The Middletown Press (Middletown, CT)
STATE’S EXPORTS REBOUND, BUT STILL BEHIND
After plunging during the first year of the COVID-19 pandemic, Connecticut’s exports rebounded last year. But the state has more work ahead to return to its prepandemic output.
While Connecticut manufacturers have faced limited exposure to the fallout from Russia’s invasion of Ukraine, they are grappling with many other challenges including inflation, supply-chain disruptions and worker shortages — obstacles that have contributed to the state’s exports recovery lagging the national comeback. At the same time, the state needs to develop a more cogent long-term strategy to fulfill its potential as a player in the international economy, according to some experts.
“Connecticut hasn’t quite kept up with the pace of other states,” Stephen Coelen, managing partner at WISERTrade, a supplier of data on international trade flows, said in an interview. “What I believe is that Connecticut needs to develop a strategic plan for the industries that we can grow in. What it needs to do is figure out where it can grow faster and more persistently.”
Dealing with disruption
In the nearly three months since the start of the Russian invasion of Ukraine, a number of the state’s largest manufacturers have curtailed their operations in Russia. The likes of Stanley Black & Decker, Otis Worldwide and Terex are part of a global wave of companies that have reduced their business in the country.
“We’re disheartened to see the escalation of the crisis in Ukraine,” Judy Marks, CEO, president and chairwoman of Farmington-based Otis, which manufactures and services elevators, escalators and moving walkways, said on an April 25 earnings call. “We have growing concerns about the long-term sustainability of Otis’ operations in Russia, especially with mounting regulations and supply chain disruptions. As a result, we are motivated to find solutions and explore alternatives for our Russia business that are in the best interest of all of our stakeholders.”
The Connecticut-based manufacturers that have pulled back in Russia generally only derived a small percentage of their revenues from the country. Similarly, many smaller manufacturers in the state did little to no business in Russia, a trend that correlates with companies’ longstanding concerns about the deterioration of the rule of law under President Vladimir Putin.
Stamford-based Goodway Technologies, a manufacturer of industrial-maintenance products, last year generated about 15 percent of its revenues from exports — but it has done sporadic business in Russia and Ukraine in recent years. The company was named the 2022 exporter of the year for Connecticut and the New England region by the Small Business Administration, and it was one of the recipients last year of the President’s “E” Award for Exports from the Department of Commerce.
“Fortunately, we only had minimal impact from the invasion regarding direct sales to that region. However, the cloud of uncertainty for neighboring countries is undoubtedly something we must watch and plan around as necessary,” Goodway CEO and President Tim Kane said in an interview. “In particular, western Europe, which has always been a strong market
“In particular, western Europe, which has always been a strong market for Goodway, may well be challenged to remain unaffected. ... Overall, we remain confident that the significant growth we have experienced in the Middle East and the Asia-Pacific regions will offset any market reactions to the Russian aggression.”
Goodway CEO and President Tim Kane
for Goodway, may well be challenged to remain unaffected. Its vulnerability to energy dependency is challenged. Overall, we remain confident that the significant growth we have experienced in the Middle East and the Asia-Pacific regions will offset any market reactions to the Russian aggression.”
The war’s limited impact on Connecticut manufacturers reflects Russia last year ranking No. 27 among destinations for Connecticut commodity exports, with the state sending about $94 million of goods to the country, according to WISERTrade. Germany, the No. 1 destination in 2021, received about $2.4 billion of Connecticut exports.
Connecticut’s commodity exports decreased about 1.5 percent year over year in the first quarter of 2022. But given that Russia was not one of Connecticut’s top trading partners, Coelen said, “I don’t think that (the war) would have had the effect of causing it down to be down from 2021 to 2022.”
A rebound`in 2021, but challenges persist
In 2021, Connecticut’s commodity exports totaled about $14.6 billion, rising 5 percent from 2020, according to WISERTrade. The aerospace industry again ranked as the leading source of the state’s exports — underpinned by powerhouses such as helicopter maker Sikorsky and aircraft engine manufacturer Pratt & Whitney.
Exports had plunged 15 percent in 2020, as commodities trade dropped across the board during the first year of the pandemic. Reflecting the extent of the disruption, Connecticut’s exports in 2021 still trailed by 10 percent their 2019 total of about $16.2 billion.
“The state’s aerospace sector was particularly hard hit during the past two years of the pandemic,” Laura Jaworski, of the state Department of Economic and Community Development, wrote in an article
about the state’s exports that was published in the April edition of The Connecticut Economic Digest, which used WISERTrade data. “For example, although aircraft, spacecraft and parts thereof increased 3.51 percent between 2020 and 2021, the sector is still down 27.82 percent from pre-pandemic levels.”
Nationwide, commodity exports dropped 13 percent in 2020. They then bounced back with a 23 percent increase in 2021, totaling about $1.75 trillion. The
2021 output was 7 percent higher than in 2019.
The disparity between the pace last year of the national and Connecticut rebounds points to a need to develop a stronger longterm strategy for the state’s international trade, according to Coelen. Such planning, he said, should include an examination of how improvements at the state’s airports and seaports could make it easier and cheaper to move goods in and out of the state.
“I think that it is reasonable
for Connecticut to think about what it can do to develop a greater capacity to get products out of the state,” Coelen said. “I think that’s true throughout all of New England, but it seems to have a very significant effect in Connecticut.”
In the meantime, Connecticut manufacturers are contending with obstacles including inflation, supplychain disruptions and worker shortages. Statewide, manufacturing employment grew 4 percent between April 2021 and April 2022, according to the state Department of Labor — but many more hires are needed to meet the sector’s demand. In March, Connecticut had about 110,000 nonfarm job openings, compared with 91,000 in March 2021, according to the Bureau of Labor Statistics.
“We have more demand for Connecticut’s products, including those exported, than we are able to fulfill because of the labor shortage,” Chris DiPentima, chief executive officer and president of the Connecticut Business & industry Association, said in an email. “Lawmakers must implement policies that increase Connecticut’s workforce, such as recognizing out-of-state licenses, reducing the burden of occupational licensing requirements and making it a more affordable state for businesses.”
Goodway, which employs about 110, is one of the manufacturers grappling with some difficult-to-fill positions. But Kane still expects Goodway’s exports to keep growing — as highlighted by the company’s plan to open later this year sales offices in the areas of Düsseldorf, Germany and Dubai, United Arab Emirates.
“We’re excited because those offices will support further expansion of our exporting capabilities,” Kane said. “And all of these products are still going to be coming out of Connecticut.