 15 at a hearing of the state legislature’s Commerce Committee.

“The report provides a comprehensive analysis of Connecticut’s critical supply chains and recognizes that to remain competitive, our state needs to continue embracing product and process innovation at all levels of the supply chain,” Gutierrez told committee members.

“This report identifies relevant benchmarks for Connecticut to measure its progress as we continue investing in our manufacturing industry.”

Despite a historic workforce advantage, the report notes that Connecticut aerospace and medical device manufacturing employment declined in the period between 2011 and 2022 while shipbuilding grew 4%.

Supply chain resiliency: CONNSTEP president and CEO Beatriz Guterriez addresses members of the legislature’s Commerce Committee Feb.15.

Phillips noted that Connecticut has the sixth largest aerospace workforce, representing 6% of U.S. aerospace workers, with only Washington state and Kansas having a higher concentration of workers.

Connecticut has the fifth largest workforce in shipbuilding and the sixth most concentrated medical device manufacturing workforce.

“Roughly a third of aerospace and medical device workers are 55 years or older, compared with the overall workforce, with has one-quarter of workers in that age range,” Phillips said.

“Over the next 10 years, these two industries will feel greater pressure than the typical Connecticut industry in the face of a significant number of retiring, relatively high-skilled workers.”

The report notes that new talent is entering the three Connecticut sectors, with 31% of workers in the supplier industries aged under 35, compared to 28% in benchmark states.

In-State Sourcing

The report emphasizes the economic impact of strengthening Connecticut’s supply chain by increasing in-state sourcing to levels seen in benchmark states.

Connecticut aerospace OEMs source 20.1% of their inputs from in-state suppliers, down 6.7 percentage points since 2011.

Connecticut suppliers account for 9.9% of shipbuilding inputs, compared with 10.7% in benchmark states, while 9% of medical device manufacturers source in-state, 2.7 points lower than benchmark states.

“Connecticut has a strong manufacturing foundation but there is a gap with benchmark states,” the report notes. “Narrowing this gap would benefit the state and the key driver will be innovation.”

The report found that increased in-state sourcing would support more than 800 new jobs at Connecticut suppliers and nearly 1,800 jobs in the state.

Increasing average reliance on in-state suppliers to 23.1% of inputs for aerospace, shipbuilding, and medical device manufacturing would equate to nearly $340 million of incremental purchases from Connecticut suppliers.

The report found that increased in-state sourcing would support more than 800 new jobs at those suppliers and nearly 1,800 jobs in the state.

“This level of economic activity from increased supplier purchases would support nearly $300 million in state GDP,” the report notes.

“Additionally, payments of wages, salaries, and benefits to Connecticut employees of suppliers would total an estimated $185 million.”


Connecticut is one of the costliest states in the country for businesses, with the report noting that costs run 5% to 7.3% higher than benchmark states, depending on the industry.

“While Connecticut ranks 13th for education and technology, it ranks 43rd in the country for the cost of doing business,” the report states.

The report found that wage costs are 6.3% to 34.6% higher in Connecticut than benchmark states for the three covered manufacturing sectors.

Connecticut’s high cost of living is also a critical factor, impacting the state’s ability to attract and retain the skilled workforce needed to meet demand.

“State intervention to incentivize workforce and affordable housing may have benefits for manufacturers.”

Innovate to Compete report

“Excluding housing, cost of living in Connecticut is 10.2% higher than the US average,” the report found.

“Among the top concerns for businesses is housing costs, which range from 5% to 14% more expensive in Connecticut than benchmark states.

“The state’s high cost of living has the potential to drive wages demanded by employees higher, acutely influenced by Connecticut’s high housing costs and lack of affordable workforce housing.

“For this reason, state intervention to incentivize workforce and affordable housing may have benefits for manufacturers.”


The report highlights Connecticut’s leadership in innovative research, ranking third nationwide in patent activity per 1,000 workers in science, technology, engineering, and mathematics fields.

However, the state does not fully capitalize on those research activities, ranking 27th among all states for product innovation.

“While Connecticut is a leader in generating innovative research, its track record in commercializing this research and innovating products throughout the supply chain is weaker,” the report states.

The report adds that “rankings among the 15 states have many elements but the key driver is innovation.”

“This disparity suggests activities to embed innovation further down the supply chain may have high returns.”

The report adds that “rankings among the 15 states have many elements but the key driver is innovation.”

“Connecticut can use its strength as one of the country’s leaders in all three of its strategic manufacturing industries, with historical significance and strong industry presence in each segment to improve this metric,” it notes.

“There are significant opportunities to intervene through investing in adoption of Industry 4.0 in the supply chain, incentivizing workforce housing, commercializing innovative research at Connecticut universities, or investing in expanded training for workers to increase the manufacturing labor pool and potentially mitigate further wage pressure for employers.”


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