The State of Manufacturing 2021

My emotions have been running high during this 75th anniversary year at HORST Engineering. It’s been a year of reflection as we struggle to overcome the effects of the Covid-19 pandemic and recession. Despite the stress of the situation, I’ve remained incredibly optimistic about our business and the future of manufacturing in Connecticut. Immense pride drives us to persevere through one of the best times, and one of the worst times in our history. Over the last five years, there has been renewed interest in supporting local manufacturers, but some momentum has been lost during the pandemic. So, at the start of Manufacturing Month, it is important that I share the message that we need policy makers and other advocates to redouble their efforts so that manufacturers recover from the pandemic slowdown, and thrive again.

Growing up around this family business, I never thought that I would be leading our company towards a diamond anniversary. In 1996 when we celebrated our 50th, I organized a modest celebration, but as business careers go, I was just a rookie with a lot to learn. I was less than a year into my “full time” career when we hit that milestone, and I had no idea what I was in for. We were slowly clawing back from that awful early 1990’s recession that changed the aerospace manufacturing economy forever. The fall of the Berlin Wall, and end of the Cold War triggered a massive wave of downsizing and consolidation among the big defense manufacturers. The large customers made a strategic shift to outsource most of their part production. 

The aerospace manufacturing supply chain is made of thousands of small businesses. Those that hung in there were poised for growth. 

Long lead times and deep backlogs are the main reason why aerospace and other advanced manufacturing businesses are often last into a recession. It also means they usually are the last out. When I started my career at HORST Engineering, we were hurting. Thankfully, we stabilized and started to make a series of investments that set us on the right path. Over the last 25 years, our growth has come in cycles. As the military aerospace sector struggled to adjust, the commercial aerospace sector was beginning to take off. That’s right around the time that the world started to “get flat.” As the global economy recovered, and low cost airlines emerged, air travel became more affordable and a travel boom ensued. 

Those that innovated, embraced the use of computer technology, and leveraged the beginning of the Internet era, made the leap from old-school manufacturing to advanced manufacturing. Our company could no longer compete in the wide ranging markets (i.e. typewriter components, hardware, machines, etc.) that we had supplied parts to in the past, but with aerospace and a few other high technology industries, we were able to reconfigure our enterprise to do the high mix/low volume, precision products that are critical to Connecticut’s success. 

The cycles continued and our business rode the waves. Growth was interrupted in September 2001 when the terrorist attacks on 9/11 dealt another blow to the aerospace industry. In the period that followed, passenger air travel struggled to recover, while defense industries returned to the fore. We adjusted our approach and persevered; a common theme in our history.  Security became paramount and with the necessary changes that were implemented, commercial aviation soared again. 

In 2008, it took a global financial crisis and a Great Recession to stop the growth. At HORST Engineering, we didn’t bottom out until 2010, and then it took several years to recover from the economic meltdown. Another period of intense innovation, technology investment, and renewed interest in American manufacturing followed. The high cost of energy drove new aircraft programs geared towards fuel efficiency and improved reliability. 

As a supplier, if you kept pace, you were rewarded with more business even as high precision work went offshore. Our family business has never made “cheap crap” and we never will. Our Core Purpose is to “help people fly safely” and whether that is taken literally when we make critical “flight safety” fasteners for jet engines or metaphorically when we do similarly close tolerance work for our non-aerospace customers. 

One of the special aspects of aerospace technology is the trickle-down effect. Aerospace is literally “rocket science” and the knowledge gained benefits so many other industries. HORST Engineering’s capabilities have been honed by our aerospace work. We are also part of a network of suppliers. That ecosystem is vital to the success of manufacturing in Connecticut and throughout New England. We have one of the highest concentrations of high tech suppliers in the world. Within a short distance, we can reach other suppliers who specialize in heat treatment, coatings, testing, and other special processes. We count on them, and they count on us. Some of our longstanding suppliers have done business with us for more than 60 years. These connections are what make our supply chain so deep, and so amazing. 

When you measure success in financial terms, we had a heck of a run between 2013 and the first quarter of 2020. Over the years, we have tried a lot of different things in an effort to grow and diversify. This has included prior expansions and acquisitions. 2019 was a “banner year” and we reminded everyone on Team HORST what that looks like. After sharing the success, we launched our biggest project in company history with the acquisition of a large, but blighted building in our “hometown” of East Hartford. We knew that the aerospace super-cycle was getting old but we had prepared for a downturn. 

On the commercial side of our industry, a duopoly exists and one of the two companies at the top was really struggling. So, when 2020 kicked off, we were literally bracing ourselves for what might come. The good news is that we had built a strong balance sheet and our past history of reinvestment gave us the protection that we thought we needed to ride out another down cycle period while still executing a construction project and move. 

