Man­u­fac­tur­ing could help kick state’s post-re­ces­sion malaise

Stamford Advocate (Sunday) - - Sunday Business - By Chris Bosak

The de­fense and aerospace in­dus­tries may be the key to lead­ing Con­necti­cut out of its job-growth dol­drums, ac­cord­ing to a Fitch Rat­ings re­view of the 2019 De­fense Au­tho­riza­tion Act.

The 2019 de­fense bud­get in­cludes sev­eral bil­lion dol­lars for projects that will im­pact Con­necti­cut, in­clud­ing $10.6 bil­lion to pur­chase 77 F-35 Joint Strike Fight­ers. Con­necti­cut­based Pratt & Whit­ney, a sub­sidiary of United Tech­nolo­gies, is part of the part­ner­ship that makes the fight­ers.

The au­tho­riza­tions also in­clude bil­lion-dol­lar projects for Siko­rsky and Elec­tric Boat. Strat­ford-based Siko­rsky is a sub­sidiary of Lock­heed Martin and Elec­tric Boat of Gro­ton is a sub­sidiary of Gen­eral Dy­nam­ics.

“Con­necti­cut is such an in­te­gral part of de­fense, for the Navy’s plans in par­tic­u­lar,” said Nicholas Varone, Fitch’s as­so­ciate di­rec­tor for cor­po­rate rat­ings in U.S. aerospace and de­fense. “It’s an im­por­tant state when we talk about de­fense spend­ing.”

A re­port by the Con­necti­cut In­sti­tute for the 21st Cen­tury backs up Fitch Rat­ing’s con­clu­sions. “The Fu­ture of De­fense Work­force: How Can Con­necti­cut Pro­mote Growth and Re­ten­tion?” de­tails the strength of the de­fense in­dus­try in the state and the am­bi­tious hir­ing plans by the large com­pa­nies. Loren Dealy Mahler, a Mil­ford res­i­dent and se­nior fel­low with the In­sti­tute, pre­pared the re­port.

Elec­tric Boat plans to ex­pand its work­force in Con­necti­cut from 11,000 to 18,000 by 2030. The Navy has hinted at in­creas­ing the num­bers of ships and sub­marines it will or­der.

“The nu­clear sub­ma­rine will be a fo­cal point of the Navy for a num­ber of years,” Varone said. “At least as far as we can see on the hori­zon.”

Pratt & Whit­ney, ac­cord­ing to the re­port, ex­pects to dou­ble pro­duc­tion by 2020 and again by 2027. It plans to hire 8,000 work­ers in the next 10 years.

The good news about the de­fense au­tho­riza­tions go well be­yond the big cor­po­ra­tions in the state. Smaller man­u­fac­tur­ers sprin­kled through­out the state make up much of the sup­ply chain for the large com­pa­nies. Pratt & Whit­ney, ac­cord­ing to the re­port, gets 85 per­cent of its en­gine parts from out­side sup­pli­ers. Elec­tric Boat has about 450 sup­pli­ers in the state and doled out $485 mil­lion in con­tracts to Con­necti­cut man­u­fac­tur­ers in the last five years.

“The sup­ply base is strong in Con­necti­cut with a sig­nif­i­cant num­ber of sup­pli­ers to sup­port de­fense,” David Petu, Fitch’s di­rec­tor of cor­po­rate rat­ings for U.S. aerospace and de­fense, said.

Find­ing the work­ers

Many man­u­fac­tur­ers across the state are find­ing out that it’s one thing to need to hire em­ploy­ees, but some­thing else to find skilled work­ers to fill those po­si­tions. An ag­ing work­force and lin­ger­ing per­cep­tions about man­u­fac­tur­ing jobs be­ing dirty, low-paid and low-skilled have cre­ated a short­fall of work­ers for the in­dus­try.

“That’s a con­cern for the in­dus­try as a whole and in Con­necti­cut,” Petu said.

The state has ad­dressed the sit­u­a­tion by cre­at­ing pro­grams in com­mu­nity col­leges and high schools that train work­ers for ad­vanced man­u­fac­tur­ing jobs. The pro­grams have proven to be highly suc­cess­ful for the com­pa­nies look­ing for work­ers and the trainees seek­ing em­ploy­ment.

Joseph DeFeo, di­rec­tor of the Ad­vanced Man­u­fac­tur­ing Tech­nol­ogy Cen­ter at Nau­gatuck Val­ley Com­mu­nity Col­lege in Water­bury, said stu­dents have a 100 per­cent place­ment rate since the cen­ter was cre­ated in 2012.

“Man­u­fac­tur­ing is hot through­out the state and coun­try,” he said a re­cent man­u­fac­tur­ers round­table held in Dan­bury. “There are prob­a­bly more jobs than peo­ple to fill them. There are a lot of po­si­tions, but peo­ple need the right skills. At least at this point, you’re guar­an­teed a job com­ing from our pro­gram.”

Con­necti­cut is known to have a highly ed­u­cated and skilled work­force, but when it comes to man­u­fac­tur­ing, the skills of­ten do not match up. The state can­not af­ford a skills gap as it con­tin­ues to lag be­hind the re­gion and coun­try in terms of job re­cov­ery from the re­ces­sion, an­a­lysts say.

Con­necti­cut has re­cov­ered only 88.5 per­cent of the jobs lost dur­ing the re­ces­sion that started in 2008, ac­cord­ing to the state’s De­part­ment of La­bor. Much of that is due to gov­ern­men­tal cut­backs as the state’s pri­vate sec­tor has re­gained 113 per­cent of the jobs lost, but that still lags well be­hind that of the re­gion and the U.S.

Con­necti­cut has seen four con­sec­u­tive months of job gains and the de­fense in­dus­try may play a ma­jor role in con­tin­u­ing that mo­men­tum. Dealy Mahler, in her de­fense work­force re­port, sug­gested the state in­crease its sup­port of col­lege and high school train­ing pro­grams and in­crease the num­ber of man­u­fac­tur­ing in­struc­tors to in­clude re­tired or soon-to-re­tire work­ers.

The state rec­og­nizes the im­por­tance of the de­fense in­dus­try and has pro­vided mil­lions of dol­lars in in­cen­tives for the large com­pa­nies to stay in Con­necti­cut. In Septem­ber 2016, the state gave Siko­rsky $220 mil­lion in in­cen­tives to keep the he­li­copter man­u­fac­turer in Strat­ford. In 2014, the state pro­vided $400 mil­lion in state tax off­sets to United Tech­nol­ogy to keep Pratt & Whit­ney in Con­necti­cut. Also in 2014, Elec­tric Boat re­ceived a $10 mil­lion loan to ex­pand its fa­cil­ity.

Now board­ing

The com­mer­cial aerospace in­dus­try is jet­ting along as well, and Con­necti­cut is reap­ing ben­e­fits. Pratt & Whit­ney makes en­gines for the Air­bus A320 and that craft is fac­ing a large back­log and in­creased pro­duc­tion.

Petu said the com­mer­cial aerospace in­dus­try is ex­pected to re­main strong, bar­ring a global re­ces­sion that re­duces de­mand for air travel.

“You can’t dis­count the health of com­mer­cial aerospace — that’s a huge part of it,” he said. “Com­mer­cial avi­a­tion is very healthy. Aerospace is more cycli­cal than de­fense, but it is at its height of back­log and pro­duc­tion. We don’t ex­pect that to change in the near term.”

Hearst Con­necti­cut Me­dia file photo

A Siko­rsky UH-60M Black Hawk sits par­tially built on the line in the Mil­i­tary As­sem­bly Build­ing at Siko­rsky Air­craft in Strat­ford in 2008.

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