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Manufacturing Continues Steady Decline
Technology takes the place of people as globalization sends more manufacturing jobs abroad
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Business New Haven
1/6/2003
By: Melissa Nicefaro
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Manufacturers play a central role in Connecticut's economy. But according to the state's Department of Labor, it is becoming increasingly difficult for manufacturers to hold onto their employees in tough economic times.
Overall, the number of those in manufacturing jobs will continue to fall, reflecting a long-term trend, says John Tirinzonie, a state labor economist. He is working on a forecast of state employment through 2010 and says the state will lose several thousand jobs in the next seven years.
Falling employment numbers at the state's large manufacturers isn't necessarily a bad thing from an employer's perspective. It means one of two things may be happening, according to Tirinzonie: technology is taking the place of jobs, or manufacturing is being done for lower costs abroad.
As technology continues to advance, there is less for workers to do because machines are capable of doing correspondingly more. In turn, manufacturers need fewer workers to do the same amount of work. We've seen that over the past two decades. Manufacturing output hasn't changed much, but the number of workers has declined steadily.
In November 2002 (the last month for which figures are available), the state labor department reported that 236,900 were employed in manufacturing jobs. That number is 10,400 fewer - or 4.2 percent less - than in November 2001. Nine hundred manufacturing jobs were cut between October and November 2002.
New Haven manufacturing companies account for about 15 percent of the state's manufacturing employment total. In November 2002, 35,500 worked at manufacturing companies in New Haven, 1,100 fewer than in November 2001. Two hundred manufacturing jobs were gained between October and November 2002.
Manufacturing in Connecticut has also been affected by global competition. Many items are produced less expensively abroad as companies with headquarters in the United States have sent their manufacturing operations outside of the country. “We're so globally tied now,” Tirinzonie notes.
Overall, the manufacturing base has become more of a highly skilled base with fewer workers.
“Two-thirds of job opportunities in manufacturing are replacement,” Tirinzonie says. “You're dealing with a workforce of roughly 250,000 people working. So even if you do shrink by a little bit, you've still got a very large population of workers.”
Adds Tirinzonie: “You have to remember that the older part of our workforce, in terms of median age, is in the manufacturing sector. So there's a constant need because of the retirements there.”
Many smaller manufacturing operations are home-based and won't see the same cost-saving benefits to operating abroad. It is these smaller manufacturers who actually are facing the greatest need for skilled workers. Larger manufacturers are affected by global competition.
Smaller employers would like to see more from schools in the way of promotion and course offerings, and in response the state's vocational schools are beefing up their program offerings. Milford's Platt Regional Vocational Tech School, for example, offers a broad course - Manufacturing Technology - that trains for jobs such as toolmakers, machinist, precision metalworkers, tool room and plant maintenance.
The Regional Workforce Development Board (RWDB) of New Haven also forecasts challenging times ahead for manufacturers. The RWDB offers a career-training course in manufacturing as a response to the needs of manufacturers.
The RWDB program integrates academic, technical and employability skills training, enhanced by internships in local manufacturing companies. Graduates are now employed in full-time jobs as machine operators, assemblers and inspectors.
“Despite the fact that the larger companies are getting smaller,” Tirinzonie says, “the small companies are holding their own or adding new workers. They're just not adding at the number the larger companies are losing.”
A Half-Full Glass
The “2002 Survey of Connecticut Manufacturers” by the Connecticut Business & Industry Association (CBIA) and the accounting firm of Blum Shapiro shows an optimistic view from manufacturers, despite a difficult overall economy.
The early 2002 survey of 419 manufacturers (81 percent of which employ 50 or fewer people) showed that most manufacturers introduced new products in 2001 and more than 60 percent intended to introduce new products in 2002. A substantial majority of companies upgraded their information systems, according to the survey, and more than three-quarters of respondents acquired equipment during the recession.
“The increased investment by manufacturers shows just how vibrant the industry really is,” says Kenneth O. Decko, CBIA president and CEO. “Considering the economic challenges the industry faced [in 2001] and the known challenges that lie ahead, manufacturers are doing whatever it takes to create profitable businesses.”
Respondents say that doing business in Connecticut presents formidable and complex challenges, involving such broad public-policy issues as taxes, transportation, health care costs, workers' compensation and energy.
“Rising health-care costs are causing the most concern, as expressed by nearly two-thirds of executives,” says Carl R. Johnson, managing partner, Blum Shapiro. “Payroll costs, taxes and workers compensation costs are also significant concerns.”
Manufacturers continued to have difficulty in finding qualified workers, the survey found. Skilled production workers, machinists, and toolmakers and designers are especially hard to find.
“It is significant that manufacturers are actually hiring,” says John M. Kirschner, partner and director of Blum Shapiro's manufacturing group. He added that 79 percent predicted employment increases in 2003.
“One of the most significant findings of this survey is the importance and scope of international trade in the stability and growth of Connecticut manufacturing,” Johnson adds. “Businesses have been trading from Connecticut for centuries. But today's competitive pressures, coupled with better global communication, are leading to increased activity in the global economy.”
“The growth of international trade is good for Connecticut's economy,” Decko notes. “For every $1 billion in exports of manufactured goods, an estimated 19,000 jobs are created.”
“Vibrant manufacturers are vital to the health of our state's economy,” Decko adds. “We need to keep working to provide an overall business climate in which manufacturers choose to invest in their Connecticut companies, expand their operations here, use suppliers from Connecticut and hire our citizens.”
Impact of Connecticut's Manufacturers
Each $1 million increase in manufacturing sales results in:
• 13 jobs in Connecticut
• $682,000 in increased Connecticut personal income
• $64,000 in increased Connecticut's tax revenue
• $624,000 in increased sales in all other Connecticut industries
Manufacturing in the Connecticut Economy
Based on the most recent available data, the manufacturing sector in Connecticut encompasses:
• More than 5,600 businesses
• Employing 240,000 workers
• Who get paid more than $10 billion per year
• While producing more than $27 billion in added value
• Through total industry sales of $45 billion
Manufacturing in Connecticut Accounts For:
• 15.5 percent of all private employment
• 17.6 percent of all real GSP
• 17.9 percent of all private sector payroll
• 6.1 percent of all private sector businesses
• 26.2 percent of total value of shipments
• 95.1 percent of all merchandise exports
• 26.3 percent of state corporate income tax ($153.9 million annually)
• 5.5 percent of state sales and use tax ($169.7 million)
• More than $200 million of municipal taxes paid
• 69.3 percent of all new patents issued
• 18.4 percent of Connecticut personal income tax paid
Source: Manufacturing Alliance of Connecticut
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