If you live in Connecticut, it has been hard to ignore the challenges of this year’s budget process. Many of us in the business community have been critical of the legislative process and the outcome of legislation to raise taxes and other business costs. Pressure from the CBIA and businesses, including several large ones based in Connecticut, has resulted in Governor Dannel Malloy proposing a “roll back” of the legislation and a special legislative session to review the situation.
Two weeks ago, I had an op-ed published in the Hartford Business Journal. I’ve done several other interviews related to this matter and the manufacturing economy. Click here for the HBJ story on their site, but I also pasted in the op-ed.
This is the op-ed as published on 01 June 2015:
Manufacturing matters to Connecticut’s economy. With the right legislative action, we can attract new business, help existing firms expand here, and create good jobs. We just need to reduce risk.
Horst Engineering, the 69 year-old family business that I lead, recently closed our Mexican operations and is expanding precision machining and forming operations in Connecticut and Massachusetts. We see opportunities here but are keenly aware of the weaknesses and threats that could derail our growth. We decided to take the risk.
Connecticut needs to do more if it is going to gain from the expansion of the high value aerospace sector. The CBIA reported in the 2014 Survey of Connecticut Manufacturing Workforce Needs that manufacturing is the “single largest contributor to Connecticut’s gross state product.” The survey highlighted that 4,500 firms directly employ more than 161,000 people, which is 10% of all nonfarm jobs. Many of those firms are small businesses that are hiring and increasing wages and benefits. In addition to these human resource investments, many are investing in advanced manufacturing technologies, equipment, and facilities.
A recent Hartford Business Journal story cited a PricewaterhouseCoopers report ranking Connecticut last in “attractiveness for aerospace manufacturing.” These sorts of proclamations grab your attention, but the story points out that the report did not necessarily identify the “best places” for aerospace manufacturing. Statistics aside, Connecticut has a deep base of talented aerospace manufacturing companies, but is saddled with the highest operating costs in the country.
Several additional jobs are needed to support each manufacturing employee, and this beneficial compound effect is stronger during an expansion. Manufacturers in high precision industries rely heavily on an ecosystem of suppliers to produce complete products. New England is fortunate to have a large cluster of companies in this ecosystem, many along the Connecticut River Valley.
The Aerospace Components Manufacturers (ACM) and Connecticut Tooling & Industry Association (CTMA) are two industry groups that exhibit the strength of our ecosystem. These peer networks are built on collaboration, education, and networking. They should be fostered.
In Mexico, CNC machining and manufacturing engineering are sought after careers. Recently, Mexico has run into the same challenge that has dogged Connecticut for years. There aren’t enough skilled workers in the pipeline to satisfy the current needs of industry. With the right technology and lean enterprise, we can compete with places like Mexico – if we invest in education and training needed by Connecticut companies.
Connecticut’s manufacturing workforce is accustomed to a high value mix of low volume products, but the availability of those skills is tighter than ever. Connecticut faces huge challenges as a result of the high cost of doing business in our state. Yet the headlines are disheartening. Why would a legislature risk derailing a manufacturing recovery by hiking taxes, increasing mandates, and adding to unsustainable levels of government spending?
Over the next 10 years, Connecticut’s manufacturers will battle an additional drain as another generation of skilled labor moves towards retirement. If Connecticut is to retain the workers it has and capitalize on its strengths, then, it will have to wake up to the fact that industries like aerospace are growing at a rapid rate in South Carolina, Georgia, Alabama, and Florida, where these jobs are desired. According to the PwC survey, several of those states are in the top 10 most attractive.
Our legislators and governor should recognize how important manufacturing is to our economy. They should be friendlier to all businesses, reduce the cost of doing business, increase support for technical education, and allow entrepreneurs to innovate. Despite a harsh economic climate, Connecticut’s businesses have persevered, but that resilience is being tested again.
Highlighting the current strength of the aerospace sector, it is worth noting that Connecticut is known worldwide for its supply chain. An unprecedented wave of growth in commercial aviation is creating opportunities for the customers that many Connecticut companies depend on. If you don’t provide water and sunlight to a flower, it won’t grow. Sadly, our politicians are doing the opposite of what is needed. Their harmful bills and policies are like a man-made drought with shade, starving plants of another type, plants which should be a critical engine of our economy.
So if manufacturing is going to continue to matter to a state that has depended on it for a long time, then all stakeholders should revisit the weaknesses and threats that are a disincentive for manufacturers to reinvest in our home state.
Horst Engineering has taken a big risk by closing in Mexico to expand in New England. Let’s hope our legislature can reduce that risk and increase Connecticut’s desirability so all types of businesses will look to our state as that right place to expand, grow and prosper.