Manufacturers Navigate Workforce, Tariff, Cost Headwinds
From rising costs to a tight labor market and policy uncertainty at the state and federal level, Connecticut manufacturers are navigating a series of headwinds.
Manufacturers weathered those challenges in 2024, increasing their output to a record $34.2 billion—almost 12% of the state’s economy.
The 2025 Connecticut Manufacturing Report—produced by CBIA with affiliates CONNSTEP and ReadyCT, and supported by RSM US—shows that concerns around workforce, affordability, and policy uncertainty are hampering manufacturers’ growth outlook.
The report draws on a comprehensive June 3-July 17 CBIA survey of manufacturers, data from numerous state and federal agencies, and interviews with industry and policy leaders to provide critical insights into the sector’s challenges and opportunities.
How are manufacturers leveraging those opportunities and navigating challenges?
RSM’s Brian Ferguson discussed the report with ARBURG, Inc. president Martin Baumann, Hubbard-Hall, Inc. president and CEO Molly Kellogg, and Hanwha Aerospace vice president and general manager Nathan Minami at the Oct. 2 Made in Connecticut: 2025 Manufacturing Summit.
Workforce Challenges
One of the key issues facing manufacturing is the labor shortage. As of August 2025, Connecticut’s 4,591 manufacturers employed 153,600 people—10.4% of all private sector jobs.
In the 12 months through August 2025, manufacturing employment fell by 1,800 jobs, a 1.2% decline, leaving the sector with only 39% of pandemic-era losses recovered.
Year-over-year employment in durable goods manufacturing, which accounts for 79% of sector jobs, declined by 1,400 (-1.1%), and nondurable goods lost 400 jobs (-1.2%).
In 2024, Connecticut’s average annual manufacturing salary was $100,745, 32% higher than the state’s overall average salary of $76,050.
The report found 82% of manufacturers report difficulty finding and retaining workers, with the largest share of employers (30%) saying the lack of skilled job applicants was the top factor hampering growth.
“In Connecticut alone, there are 7,000 manufacturing job openings,” said Ferguson. “There’s a lot of hunger for good talent.”
Changing Perceptions
Baumann said one of the keys to closing the labor gap is to change perceptions about the industry.
“Very often, the perception about manufacturing is it’s a little dirty,” he said. “It’s not your grandad’s manufacturing anymore.”
Baumann said Rocky Hill-based ARBURG focuses on opening its doors to students as young as middle school to show them the opportunities they offer to work with advanced technologies.
“It’s not your grandad’s manufacturing anymore.”
ARBURG’s Martin Baumann
“If just 2,000 manufacturers would host one event per year with 50 kids, we would reach 100,000 kids every year,” he said.
According to the report, 61% of manufacturers offer internship or apprenticeship programs.
Nearly half (48%) are involved with educational institutions like technical high schools or community colleges.
Working Together
Kellogg added that it’s important for manufacturers to work together to develop programs to grow the next generation of the workforce.
She pointed to the work of Regional Sector Partnerships, which bring manufacturers together to create a nationally certified training program.
“That’s real innovation,” she said. “That is doing the hard work of figuring out how to create a certificate program for the workers that we need.”
“We’ve got to make STEM education and manufacturing cool for the next generation.”
Hanwha Aerospace’s Nathan Minami
Minami said along with internship, apprenticeship, and training programs, it’s critical to build interest in the younger generation.
“This is a more long-term investment,” he said about engaging kids in grades six through eight.
“We’ve got to make STEM education and manufacturing cool for the next generation.”
Tariff Uncertainty
The panel also dove into the uncertainty many manufacturers are experiencing with shifting federal trade and tariff policies.
“There’s a pretty negative feeling around tariffs right now here,” said Ferguson.
Sixty-six percent of survey respondents said tariffs will have a negative impact on their company.
Kellogg said trade policies were adding complexity and uncertainty to Waterbury-based Hubbard-Hall’s operations.
She compared the current situation to the supply chain crisis coming out of the COVID-19 pandemic.
“Then, the challenge was, can we even get it?” she said, talking about their products and materials.
“Now, the challenge for us—we can get it, but we don’t know what the hell it’s going to cost.”
Short-Term Pain
Baumann added that tariffs can and should be a tool to deal with unfair trade practices.
