Total Cost of Manufacturing in Connecticut: High

A new study downplaying manufacturers’ business costs in Connecticut presents only part of the picture and leaves out some critically important factors.
Speaking at the Fairfield County Economic Summit and Outlook in Stamford, Dennis Hefley, professor of economics at UConn and editor of The Connecticut Economy, outlined several factors that would seem to make manufacturing costs in Connecticut relatively competitive.
Hefley said Connecticut ranks 43rd lowest among the 50 states in terms of the total cost required to produce each $1 of manufactured goods.
Concerns over Connecticut’s high wages and energy costs, given this figure, “may be displaced,” he added. Wages and energy costs are high in the state but are being offset by manufacturers’ higher productivity, said Hefley.
Many factors, however, contribute to the overall cost of manufacturing in Connecticut, and the study leaves out such critical aspects as corporate taxes and regulatory costs.
Also not accounted for in the UConn study is how Connecticut manufacturers are working to control the costs of finished products by incorporating low-cost overseas components into their processes.
“It’s still very difficult to operate a successful manufacturing operation here,” said CBIA Economist Pete Gioia. “Our manufacturers’ innovation, superior products and high productivity are bringing about high value-added results. But the fact remains that we can’t do many types of manufacturing in Connecticut because it’s cost-prohibitive. “
Because manufacturers have to overcome incredible cost and regulatory obstacles to operate here,” added Gioia, “many unfortunately seek to produce new products in other states or countries.”
Hefley acknowledged that manufacturers continue to encounter difficulty in doing business with state government, and that delays in regulatory approvals cost time and jobs.
And another “cost” to growing manufacturing jobs in Connecticut continues to be the availability and sustainability of a skilled workforce.
Nearly a third of all respondents to this year’s BlumShapiro/CBIA Survey of Connecticut Businesses said that they were having difficulty finding and hiring new workers, and the biggest barrier was that applicants are just not qualified.
This has been an acute problem for years in the state’s manufacturing industry, which is becoming more technology-driven.
For more information, contact CBIA’s Pete Gioia at 860.244.1945 or pete.gioia@cbia.com.