This has been quite a downturn. When we built our 2020 business plan, “pandemic” wasn’t one of the threats that we listed. I am proud that we were quick to react, even quicker than most companies. Our first Covid-19 Task Force meeting was on March 16th, 2020. I was following the news coming out of Asia and was aware that the Covid-19 virus was cause for concern, but how could you predict how bad this would be? Throughout 2020, we worked very hard to keep our people safe. We were an essential business and as a manufacturer, we had a built in advantage because “safety” is part of our everyday habits. 

Things got worse as the year progressed. The speed of the downturn was quicker than past cycles and even as businesses that are part of the “stay-at-home” economy have flourished, the transportation and hospitality sectors have languished. We aren’t guessing when permanent improvements will kick in, but we are optimistic that we will grow again. In the meantime, we completed our renovation, executed a huge move, made a difficult decision to consolidate our Massachusetts operations, and increased our focus on lean enterprise. You don’t get opportunities like this too many times in your career. I’ve been saying that we are a “75 year-old startup.” We have the benefit of an incredible legacy and we are now in a state-of-the-art factory. 

Committing to an expansion plan in East Hartford, Connecticut in the midst of the doldrums is a bold endeavor, but we are making it through and poised for an upturn. Many have questioned why we would pour so much money into a project in a high cost location. I wondered too, but when I did the deep thinking required before initiating the investment, I determined that advanced manufacturing was here to stay. Connecticut has a lot of issues, and in my younger idealist days, I thought that I could single-handedly change the politics, the negative vibe, and the economy. 

I’ve wizened and realized that there is less in my control, but that I can still make a difference. We took a 50 year-old dilapidated building and transformed it. It’s incredible. Over the last two and a half years, we have gotten much-appreciated support from our town and the state. Even the federal government stepped up and we have used the contributed resources as intended. The combination of outside support with our own savings were vital to the success of this project.

Our employees, suppliers, advisors, and customers all had to deal with the same circumstances. We are getting through this and now that we are operating from our new factory, we are even more excited about the future. The technical schools are also regaining their footing. After some setbacks, Goodwin University, Asnuntuck Community College, Manchester Community College, and the other institutions who help train the next generation of talented manufacturing workers, are making progress again. Skills have always been a competitive advantage for the people of Connecticut. Job growth will return, and wages will grow. 

Productivity will offset inflation while improving quality. For many years, I spoke loudly about how “high tech” manufacturing was, and is. I argued that technology wasn’t video games and apps, but that technology was a rocket engine and a space suit. I always pointed out that HORST Engineering had parts on these life-changing products. I described manufacturing as clean and advanced even as our own factory was a step behind the standard that I desired. I envisioned a “dream factory” that would be the culmination of teamwork and success. 

As I walk across our new factory floor, one that you “can eat off” (just not in Covid times!), I recognize how far we have come. My grandfather, Horst Liebenstein, fled Germany in 1938, and that gives me a unique perspective. He immigrated at Ellis Island, he Americanized his name to Harry Livingston, and eventually made his way to Hartford, a thriving industrial center. He met his spouse, Sylvia, and they started a family. They then founded our company in the North End on Garden Street, just over a mile from the Connecticut River. The entire Connecticut River Valley is a corridor of manufacturing prowess. The Aerospace Component Manufacturers refer to it as “Aerospace Alley.” 

I grew up in this business with my father Stanley, Uncle Steven, and mother Adeline as mentors and guides. They took risks before me and added to the foundation that my grandfather built. With the help of many key employees, we have capitalized on the head start that our predecessors gave us. I have no idea what the future will bring, but we will be ready. As noted, we have gotten good support from many, including the State of Connecticut, but policy makers need to know that more should be done. Retirements and competition will require more investment in programs to develop manufacturing skills. My hope is that a reckoning in higher education will redirect more people to skills oriented programs that won’t leave them indebted and unhappy in their jobs. 

Doing business here doesn’t have to cost so much. Policy makers still need to moderate regulations and ease up on taxes. I’m worried about health care costs and about the impact of the pandemic on business travel. I’m worried about a lot of things, but we stayed in Connecticut, we are investing, and are diversifying here.

I want our story to inject a bit of joy. East Hartford, Connecticut, and New England may not reclaim past industrial glory, but that doesn’t mean they can’t be better. Lean enterprise is all about respect for people and continuous improvement. Manufacturers understand that more than most businesses.  Let’s build on that theme. I probably won’t be around in 75 years, but my kids should be. By then, they will have kids and grandkids of their own. One of the benefits of being the steward of a family business is that you are guaranteed to have a long-term mindset. 

You look back, and then you look ahead.

1 Response to “The State of Manufacturing 2021”

  1. 1 2021 Keene Pumpkin Cross | Life Adventures Trackback on 17 October 2021 at 8:50 pm

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

HORST Engineering Family of Companies

Cross Spikes™ by HORST Cycling

Follow me on Twitter



Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 442 other followers

%d bloggers like this: