Conntact.com, Connecticut’s Business News Journal, wrote the following article:
Does Manufacturing Have a Future In Connecticut?
Monday, 07 January 2013 19:56 BNH
Propelled by increasingly sophisticated technology and a skilled, productive workforce, Connecticut’s manufacturing outlook is surprisingly bright.
So much so that University of Connecticut economist Steven P. Lanza gave the Nutmeg State an A-minus on his “Manufacturing Report Card,” published in the winter 2013 issue of The Connecticut Economy.
Lanza, also executive editor of the publication, rated the state based on income, output, employment, productivity, technological sophistication and “churn,” or the aggregate birth and death rate for small companies.
Lanza points out that the number of factory jobs in Connecticut has stabilized over the past two years, holding steady at about 165,000. When adjusted for declining manufacturing output, he says this is some 8,000 more jobs than would be expected.
Notable though is Lanza’s observation that despite the long-term decline in manufacturing employment, productivity from these workers is up.
Between 1990 and 2007, he points out, manufacturing output grew by more than half, despite an estimated 35 percent fewer workers. Measured in 2005 dollars, Lanza says output per manufacturing worker grew from $57,900 in 1990 to $135,800 in 2007, an increase of 134 percent, compared to a 38-percent increase in productivity
from workers in all industries over the same period of time.
This translates, he says, into higher wages: Connecticut manufacturing workers earned an average $76,900 in 2011, compared to the state’s all-industry average of $61,100.
Lanza also points out that Connecticut is doing well adapting to the changing face of manufacturing.
“The factory floor isn’t the noisy, grimy workshop it once was,” he says. “Manufacturing has become far more technologically advanced, requiring sophisticated machines and computers operated by highly trained and skilled workers.”
Lanza reports that manufacturing output from high-tech firms in Connecticut has increased from less than 60 percent of the manufacturing total in 1997 to more than 70 percent in 2010, particularly in the areas of electronics, chemical and transportation manufacturing.
He also reports that most of the state’s manufacturers are small to mid-sized firms, with 85 percent employing fewer than 100 workers. The “churn” factor may not seem a positive for the industry at first blush, Lanza says, but is beneficial in the long run since the phasing out of an obsolete company or technology can help pave the way for more efficient or innovative companies.
“In the long run ‘churn,’ led by smaller firms, can be an important source of economic change and development,” Lanza observes.
The report draws on data from the bureaus of Labor Statistics and Economic Analysis to grade each of the 50 states along the A-to-F academic scale. Connecticut was one of nine states to receive A grades (it scored a 91), with Oregon topping the list with a perfect A-plus (100). Six states were slapped with F grades, the lowest of which were Hawaii and Alaska, which each received a score of 50.
“The state’s manufacturers have managed to adapt to changing times, to survive and even to thrive,” Lanza concludes. “The manufacturing industry will remain a cornerstone of the state’s economy for years to come.”
The Connecticut Economy’s “Centerfold” section, which charts the density of manufacturing jobs in 2011 by town, illustrates that the bulk of the jobs in the New Haven area are north and west of the city along the Naugatuck Valley, and otherwise are found clustered in the northeast and northwest corners of the state, as well as in the southeast along the shore and a small pocket of upper Fairfield County.
The average 4,741 manufacturing workers in Wallingford were the most in the New Haven labor market area (LMA), and they also earned the highest annual average wage — $89,932 — in the area. New Haven had the third-highest average manufacturing employment in the LMA with 2,532 workers in 2011, behind North Haven and its 3,992 workers. But out of the 22 municipalities in the LMA, the Elm City ranked just 16th in average wage, at $52,847.
Home to Electric Boat, Groton led the pack in terms of having the highest average employment number in the state — 10,838 workers — but it was Norwalk’s 2,455 manufacturing workers who had the highest average annual wage: $132,325.
Several other towns with relatively
low manufacturing employment numbers similarly had high average wages, as was the case with Darien’s estimated 50 workers ($120,566), Rocky Hill’s 613 workers ($110,998), and Avon’s 659 workers ($109,877).
The state average per municipality was 1,108 workers, earning an average salary of $59,646.
The data, based on figures from the state Department of Labor, also measures the concentration of manufacturing jobs in each town against the total concentration of the state with a ratio, or location quotient (LQ). In this case, a town with an LQ of 1.00 would have the same concentration of manufacturing jobs as the state as a whole.
New Haven had an LQ of 0.31, one of the three lowest in its labor market area (Madison and Killingworth were lower). Chester, with its 856 workers, had the highest LQ of 4.10, with Durham’s 2.43 LQ next in line.
The report is available as a free download at cteconomy.uconn.edu.