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On
the Road Again
Manufacturing in Connecticut is on the rebound, but still restricted by lack of workers
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Business New Haven
5/4/1999
By: Linda Mele
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Like Mark Twain, the reports of the death of manufacturing in Connecticut have been greatly exaggerated. But we're not out of the woods yet.
While manufacturers and a number of associations are working hard to effect a turnaround, they still have a long way to go despite some successes.
In a Manufacturing Competitiveness Index report released last October by the Manufacturing Alliance of Connecticut Inc., the state ranked 43rd overall out of the 50 states in its “friendliness” to manufacturers.
Connecticut was low on the totem poll in health-care costs, the amount of state, local and corporate taxes paid, the cost of workers compensation, electricity costs and manufacturing employment growth.
Based on the report, coordinated and prepared by the Middletown-based DataCore Partners Inc., MAC developed a legislative agenda for this year that addresses many of the issues highlighted in the report.
In addition, the state targeted manufacturing as one of the industry groups that holds “the key to Connecticut's economic future” in its “Industry Cluster Initiative,” according to Department of Economic & Community Development (DECD) Commissioner James Abromaitis.
All the experts agree that employment growth is the most important issue that needs to be addressed and, according to the results of a recent survey conducted by MAC, the state's manufacturers could add 12,000 jobs to the workforce right now if trained employees were available to hire.
Sent to 400 manufacturers statewide, the companies that responded represented 8,647 employees and, overall, say they could increase employment by 4.4 percent, or 381 jobs, if trained workers were available.
“If you apply that figure statewide, that's about 12,000 jobs,” says MAC Energy Counsel Jeff Gaudiosi. “That's an incredible amount of jobs that don't have to be vacant.”
Combine that figure with the fact that Connecticut's manufacturing workforce is aging - the average age reported by respondents is 40 - and you have a hurdle that, no matter what else everyone is doing to help the industry recover and grow, is a major stumbling block to manufacturing employment growth.
“Our workforce is getting older and we're not able to find trained employees to replace the ones who will be retiring,” says MAC board of directors chairman Tony Arcesi, president of Integra-Cast in New Britain.
“If we can't produce well-trained people soon, it's conceivable that the state's prized manufacturing workforce will be extinct in 20 years,” Arcesi says.
MAC executive director Frank Johnson says the manufacturing sector has proven that it can create jobs and state Department of Labor statistics confirm that.
In 1997, the manufacturing industry added 1,400 new workers, ending a 12-year streak of job losses, and added 900 jobs in January and another 100 in February of this year, according to the Connecticut Economic Digest.
“We have got to act now to increase the pool of skilled workers or that momentum will slip,” Johnson says.
In February, the DOL also reported that the average manufacturing production worker earned $630.20 per week for 42.9 hours ($14.69 and hour) in that month, a 5.4-percent increase over February 1997 Overall, manufacturing accounted for 17 percent of all employees in the state.
“Connecticut's employment outlook continues to improve with all industry sectors above their year-ago level,” says Salvatore DiPillo, labor statistics supervisor. “Particularly notable is the steady increase over the past year in manufacturing employment, which had been declining since 1984.”
Connecticut Business & Industry Association (CBIA) economist Peter Gioia says the shortage of appropriately trained skilled labor is probably the most striking limitation on business growth in Connecticut.
Johnson says one way to help solve the labor shortage is to develop a manufacturing curriculum for the state's vocational-technical and secondary schools.
“Despite the pressing need for manufacturing workers, only 400 [four percent] of the state's 11,000 voc-tech students are studying manufacturing,” Johnson says.
Several programs are currently addressing that issue.
The Precision Machining Training Program, which grew out of the MetroHartford Millennium Project, is a course designed to teach students some of the skills needed in manufacturing. The public-private partnership will train 120 students at several of the state's community-technical colleges.
In addition, an initiative to completely revamp the state's vocational-technical schools would devote at least one facility wholly to modern manufacturing training.
And, while the state's secondary schools are doing a good job preparing students for college, they aren't doing such a hot job working with those students who may not be interested in college, according to the experts.
MAC is calling on the state to create a “Rapid Response Task Force” to address the imbalance, according to Johnson, to help schools quickly adjust their curricula to provide a rapid infusion of workers into the manufacturing industry.
A second issue of major importance is the cost of doing business in Connecticut, Johnson says, and MAC has been aggressively addressing that, too.
One area of primary concern is electric utility deregulation.
On April 15, both the House (126-17) and Senate (27-7) approved a utility deregulation bill that would change the way electricity is sold in the state and allow out-of-state electric companies to compete with in-state providers for business.
If signed by Gov. John G. Rowland, the bill would reduce consumer electric bills for Connecticut Light & Power customers by about nine percent and for United Illuminating customers by approximately six percent. The difference in the savings is based on the fact that UI customers bills have already been reduced about four percent since 1996.
Large commercial and industrial customers like manufacturers would be able to “shop” for their power and most likely see substantially larger savings.
Johnson says the savings would also be realized by vendors, suppliers and the municipalities with which manufacturers do business. Those lower costs could be passed on to industry.
The state has also been working to reduce taxes manufacturers pay.
According to the MAC index report, Connecticut manufacturers pay an average of $1,540 and $102.17 more per capita for state and local taxes and corporate income taxes, respectively, than the U.S. average.
And, while the Rowland administration has implemented a program that would reduce the corporate tax rate from 11.75 percent to 7.5 percent by 2000 and state-level reforms have reduced workers compensation costs by 33 percent since 1993, the cost to Connecticut employers for health care is still the highest in the nation.
The national average per worker is $2,822, but Connecticut employers pay about $3,758 per worker - $936 more than the national average.
Fleet Bank Chief Economist Nicholas Perna, who worked on the index study, says in a state in which the overall cost to live and do business is expensive, the cost of medical care and other services will be proportionately high, too.
Perna suggests that the state might need to spend as much time studying health care restructuring as it has electric utility restructuring.
The good news is that neither the state nor its manufacturers are sitting around waiting for things to happen. Both groups are pursuing agendas that should help Connecticut's manufacturing industry achieve a turn-around.
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