Survey Shows Manufacturers Like Connecticut, Optimistic for the FutureNovember 26, 2012
Connecticut manufacturers are reporting encouraging balance sheet news, with a large majority showing profitability despite the economic downturn of previous years.
A recent survey of 150 Connecticut-based manufacturing companies, conducted by BlumShapiro and the Connecticut Business and Industry Association to assess their enthusiasm for maintaining a business presence in this state, also shows that a majority see Connecticut as an excellent place to work and live.
One of the most revealing aspects of the BlumShapiro/CBIA survey is that respondents have been located here for an average of 30 years, emphasizing that many Connecticut businesses have long considered their presence to be permanent. Among the reasons listed is that Connecticut is ideally located between two major markets and provides an excellent quality of life for employees.
Most respondents also gave Connecticut high marks for providing a good supply of highly trained employees. Another positive indication for future manufacturing is that many Connecticut businesses are maintaining or increasing their investments in research and development.
Despite dealing with uncertainty over issues such as taxes and regulations, more than 60% of the respondents said they anticipate increased profitability this year over last year.
Interestingly, national economic issues are seen as a source of concern for many respondents, more so than local or state issues. For instance, manufacturers with a significant portion of their sales within the United States rate the national economy as their primary concern. Overall, approximately 58% of the survey respondents said that the combination of international and national economic factors was the major issue prompting fears for future operations, and another 17% put tax increases at the top of their list.
It is clear from the high marks given to quality of life that most businesses would prefer to remain in this state. Nonetheless, they also report that other states are very aggressive in their attempts to convince Connecticut firms – especially manufacturers – to relocate.
Other states, especially in the south, are offering tax incentives, credits and lower tax rates. The economic impact would be severe if significant numbers of Connecticut companies were swayed by the offers from other states and decide to relocate.
Connecticut and Business:
While most respondents to the survey had high marks for living and doing business in Connecticut they also responded that they do have concerns over the future outlook for the manufacturing sector. Primary among these concerns is Connecticut's reputation in some quarters as a state in which it is difficult to do business due to high tax rates, compliance aspects and the notion it is an "employee state".
Somewhat less than 40% of respondents rated Connecticut as very negative for business, while 35% thought it was "somewhat negative".
In addition, respondents indicated that while they believe Connecticut has an ample supply of qualified workers, they also expressed concern about their continued ability to attract those workers – a result of the state's younger residents leaving for other locales when they enter adulthood. This could become a factor in maintaining appropriate levels of skilled workers in the very near future.
Although the workforce seems stable for the next few years, retirements from the Baby Boom generation are expected to increase significantly by 2017.
Potential Tax Increase Impact:
Uncertainty over future taxes also creates some headaches for long-range planning. The possible expiration of key federal tax provisions is negatively impacting management’s ability to expand and hire, and respondents said that additional tax increases would have a "significant" impact on their overall business, including their ability to hire new employees.
The outlook and direction of Connecticut's manufacturing community is vital for the continued prosperity of the state and its residents. A thriving business environment provides wages that help stimulate the economy and tax revenue to support the government.
While survey respondents have a favorable opinion of the quality of life in Connecticut, some business owners are still expressing concerns about the state's five-year economic outlook. Although they have faith in their own business capabilities, they are far less confident that state and federal governments will help them achieve future growth and prosperity.
At a time when other states are making intensive efforts to lure businesses elsewhere, it is essential that Connecticut create an environment that encourages companies to stay and grow here. A healthy manufacturing sector will allow Connecticut to continue to provide jobs for its citizens and maintain its highly desirable lifestyle.