Despite gains, poor marks for Connecticut manufacturing

Strengths that have led to a rebound in Connecticut manufacturing were countered by familiar weaknesses as the state received a “C” grade for the industry, according to the 2018 Manufacturing and Logistics Report Card.

The report, compiled by the Ball State Center for Business and Economic Research, or CBER, and Conexus Indiana, graded all 50 states on nine aspects of manufacturing and averaged the grades for an overall score. Connecticut scored high in global reach, productivity and innovation, and human capital, but received poor grades in expected liability gap, tax climate, logistics industry health and sector diversification.

“If you have high taxes, you better have good human capital and there is evidence of that in Connecticut,” said CBER director and professor Michael Hicks.

Connecticut received a “C+” last year and the overall drop was mainly due to declines in liability gap and productivity.

Hicks said the sector diversification “D” grade is not as bad as it appears because Connecticut is top-heavy in high-tech and ad- vanced manufacturing as opposed to specializing in traditional manufacturing or in an industry that is declining.

“You’re not canning or operating slaughter houses there,” Hicks said. “It’s one of the few states that did poorly (in diversity), but I wouldn’t worry about.”

Hicks co-authored the report with Srikant Devaraj.

Having a high level of advanced manufacturing positions may give Connecticut a leg up on other states, but finding workers to fill all the jobs has proven to be a challenge.

“There is a tremendous gap between the needs of the industry and the skills of the workforce,” said Joseph DeFeo, director of the Advanced Manufacturing Technology Center at Naugatuck

Valley Community College. “For many years, we have not trained enough people in the art of machining. Now that there has been a reshoring of work to the United States, manufacturing companies are scrambling to develop the talent they need to be successful.”

DeFeo said the state is experiencing a renaissance in manufacturing and those with the skills are highly sought after in the market. He said there were recently 22,000 job openings for manufacturers in Connecticut, making it the fourth-largest hiring sector in the state.

NVCC offers training in skills such as blueprint reading, manufacturing math and quality control, as well as operating lathes, mills, grinders and computer-numerated control machines.

DeFeo said NVCC has a 100 percent job placement rate in manufacturing positions. The college’s programs in Waterbury are at full capacity and the center expanded its training program for incumbent workers into Danbury’s Henry

Abbott Technical High School in 2015. NVCC’s College Connections program provides high school juniors and seniors who are not likely to go to college a path to earn an advanced manufacturing certificate.

Hicks said Connecticut is a “leading state” in advanced manufacturing with a productive workforce, highly skilled labor pool and proximity to universities.

Similar studies

Hicks has done the study every year since 2009. As a point of comparison, two separate but similar studies were done by Connecticut-based organizations in recent years. The Connecticut Business & Industry Association, led by economist Pete Gioia, released “Connecticut Manufacturing: Building on the Past. Creating Our Future.” Also, DataCore, led by economist Don Klepper-Smith, performed a 50state analysis of manufacturing, a report Klepper-Smith calls one of his best works.

In Klepper-Smith’s mathematical rankings, Connecticut came out 30th overall in manufacturing. The state scored in the top 10 in productivity, exports per capita and technology. Familiar negatives, however, dragged down the overall ranking the state was in the bottom 10 in electricity costs, taxes, and state and local debt.

Klepper-Smith said the Ball State study’s grading of Connecticut is “about right.” However, he gives manufacturers in the state kudos for their efforts considering the barriers Connecticut economic policy presents.

“I’d give manufacturers an ‘A+’ in terms of what they’ve had to do in dealing with the state,” he said. “We’ve created an environment that’s not conducive to business growth. We’ve created an environment of uncertainty and if there’s one thing business planners don’t like, it’s uncertainty.”

Hicks piled on by saying the state’s unfunded liabilities represent another deterrent to businesses considering moving to Connecticut. According to the conservative-leaning American Legislative Exchange Council, Connecticut has the most underfunded pensions in the nation.

“That’s viewed by a business as a future tax,” Hicks said. “It’s a built-in, surprise tax waiting around the corner unless the General Assembly does something.”

Vital sector

It would behoove Connecticut to make the business environment more friendly for manufacturers, and not with programs that “pick winners and losers,” Klepper-Smith said. Manufacturing, he said, has a job multiplier effect of 1.6.

“Manufacturing isn’t just an issue for the manufacturing sector,” he said. “It’s an issue for all of us.”

With companies fleeing the state for more friendly business climates and machines doing work that people used to, the number of manufacturing jobs has decreased dramatically over the past several decades. Klepper-Smith said there are 160,000 manufacturing jobs in the state as opposed to nearly 500,000 in the late 1960s.

Productivity, however, has increased even as the raw job numbers have declined.

“We’re getting far more production than 50 years ago,” Klepper-Smith said. “People are working harder and technology is working harder.”