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Biting the Hand That
Feeds Us?
Study says state ‘unfriendly' to manufacturers
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Business New Haven
11/17/1997
By: Linda Mele
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Connecticut is not a manufacturing-friendly state, according to a study commissioned and released this month by the Manufacturing Alliance of Connecticut (MAC), the largest manufacturing trade association in the state.
The study, which ranked 50 states in 13 categories, ranked the Nutmeg State 43rd overall.
“The general findings of this analysis indicate that Connecticut's manufacturing environment is highly uncompetitive given the most recent data available...indicating that the current environment is not conducive to statewide manufacturing expansion,” the report says.
According to MAC Economic Development Committee chairman Donald Janezic, who is also CFO of the Fairfield-based Bigelow Tea, the report is not “a one-sided, self-serving document.
“We had the input and support of a number of notable Connecticut economists and we believe the final result is a meaningful measurement of the state of Connecticut's manufacturing industry as compared to other states,” says Janezic.
Though the report gives an overall negative ranking to the state, the document may help manufacturers improve where other states excel, Janezic says.
All the news isn't bad because the state ranks first overall in the ratio of commercial and industrial loans as a percentage of total loans (36.6 percent), fourth in elementary and secondary school expenditures per pupil ($8,270), eighth in average weekly unemployment benefits as a percentage of per-capita wages (64.3 percent), eighth in total industry R&D expenditures per capita ($724), and ninth in manufacturing productivity as calculated by output per production worker ($118,397).
But the state “dramatically under-performed” in other areas, including dead last in employer-paid health expenditures per worker ($3,758), 49th in state and local taxes per capita ($4,618), 47th in state corporate income taxes per capita ($213), and 46th in average weekly workers compensation temporary disability payments ($656).
Connecticut also ranked 47th overall in the cost of electricity for industrial users ($24.30 per kilowatt hour), 36th in manufacturing employment growth (a 1.31 percent decrease from 1995 to '96), 18th in annual manufacturing wages as a percentage of total wages (26.2 percent), and 16th in terms of manufactured export per capita ($2,152 in 1996).
Janezic says he wasn't surprised the state had a poor showing, but he was surprised it ranked so low.
“Our evolution away from a manufacturing to a service economy was precipitated by the decline in defense spending and the high cost of labor, land, utilities and benefit expenses,” Janezic says,
“Without making products here and selling them outside Connecticut,” observes Janezic, “we can't import wealth and the economy cannot grow.”
Janezic says that although it's impractical to expect that the state will return to a predominantly manufacturing/industrial economy, “We don't want to lose any more ground in the years to come. We must stop the bleeding and not give manufacturers another reason to leave the state,” he says.
Chris Cooper of the state's Department of Economic & Community Development says Gov. John G. Rowland recognized the state had to do more to support all kinds of businesses when he was elected.
“He saw the onerous things businesses had to contend with and has been working to relieve some of those burdens,” Cooper says. (See related story, page 1.)
Cooper cites workers compensation reform, which has reduced the cost to by 33 percent since 1993, and the reduction of the corporate tax which will fall over four years from 11.75 to 7.5 percent.
“Last year, for the first time in 13 years, the state saw an increase in manufacturing employment,” Cooper says. “It was only 0.25 percent, but it was an increase.”
According to Cooper, through the 1970s one of every two employees in Connecticut was employed in a manufacturing environment. Today that figure is only one in six - but the number of manufacturers grew by ten percent from 1975 to 1994. The value of the state's manufacturing shipments today is $44 billion, which accounts for 40 percent of the gross state product, Cooper says.
“Technology let manufacturers find less labor-intensive ways to make things so there are fewer manufacturing employees, but more businesses,” Cooper says.
“We agree with the MAC study in that there's a lot that still needs to be done,” Cooper says. “But manufacturing in Connecticut is certainly not dead.”
For a copy of the report, call 203-596-1900.
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