- 2021 Connecticut Manufacturing Report highlights shortage of skilled labor as the top issue facing the state’s manufacturers
- 88 percent say it has been difficult to find or retain workers
- Despite this challenge, the report also shows cautious optimism as manufacturers have improved profit expectations
Summary by Dirk Langeveld
The vast majority of Connecticut manufacturers is having difficulty finding or retaining workers, with the sector lagging behind the overall state economy in the recovery of jobs lost at the outset of the COVID-19 pandemic. At the same time, manufacturers were considerably more optimistic than last year on their outlook for growth and profitability.
Those were some of the findings of the 2021 Connecticut Manufacturing Report, unveiled over the weekend at the Connecticut Business and Industry Association’s 2021 Manufacturing Summit. The survey results were derived from a poll CBIA issued to manufacturers in the state between Aug. 4 and Sept. 8.
Skilled worker shortage
Eighty-eight percent of Connecticut manufacturers said that it has been difficult for them to find or retain workers, up from 75 percent in CBIA’s 2020 survey. Finding workers has become a particular challenge, with 55 percent saying this has been difficult – up from 22 percent in 2020.
Thirty-six percent said they have been having trouble finding candidates with the required skills or expertise, making it the top impediment to finding workers. Twenty-nine percent blamed a lack of work ethic, while 18 percent said they have been having trouble competing with other businesses that can offer better wages or benefits.
Retirements in the manufacturing sector were also contributing to labor challenges. Forty-one percent of Connecticut manufacturers said labor issues are the state’s main obstacle to growth.
In the report, Connecticut Chief Manufacturing Officer Colin Cooper says demand for skilled manufacturing labor is up 40 percent compared to pre-pandemic levels. However, there are 7,900 fewer manufacturing jobs in Connecticut in September 2021 compared to February 2020.
Connecticut’s manufacturing sector lost 8 percent of its workforce, or 12,700 jobs, in March and April 2020. It has regained only 38 percent of these positions, while the state’s overall jobs recovery is at 70 percent and manufacturers have recovered three-quarters of jobs lost in the pandemic on a national scale.
Among those citing employee retention issues, 58 percent said it was difficult to offer competitive compensation. Eleven percent said a lack of employee engagement and recognition was contributing to the problem, while 10 percent said workers were deterred by Connecticut’s high cost of living.
Twenty-one percent said their company’s greatest investments were being made in employee retention. This was followed by investments in the manufacturer’s property and facilities as well as new technology, each cited by 18 percent of respondents.
Forty-three percent said that want Connecticut lawmakers to give priority to investments in education and vocational training programs. Eighteen percent supported additional unemployment reform, while 14 percent called for lower taxes (including exempting training programs from the state sale tax). Twelve percent said they supported work incentives.
The report suggests that manufacturers have moved past the survival mode that accompanied the initial economic crunch of the pandemic and are now shifting to embrace new growth opportunities.
Forty-four percent said they expect their workforce to grow in the next six months, up 24 points from last year. Fifty-three percent anticipate that their business will grow, up from just 18 percent last year. And 40 percent foresee growth in the Connecticut economy, compared to just 10 percent in 2020.
Sixty-four percent reported that they were profitable in 2020, a drop from 76 percent reporting profitability in 2019. However, 70 percent said they expect to be profitable this year.
Although the survey findings suggest cautious optimism, manufacturers also expressed concerns on issues such as the cost of living in Connecticut, misperceptions about manufacturing as a career choice, and the need to continue aligning educational curricula to prepare students for careers in manufacturing. Thirty percent said reducing state spending and reforming pensions should be a priority for state legislators, and the same share said priority should be given to job creation and economic growth.
Forty-three percent said they have been approached by officials from another state about relocating or have independently considered moving out of Connecticut. Among those that have considered relocating, 43 percent said seeking lower taxes as a key motivator while 32 percent cited lower operational or living costs and 23 percent said they were looking for a better overall business climate.
Asked what the advantages were of being based in Connecticut, one in four cited proximity to customers. Twenty-three percent said the quality of life was a top benefit, while 20 percent named the skilled workforce.
Manufacturer impact on the Connecticut economy
The 2021 Connecticut Manufacturing Report also highlighted the impact of manufacturing on the Connecticut economy. Manufacturing output in the state in 2020 was at its highest level since 2015, and the sector accounted for 10 percent of both the state’s GDP and its workforce.
The number of manufacturing companies in Connecticut totals 3,796, with these businesses employing approximately 153,000 people. The average compensation for a manufacturing worker is $100,662.
Manufacturing also accounted for 92 percent of Connecticut’s exports in 2020, with a value of $13.8 billion.