Forecasting the Future
9:44 am
Tue December 3, 2013

Connecticut Manufacturing Shows Dynamic Growth and Destruction

The F119 engine, made in Connecticut by Pratt & Whitney
Credit Pratt & Whitney

Connecticut has created 40,000 new manufacturing jobs since the end of the recession. But paradoxically, the sector is still shrinking.

On the face of it, manufacturing has had it tough in the last three years. Since 2010, the sector has seen a net decline in employment of about 4,000 jobs in Connecticut. But that number masks the fact that there's been tremendous turnover in the industry -- about 40,000 jobs have been created in that time, and just as many lost. Patrick Flaherty is an economist with the state Department of Labor. "The economy is very dynamic," he said, "and there are companies that are going out of business all the time, unfortunately, but new companies are starting all the time, which is great."

Flaherty was giving a presentation to a panel that's known as the Commission on Connecticut's Future. It's particularly concerned with the future of manufacturing in the state, which is still currently the fourth largest source of employment in the state, after healthcare, retail and education.

Flaherty says in many ways manufacturing is the victim of its own success, as innovations have led to huge productivity gains, meaning the dollar value of what's produced in the state has increased even as employment has declined. "A number of these innovations that are occurring will have tremendous potential for increasing wealth and our standards of living, but are not necessarily going to lead to a whole lot more jobs," said Flaherty.

One of the other paradoxes that the commission is wrestling with is that despite a decline in jobs in the sector, many employers say they can't find the skilled workers that they need -- the workforce pipeline isn't creating the right mix of skills. That could get worse in the near future. An improvement in house values and the stock market could mean people who'd put off their retirement during the recession are now ready to leave the workforce.  According to Flaherty, "there's a wave of retirements coming, which could lead to a labor force shortage, which is a shocking thing to think about with the unemployment rate so high, but there's a scenario where that happens."

Connecticut heavy dependence on defense contracting is another complication. A near term decline in jobs because of sequestration could mean leave the state unprepared for any future ramp up in manufacturing, as its skills base erodes.