Hartford Business Journal

HARTFORDBUSINESS.COM | OCTOBER 14, 2024 31 Opinion & Commentary EDITOR'S TAKE Manufacturing employment in CT has stalled; here are some ideas to stimulate growth D espite having thousands of open positions, Connecticut's manufacturing industry has struggled to add jobs this year, stunting the state's economic growth prospects. In its most recent jobs report, the state Department of Labor said manufacturers shed 700 jobs during the month of August, despite "significant hiring" occurring within the industry. The DOL blamed the drop in employment on companies' inability to "keep pace with retirements." That candid analysis should set off alarm bells for any policymakers or business leaders who haven't taken the workforce shortage seriously. And the situation could get worse before it gets better: More than 35% of manufacturing workers are 55 or older, compared to just 27% across the broader economy, according to the Connecticut Business & Industry Association. Meantime, 80% of Connecticut manufacturers say it's difficult to find and retain workers, according to CBIA's 2024 Connecticut Manufac- turing Report, which was released earlier this month. "The lack of an available and skilled workforce is the number one challenge to the growth of the manu- facturing industry," Paul Lavoie, the state's chief manufacturing officer, told me. "Most manufacturing compa- nies have work and are in search of a workforce. It has eased a bit, but it is still a challenge. Simply put, there aren't enough people to do the work." While other states also face 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 that for a key industry on a long-term basis, compa- nies will be forced to look elsewhere for workers. Through the first eight months of 2024, Connecticut has added 14,800 jobs overall, but the state's manufac- turing sector contracted during that time period. At the end of January, manufac- turers in the state employed 158,400 people. That number shrank to 157,800 workers at the end of August, according to the state Department of Labor. That's fewer people than the industry employed pre-pandemic. Conversely, manufacturing in Connecticut has grown 11.2% in real GDP since the first quarter of 2019, signaling the sector has contributed more to the state's economy, despite not being able to fill open positions, according to Chris DiPentima, presi- dent and CEO of the CBIA. Propelling the industry is a boost in federal defense contracts, particu- larly for Electric Boat, which must fill thousands of jobs in the years ahead as it ramps up production of attack and ballistic missile submarines for the U.S. Navy. Manufacturing jobs and production are important to the state because they provide key multiplier effects to the economy. For example, companies like EB and East Hartford jet-engine maker Pratt & Whitney provide work for hundreds of in-state suppliers. Each manufacturing job creates five additional jobs in other parts of the economy, according to the CBIA, and the sector accounted for 10.2% of Connecticut's GDP in 2023, or $34.55 billion. Of course, other factors have stunted the industry's growth. Economist Fred McKinney, co-founder of Connecticut-based economic consulting firm BJM Solutions, points to the state's and Northeast's high costs of doing business, which for decades sent manufacturing work to the south, China and other lower-cost areas. Since 1990, the U.S. has experi- enced a 26% decline in manufac- turing jobs; Connecticut has lost more than 48% of its manufacturing jobs over that same 34-year period. Rising healthcare and energy costs, expensive and insufficient housing and child care, and an unfriendly regulatory environment have also negatively impacted the industry in more recent years. Ingredients to growth So, how can the state address the manufacturing sector's workforce struggles? There are no magic-bullet 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 compa- nies that want to be in this market. He also said a commitment to transforming the state's "inferior transportation system would be a good way to generate that demand for construction and manufacturing jobs." The state should also boost efforts to recruit minority manufacturers that currently have operations in other states, or even other countries, such as Jamaica, Haiti or South Africa. "Before the pandemic, I was advising a South African entrepre- neur who was attempting to buy the largest aluminum manufacturing company in sub-Saharan Africa," McKinney told me. "The entrepreneur wanted to come to Connecticut, but we were not successful in trying to establish a public-private partnership to bring those manufacturing jobs to the state." Lavoie said policymakers must develop a comprehensive energy policy that focuses on driving down costs, increasing supply and supporting energy efficiency in the industrial base. The state must also find creative ways to help small manufacturers pool together so they can offer more affordable healthcare plans, he said. Lavoie told the 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 replenish the Manufacturing Innova- tion Fund, which was created by the legislature a decade ago to support small and midsize manufacturers with new technology adoption and workforce development. Manufacturers can't fully hire their way out of worker shortages, he said, so the adoption of new technology, 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 recom- mendations to help grow manu- facturing employment in the state, DiPentima said. That includes adopting more work- based learning and dual credit oppor- tunities for high school students to accelerate pathways to college or a career upon graduation. "We also need to inventory the state's post-secondary opportuni- ties to make it easier for students and families to find relevant skill- building and education programs," DiPentima said. The state must also grow its workforce housing stock, improve the regulatory environment by stream- lining permitting processes, and adopt policies that incentivize capital investment, DiPentima said. There's no shortage of good ideas to address workforce concerns. The key is prioritizing initiatives that will provide the best return on invest- ment, and then constantly reviewing their effectiveness. And it will take a private-public partnership to make it successful. Employers must be fully engaged in this process — after all, they stand to benefit the most if Connecticut grows its talent pool. Ultimately, the key is making Connecticut a more affordable place to live and do business. Some positive steps on workforce development have already been made in recent years, but there's much more work to be done. When state lawmakers return to Hartford in January their top priority must be promoting economic and population growth — those are the essential ingredients to grooming the future workforce. Source: State of CT Dept. of Labor, Office of Research MANUFACTURING EMPLOYMENT IN CT 1990 1995 2000 2005 2010 2015 2020 2024 300K 250K 200K 150K MANUFACTURING JOBS

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