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Thu February 10, 2011
Small Manufacturers Find Ways To Thrive
Connecticut has around 5,000 manufacturing companies. You may be picturing Pratt & Whitney or Electric Boat, but of course the vast majority of manufacturers are small businesses. WNPR’s Harriet Jones looks at the challenges facing those firms in a shrinking industry.
It’s a typically busy day on the shop floor at Prestige Manufacturing in Milford. Ken Dugan has run this business for 27 years.
“We’re basically what you call a job shop. That means that we don’t design our own product here, we don’t even manufacture our own product here. But what we do is we take other people’s product, we make it for them from their design and their specification, and we sell it back to them.”
Prestige makes everything from parts for camera battery packs to helicopter components. This type of job shop is representative of a large slice of Connecticut’s small manufacturers.
“The Pratt and Whitneys and the Sikorskys in many cases are assemblers. They bring together pieces that have been built and manufactured, if you will, by others.”
Elliot Ginsburg is CEO of the Connecticut Center for Advanced Technology.
“You’ve got people who are building this piece, who then create a kit to go into a bigger piece, and then finally be assembled as a final product, and that’s the way the supply chain is in fact working for the original equipment manufacturers now, far different than it was 50 years ago when they would have produced everything to make the final product.”
That change may seem to favor small manufacturers, but the numbers tell a story of long-term decline. Since 1990, the state has lost just shy of 140,000 manufacturing jobs – almost half of its previous workforce. In 2010 alone, supposedly a year of modest recovery, Connecticut lost a further 4,700 jobs in the sector. Third district representative, Congresswoman Rosa DeLauro says Connecticut can’t give up on its small manufacturers.
“We are a manufacturing state. We used to be called the arsenal of the republic.”
She’s introduced legislation that would allow small manufacturers to establish a new kind of savings account akin to an IRA, called a Manufacturing Reinvestment Account. This would give tax benefits for any cash used to grow the business or increase workforce. DeLauro says the state should be taking active steps to make manufacturing the key to its revival.
“Because we have to grow the economy. We can’t just be running in place. This is long-term growth. It’s about a national growth strategy. How do we increase the number of jobs? How to revitalize the manufacturing industry that was the bedrock for a state like Connecticut.”
As a high cost state, Connecticut presents peculiar challenges for manufacturers. Small companies can no longer compete with China and other low-cost countries in producing basic components in high volumes – instead they must rely on innovation, precision and the expertise of their workforce to complete small, highly-skilled niche jobs. Health care costs and the high price of power are often cited as competitive roadblocks. Michael Polo runs aerospace parts company AdChem Technologies in Manchester.
"We do quite a bit of export, so we’re competing globally. And those type of things, taxes, utilities, really hinder us competing and that’s frustrating, because it’s not people—our workforce—a lot of times, it’s those other costs that really hurt us."
Don Schollin of QS Technologies, a cable manufacturer in Meriden says he too wants to see the state work on reducing the burden on small companies, but he cautions manufacturers are often uniquely vulnerable to economic cycles.
“There’s forces too that are beyond what the state of Connecticut can do. You have to have business in the country and across the world. There was a major correction as we all know coming out of 2008. For instance 2008 was our best year ever. In 2009 we gave 40 percent of it back.”
Most analyses suggest that each manufacturing job supports two to three jobs elsewhere in the economy, which means that figuring out how to nurture Connecticut’s small manufacturers is all the more urgent.
For WNPR, I'm Harriet Jones.