Manufacturing sector: Uncertain future, but state vows expanding efforts at support
Connecticut”™s manufacturing sector has understandably taken its share of blows during the Covid-19 pandemic ”“ but its resilience and support from the state government will help see it through.
That was the main theme at “Made in Connecticut: 2020 Manufacturing Summit,” held virtually on Oct. 23 under the auspices of the CBIA, CONNSTEP and ReadyCT, as well as the “2020 Manufacturing Report,” produced by those three interconnected groups, which was released simultaneously.
According to the report, there are 3,965 manufacturers in the state, employing 155,900 workers who earn an average annual salary of $98,150 for a total of $17.3 billion in total compensation. State corporate taxes paid in 2019 were $144.5 million, with another $223.5 million paid in state sales and use taxes.
The figures show mostly improvement from the groups”™ 2019 report, which counted 4,011 manufacturers employing 160,900 workers; an average annual wage of $96,279 for a total of $14.9 billion in total compensation; and $123 in state corporate taxes and $201.7 million in state sales and use taxes paid in 2018.
However, the latest figures predate the pandemic, whose full effects are still being measured.
Even so, according to a July 8-29 survey included in the report, 56% of the state”™s manufacturers were forced to lay off, furlough, or reduce employee hours in the face of Covid-19, while 46% expect to return a profit in 2020 — down 30 percentage points from 2019. Just 18% of respondents said their businesses were growing, while 82% said they were either contracting or holding steady.
Asked about their outlook for the Connecticut economy, 60% expect a contraction over the next 12 months, including 20% who project a strong decline in growth. Only 10% see the state”™s economy growing in the next year and 30% expect economic conditions to remain static.
On the national level, 32% expect growth, 46% a contraction, and 23% static conditions.
Regarding the Connecticut General Assembly, 51% disapproved of its handling of the economy and jobs creation, versus 19% approving and 30% being classified as neutral. 43% said that reducing state spending and pension reform should be lawmakers”™ top priority in 2021, followed by lower taxes/reforms (27%) and business-friendly practices (13%).
State government to the rescue?
At the Summit itself, Department of Economic and Community Development (DECD) Commissioner David Lehman said the state is continuing to follow Gov. Ned Lamont”™s directive to simplify the ways in which companies deal with the government, pointing to the launch of the state”™s “business one-stop” portal, business.ct.gov., and the recognition of the “need to provide tax certainty” to companies already here and those who may be considering a relocation to Connecticut.
Lehman moderated the “State Manufacturing Initiatives” panel, whose members included Colin Cooper, roughly one year into his tenure as the state”™s first-ever chief manufacturing officer, and Kelli-Marie Vallieres, who in July was named executive director of the newly-created Connecticut Workforce Development Unit.
Cooper said there is a “heightened sense of awareness about the importance of manufacturing in the state government,” with a focus on creating careers rather than just jobs. He also said he was “pleasantly surprised” by the level of cooperation between stakeholders like Lehman, Vallieres, Connecticut COO Josh Geballe, and others. None of them operate as a “pre-existing fiefdom,” he said. “They”™re just looking to get results.”
Vallieres echoed that sentiment, saying that the various regionalized and siloed manufacturing alliances spread across the state are now sharing information and ideas, with the result that manufacturers now are “talking as one voice” more often.
Also on the panel was Connecticut Department of Labor Commissioner Kurt Westby, who said the state is doubling down on educational outreach at the K-12 level, including career awareness and workforce development in manufacturing. He also touted the state”™s Shared Work program, which can help businesses avoid layoffs during the Covid-19 pandemic; it was expanded on Oct. 5.
Before the pandemic, Westby said, “maybe 300 employers a year took advantage of the program.” So far this year, almost 3,000 companies representing almost 24,000 workers have done so.
Cooper sounded an alarm about the so-called “silver tsunami” that already is affecting the manufacturing sector. Noting that about 35% of the workforce is aged 55 and over, he said that, even if retirees are immediately replaced on a 1:1 basis, the state will still face an “experience” gap, which “we can”™t afford” to let happen.
Vallieres said that systematic changes are still needed in government to accommodate present needs and to adequately prepare for “Industry 4.0,” the ongoing automation of traditional manufacturing and industrial practices.
The new reality for manufacturing at large will be one that is “lean, clean and green,” according to IT Direct President and CEO Ari Santiago, who moderated a panel discussion about the new report.
Capitalizing on the realities of Industry 4.0 will require a realization that there is “a fight for top talent” in manufacturing right now, said Graham Robinson, SVP & President, Stanley Industrial, at Stanley Black & Decker. With demand “through the roof,” he said, employers need to be more flexible, “not in terms of talent but with work arrangements.” One example of the latter would be to supply not only employees, but also their families, with adequate PPE during the pandemic in order to more fully demonstrate empathy with workers.
Brian Montanari, president and CEO of HABCO Industries in Glastonbury, said the Connecticut Workforce Development Unit has been especially helpful in helping his firm compete with others, in part by a philosophical approach.
“Our competitors include our suppliers,” he said, “and competing with larger companies drives our costs up. We have to sell the benefits of working with a small business like ours.”
Robinson further noted that companies need to “move with speed and urgency” to remain competitive during the pandemic. “Don”™t let a good crisis go to waste,” he advised.
In prefatory remarks, CBIA President and CEO Chris DiPentima said that manufacturers being deemed “essential businesses” from the start of the pandemic “could not have been more true.” He asked attendees to sign the organization”™s “Rebuilding Connecticut Pledge,” as a means of “supporting a package of commonsense ideas that provide the revenue to support essential state services while creating a positive climate for growing jobs and driving critical investments in infrastructure and our cities.”