Hartford Business Journal

HARTFORDBUSINESS.COM | OCTOBER 19, 2026 23 FOCUS | MANUFACTURING CT manufacturers confront rising costs, trade uncertainty as they explore AI CBIA President and CEO Chris DiPentima (far left) moderates a panel discussion at the organization's manufacturing summit Oct. 1 in Hartford. HBJ Photo | Harriet Jones By Greg Bordonaro & Harriet Jones gbordonaro@hartfordbusiness.com C onnecticut manufacturers are bringing more work in-house, looking closer to home for suppliers and exploring artificial intelli- gence as rising costs and tariff uncer- tainty put pressure on their businesses. Those challenges, and the strategies companies are using to address them, dominated the Connecticut Business & Industry Association's manufacturing summit held earlier this month in Hart- ford. Small manufacturers described trade disruptions that are squeezing margins, while executives from the state's largest defense companies urged a deliberate approach to adopting AI. The 2026 Connecticut Manufac- turing Report, released at the event, underscored those pressures: 93% of manufacturing respondents reported rising costs, driven by energy, health- care and labor, while 59% expected tariffs to negatively affect their opera- tions over the next year. Yet, manufacturers remain broadly optimistic about profitability. Among manufacturers surveyed, 68% expect to turn a profit this year, matching the share that reported a profit in 2025. The survey also found that 35% expect to add workers, while 57% anticipate stable staffing and 6% foresee reduc- tions in 2026. "Connecticut manufacturing is an economic powerhouse," CBIA President and CEO Chris DiPentima said. "However, our manufacturers can't continue absorbing rising costs indefinitely." Trade pressures Connecticut exported a record $17.74 billion in goods last year, DiPentima said, but only four of its 10 leading export markets recorded increases. Exports declined to Canada, the state's largest market, as well as Mexico and China. The trade conflict has since intensi- fied. President Donald Trump imposed additional 50% tariffs on selected Canadian goods in August. Canada responded Sept. 8 with tariffs of 15%, 25% and 50% on selected U.S. prod- ucts, including industrial equipment and electronics. For manufacturers doing business across the Canadian border, those tariffs are complicating pricing decisions. Keith Simons, president of the products division at Shelton-based OEM Controls, which makes industrial joystick controllers, said his company does significant business in Canada. Passing along additional costs has become increasingly difficult. "Their reciprocal tariffs are also affecting our price point," he said. "It's a really tough one to navigate and almost impossible to just add that on." Tariffs also increase the cost of investments intended to make companies more competitive, said Jeff White, a partner at law firm Robinson+Cole who advises manufacturers. Businesses purchasing expensive machinery from overseas must account for duties on that equipment, he said. The CBIA report estimates that the effective tariff rate on Connecticut's manufactured imports rose from 1.25% in 2024 to 7.07% during the first seven months of 2026. Applied to current import volumes, the increase would represent about $1.2 billion in additional annual tariffs. Some companies are responding by shifting work closer to home. Simons said OEM Controls is handling more assembly internally, giving it greater control over costs. Bill Hazard, president of Bris- tol-based wire cutting company Novo Precision, said he is seeking ways to localize his supply chain. Connecticut's concentration of small manufacturers makes that possible, Hazard said. "We can leave our driveway and within two miles there's probably 50 to 100 other manufacturing companies," he said. "We have that infrastructure here with all these small companies, which gives us a huge competitive advantage." Still, White said tariff uncertainty is delaying investment decisions among some international companies he represents as they wait for greater clarity about U.S. trade policy. Costs and hiring Manufacturers also face persistent challenges within Connecticut. Among manufacturers surveyed by CBIA, 62% identified energy costs as a priority for the 2027 legislative session, making it their top issue. The state's average industrial elec- tricity price was 18.08 cents per kilo- watt-hour from July 2025 through June 2026, the nation's sixth-highest and more than twice the national average, according to the report. Hiring remains difficult: 88% of respon- dents said filling an opening takes at least two weeks, including 38% who said it takes more than eight weeks. DiPentima said manufacturers have more than 7,000 job openings, with an aging workforce, slower population growth and reduced immigra- tion complicating recruiting. The report was produced by the CBIA Foundation for Economic Growth & Opportunity with support from accounting firm RSM. The University of New Hampshire Survey Center conducted the survey, sending invita- tions to more than 3,300 top executives statewide. The response rate was 11%, and manufacturers accounted for 34% of respondents, according to the CBIA. Building an AI foundation AI was also a hot topic at the event. Executives from Sikorsky, Pratt & Whitney and Electric Boat said AI can improve manufacturing processes, but companies should first identify problems and organize reliable data. Pratt & Whitney recently polled 1,500 of its supply chain companies and found that about half were exploring or implementing AI. Peter Bradley, who leads digital tools and data science at Pratt & Whitney, said making data accessible across business functions requires foundational work. "All that flashy AI stuff doesn't really happen without a lot of that founda- tional work," he said. Paul Link, Sikorsky's program manager for AI and data, said suppliers should identify bottlenecks and inef- ficiencies before evaluating artificial intelligence as a solution. The three companies are purchasing software, partnering with specialists and developing applications internally. Pratt also acquired Amsterdam-based Aiir Innovations to expand AI-assisted engine inspections. Gary Cooper, Electric Boat's director of combat and weapons systems engineering, cautioned companies to evaluate AI startups' expertise and protect sensitive information. "We personally have to make sure that our data doesn't train the world how to build submarines," he said. Cooper said AI can help waterfront workers through clearer work orders and better material availability. Bradley pointed to Pratt's use of AI to measure small parts during inspections as an example of a measurable benefit. Workforce training also matters. Bradley said some Pratt employees with expertise in aerodynamics or materials are returning to school for AI degrees, helping them find new ways to innovate. "We're able to do things in seconds that used to take minutes," Bradley said. But he urged companies to keep the technology in perspective as companies weigh their investments. "It's really important to understand that this is not magic, it's not even intelligence," he said. "It's really math and software."

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