For more than a century Connecticut has been a leader in manufacturing innovation, the state from which the rest of the nation often takes its cue when it came to the newest and best technological advancements.
The names of those giants who set up shop in Connecticut and created manufacturing advancements that would change the world read like a Who’s Who in American Innovation – Samuel Colt, Igor Sikorsky, Frederick Rentschler, Charles Kaman and myriad others.
The question is, what will the next 100 years look like? For that matter, what will the next decade look like in terms of Connecticut remaining on top? Will our state still be the one the nation turns to in leading the way for the next generation of technological advancement in manufacturing?
Signals are mixed right now. There is plenty of good news to report about the state of manufacturing in Connecticut, but with it comes some unsettling signs.
Recent surveys have pointed to good signs – Connecticut manufacturers have seen increases in profitability at a higher rate than other businesses, as well as fewer net losses. Innovation right now seems to be much more prevalent in the manufacturing sector than elsewhere, with new products being introduced at a much higher rate than we see in other industries. What’s more, there has been an expansion of programs and classes in state’s community college system, with stronger focuses in areas such as precision machine skills, and this is proving to be a good, solid investment.
Yet amid the positive developments are areas of concern. The overwhelming majority of Connecticut manufacturers still consider the state to be unfriendly to business. A combination of high business tax rates and diminishing tax credits contribute significantly to this, and the numbers don’t lie. In Forbes’s Best States for Business listing in 2012, Connecticut ranked 42nd for regulatory environment, and nearly at the bottom (47th of 50) for business costs.
And then there is the increasing desire for some of them to relocate out of Connecticut. Roughly 60% of the manufacturers surveyed in the BlumShapiro/CBIA 2012 Survey of CT Businesses indicated that they have not only been courted to relocate elsewhere, but are actually considering moving their business to a more “business-friendly” state. That is an alarmingly high rate.
Recently Texas Governor Rick Perry traveled to Stamford to court a portion of the state’s manufacturing base and to invite some businesses to consider Texas as a new home. Clients of ours admit such offers can be enticing – so many states have lower tax rates, fewer regulatory redundancies and a generally more welcoming attitude towards essential manufacturing businesses than Connecticut does right now. And once those jobs leave our state, as we know from experience, they seldom, if ever, come back
Of course, these businesses don’t exist in a vacuum in Connecticut’s towns and cities – they can have a major effect on fellow businesses and on local economies. The presence of a large manufacturing business can encourage specialty shops to develop nearby to support them. Plating, sanding, welding, tools, machinery – these are all businesses that frequently pop up in communities around larger manufacturers, and invariably contribute greatly to the local economy. So if that manufacturer either leaves or reduces its scope of business in Connecticut, those smaller businesses are affected as well.
Connecticut has plenty in its corner to remain a manufacturing leader – it has the skilled labor, the demand for its products and the educational structure in place to help it succeed, not to mention that rich history and heritage in which so many people still place a great amount of pride. But still there are those lingering doubts – Connecticut’s perceived “business unfriendliness,” the high cost of doing business here and the allure of other states with lower tax rates and fewer regulatory roadblocks.
What does the next decade hold for Connecticut’s manufacturing base? It’s not an easy question to answer right now. But we do know that the competition between states to land these businesses has never been greater, and if Connecticut is to remain competitive, our focus must remain on creating a business-friendly environment that not only keeps businesses in Connecticut but attracts new businesses.