“My key complaint is how it has been implemented,” he said.
Baumann said ARBURG, which makes plastic injection molding equipment, suddenly had to prove where each piece of aluminum and steel for their machines is coming from.
“The short-term pain is real, and I don’t think it’s that short term.”
Baumann
“Somebody can say, ‘oh, it’s just short-term pain for long-term gain,’” he said. “But the short-term pain is real, and I don’t think it’s that short term.”
He added that many of ARBURG’s customers are deciding to keep their old machines rather than upgrade to modern machines.
Kellogg said it’s a similar concern for family owned Hubbard-Hall, which makes complex surface finishing and wastewater treatment products.
“Our customers freeze,” she said. “We freeze.
“We’re on the verge of investing in both Connecticut and South Carolina, and then we stop, because we don’t know what’s going to happen.”
Mixed Bag
Minami said for aerospace components manufacturer Hanwha, which has Connecticut locations in Cheshire, East Windsor, Glastonbury, and Newington, tariff policies were a “mixed bag.”
He said that they’ve seen more work coming in as customers bring some of their supply chain back to the U.S.
“I think there’s a lot of discovery still to come.”
Minami
“We have made decisions to bring stuff back to the U.S. where previously we might have kept it overseas,” he said.
But Minami also said Hanwha has seen some negative impacts when it comes to their balance sheet.
“I think there’s still a lot of uncertainty on how things are going to progress,” he said. “I think there’s a lot of discovery still to come.”
Embracing Innovation
One of the key challenges manufacturers highlighted in this year’s report was rising costs.
Ninety-five percent of those surveyed said the cost of doing business is rising—with labor, healthcare, and energy expenses at the top of the list.
Key cost drivers include labor, healthcare, and energy (16% each), followed by goods and supplies (11%), state mandates (11%), state and local taxes (10%), and compliance costs (9%).
“As margins are getting squeezed, a lot of companies are really starting to think about automation.”
RSM’s Brian Ferguson
To offset those costs, many manufacturers are finding innovative new ways to grow and be more productive, including the use of artificial intelligence.
“As margins are getting squeezed, a lot of companies are really starting to think about automation,” said Ferguson.
“I’ve seen some cases where robotics, automation, and AI have brought in 10X improvement and output profitability,” Minami added.
Identifying Opportunities
Still, only 27% of companies in Connecticut have implemented artificial intelligence in their operations.
Eighty percent of those who haven’t adopted AI said they were unsure how to incorporate it, with another 14% expressing privacy concerns.
“People are trying to figure out which direction to run,” said Ferguson.
Minami said it’s important for companies to take a step back to make sure they’re targeting the right technology investments.
“The key is really understanding your business.”
Minami
“The key is really understanding your business, your processes, your product, your customers,” said Minami.
He said Hanwha created a team of professionals to identify the best opportunities for improvements.
Ferguson added that once businesses have a strategy and direction, “you can take little bites.”
“It’s a lot easier than you think,” he said. “You can quickly start to automate some of the cumbersome tasks that existed in your business.”
‘Flexible Solutions’
As technology improves and evolves, Baumann said “more and more, we need flexible solutions.”
He said that as they invest in new technology, ARBURG focuses on how adaptable it can be to different operations.
“When it comes to automation, it’s not just one size fits all.”
Baumann
“When it comes to automation, it’s not just one size fits all,” Baumann said.
“Break it down and really adapt to your needs and work with the supplier.
“Flexibility in automation is one key thing that we see.”
Important Investments
Kellogg added that investing in digital transformation and using AI effectively will be a “huge boom for manufacturing.”
“I think about investments in our business,” she said. “I can build a new building—I absolutely need to spend maybe an equal amount of time and money on our digital infrastructure.”
She said that investment includes improving the skills of their workforce.
“How can we make a low-skill job into a high-skill job?”
Hubbard-Hall’s Molly Kellogg
“How can we make a low-skill job into a high-skill job?” she asked.
In the end, as manufacturers navigate new technologies and shifting policies that impact their business, Minami said it all comes down to talent.
“That’s my number one focus always,” he said.
“If you have the right team, you’re giving them the proper training, the right workplace culture and helping folks to be able to continue on in their careers—if you do those things, you focus on the basics, your business is going to be okay.”
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