Despite having thousands of open positions, Connecticut’s manufacturing industry has struggled to add jobs this year, hampering the state’s economic growth prospects.
In its latest jobs report, the state Labor Department said manufacturers lost 700 jobs in August despite “significant hiring” taking place in the industry.
The DOL blamed the decline in employment on companies’ inability to “keep up with retirements.”
This honest analysis should raise alarm bells for any policy makers or business leaders who have not taken the labor shortage seriously.
And the situation could get worse before it gets better: More than 35 percent of manufacturing workers are 55 or older, compared to just 27 percent economy-wide, according to the Connecticut Association of Business and Industry.
Meanwhile, 80 percent of Connecticut manufacturers say it’s difficult to find and keep workers, according to CBIA’s 2024 Connecticut Manufacturing Report, which was released earlier this month.
“Lack of available and skilled labor is the number one challenge to manufacturing industry growth.” Paul Lavoie, the state’s director of productionhe told me. “Most manufacturing companies have work to do and are looking for a workforce. It’s gotten a little easier, but it’s still a challenge. Simply put, there are not enough people to do the job.”
While other states are also facing shortages, Connecticut’s seems more significant. One of the state’s top selling points to employers is that we offer a highly skilled talent pool.
If we fail to do this for a key industry in the long term, companies will be forced to look elsewhere for workers.
In the first eight months of 2024, Connecticut added 14,800 total jobs, but the state’s manufacturing sector contracted during that time.
At the end of January, manufacturers in the state employed 158,400 people. That number fell to 157,800 workers at the end of August, according to the state Labor Department.
That is, fewer people than the industry employed before the pandemic.
In contrast, Connecticut manufacturing grew 11.2 percent in real GDP from the first quarter of 2019, signaling that the sector contributed more to the state’s economy despite failing to fill open positions, according to the data . Chris DiPentima, President and CEO of CBIA.
The industry boost is a boost to federal defense contracts, particularly for Electric Boat, which is set to shed thousands of jobs in the coming years as it ramps up production of attack submarines and ballistic missiles for the U.S. Navy.
Manufacturing jobs and output are important to the state because they provide key multiplier effects for the economy. For example, companies like EB and East Hartford jet engine manufacturer Pratt & Whitney provide work for hundreds of suppliers in the state.
Every manufacturing job creates five additional jobs elsewhere in the economy, according to CBIA, and the sector accounted for 10.2 percent of Connecticut’s GDP in 2023, or $34.55 billion.
Of course, other factors hindered the growth of the industry.
Economist Fred McKinney, co-founder of Connecticut-based economic consulting firm BJM Solutionspoints to the high costs of doing business in the state and the Northeast, which for decades sent manufacturing jobs to the South, China and other lower-cost areas.
Since 1990, the US has seen a 26% decline in manufacturing jobs; Connecticut lost more than 48 percent of its manufacturing jobs over the same 34-year period.
Rising health and energy costs, expensive and insufficient housing and childcare, and an unfriendly regulatory environment have also had a negative impact on the industry in recent years.
Ingredients for growth
So how can the state address labor struggles in the manufacturing sector?
There are no magic solutions.
McKinney said Connecticut should double the number of training slots in the state’s trade and technical schools, an effort that must be done in collaboration with global companies that want to be in that market.
He also said a commitment to transform “the state’s lower transportation system would be a good way to generate that demand for construction and manufacturing jobs.”
The state should also step up efforts to recruit minority producers who currently have operations in other states, or even in other countries, such as Jamaica, Haiti or South Africa.
“Before the pandemic, I was advising a South African entrepreneur who was trying to buy the largest aluminum company in sub-Saharan Africa,” McKinney told me. “The contractor wanted to come to Connecticut, but we were unsuccessful in trying to establish a public-private partnership to bring those manufacturing jobs to the state.”
Lavoie said policymakers need to develop a comprehensive energy policy that focuses on reducing costs, increasing supply and supporting energy efficiency in the industrial base. The state also needs to find creative ways to help small manufacturers come together so they can offer more affordable health care plans, he said.
Lavoie told HBJ earlier this year that his office plans to ask Gov. Ned Lamont for at least $100 million in funding over the next six years to fill the Manufacturing Innovation Fund, which was created by the legislature last year with a decade to support small and medium-sized enterprises. manufacturers with the adoption of new technologies and workforce development.
Manufacturers can’t fully hire their way out of labor shortages, he said, so adopting new technologies, including robotics and automation, must help fill that gap.
The CBIA Foundation recently released its “Opportunity Connecticut” economic action plan, which includes a number of recommendations to help grow manufacturing employment in the state, DiPentima said.
This includes adopting more on-the-job learning and dual credit opportunities for high school students to accelerate paths to college or a career after graduation.
“We also need to inventory the state’s postsecondary opportunities to make it easier for students and families to find relevant skill development and education programs,” DiPentima said.
The state also needs to increase its workforce housing stock, improve the regulatory environment by streamlining permitting processes and adopt policies that encourage capital investment, DiPentima said.
There is no shortage of good ideas to address workforce concerns. The key is to prioritize the initiatives that will provide the best return on investment and then constantly review their effectiveness.
And it will take a public-private partnership to succeed. Employers need to be fully engaged in this process – after all, they stand to benefit the most if Connecticut grows its talent pool.
Ultimately, the key is to make Connecticut a more affordable place to live and do business.
Some positive steps towards workforce development have already been made in recent years, but much remains to be done.
When state lawmakers return to Hartford in January, their top priority must be promoting economic and population growth — the essential ingredients for preparing the future workforce.
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