Connecticut Manufacturing Is A Bright Spot

As National Picture Worsens

By John Voket

While 191 Connecticut manufacturers responded with a generally positive outlook in a survey released August 29, the Institute for Supply Management (ISM), a trade group of purchasing managers, tells a different tale at the national level.

The ISM said September 4 its index of manufacturing activity ticked down to 49.6 — down from 49.8 in July and the lowest reading in three years. A reading below 50 indicates contraction.

At the State Capitol August 29, Congressman Chris Murphy was joined by Senator Richard Blumenthal and Connecticut manufacturers touting the results of the 2012 Survey of Connecticut Manufactures.

The purpose of the survey was to give Connecticut manufacturers the opportunity to provide in-depth prospective and advice to the lawmakers about an industry that has sustained Connecticut for three centuries. Rep Murphy and Sen Blumenthal asked manufacturers about ways to create jobs, how to find skilled workers to fill those jobs, and then keep those jobs in Connecticut.

The survey showed that 77 percent said they were confident in the financial future of their company; 52 percent expect to see an increase in gross revenues; 56 percent plan on hiring more workers in the next year; and 58 percent expect to increase wages.

The ISM reports, however, that US factory activity shrank for the third straight month in August as new orders, production, and employment all fell. The report adds to other signs that manufacturing is struggling around the globe.

Weak consumer spending and steady declines in business orders for large machinery and other capital goods are slowing factory output.

The report followed other data showing manufacturing has slowed overseas. A measure of factory activity in China fell to its lowest level in more than three years last month.

And manufacturing in Europe has also stagnated in the face of the region’s financial crisis.

Paul Dales, senior US economist at Capital Economics, said continued uncertainty caused by the recession in Europe, the slowdown in Asia, and impending tax increases and spending cuts in the United States “is taking its toll on activity.”

“At this level, the index remains consistent with ... growth in the third quarter of between 1.5 percent and 2 percent,” Mr Dales said in an e-mail to clients.

The manufacturing index typically needs to fall to about 43 to suggest the broader economy is shrinking, according to the ISM. Still, growth at or below 2 percent is not enough to significantly lower the unemployment rate, which was 8.3 percent in July.

Fed Rescue Plans?

The slight decline in manufacturing activity also makes it more likely the Federal Reserve will take steps at its meeting next week to boost economic growth, Mr Dales said.

US factories have been a key source of jobs and growth since the recession ended in June 2009. But the sector has shown signs of weakness in recent months. The ISM survey showed factories kept hiring in July but at a slower pace.

And production dropped sharply to 47.2, the first time it has fallen below 50 since May 2009, when the economy was in recession.

New orders, a sign of future production, also dropped. New export orders increased but remained below 50, contracting for the third straight month.

Factories reported less demand in the spring after consumers cut back on spending and businesses invested less in machinery and equipment.

Recent data suggest the economy picked up a little in July, which could boost factory production in the second half of the year. Employers added 163,000 jobs, the best hiring since February, and consumers stepped up spending last month after earning a little more.

The government will report on August hiring and unemployment on September 7.

Referring to the Connecticut survey, Rep Murphy said he and Senator Blumenthal have spent their time in elected office “listening to manufacturers in Connecticut about how the federal government can help them grow their businesses.”

 He added, “This report gives us the data we need to make the case for Connecticut manufacturing to policy-makers in Washington and across the country.”

Keep Jobs Local

Congressman Murphy, who is seeking a US Senate seat in November, said he will use survey information to push for policies that will create jobs in Connecticut and fight against policies that will ship Connecticut manufacturing jobs overseas.

“Connecticut manufacturers are confident about the future, and we share their optimism. We have a lot of work to do, but these results show that those who say manufacturing in Connecticut is dead are dead wrong,” Rep Murphy said.

More than 70 percent of respondents say they face competition from foreign sources and 45 percent say that outsourcing has hurt their business. Rep Murphy and Sen Blumenthal have worked to become high profile leaders supporting the “Buy American” movement that will create jobs in America and especially in Connecticut due to the state’s long history of supplying America’s armed forces.

Sen Blumenthal said the survey shows Connecticut manufacturers are confident, can-do job creators — with most planning to hire new workers and raise pay — but still struggling to find people with the right skills to fill positions.

“The federal agenda must emphasize skill training and workforce development at our technical high schools and community colleges, so manufacturers can fill present and future openings,” he said.

The senator said a very hopeful sign is that fewer layoffs are foreseen.

“The survey reinforces the need for tax reform like the Bring Jobs Home Act that will enable manufacturers to grow jobs and reshore them from abroad,” Sen Blumenthal said. “Two more priorities supported by the survey — stopping unfair trade like currency manipulation practices by China, and making solid investments in the roads, bridges, railroads, and other public facilities necessary to move raw materials, parts, and manufactured products.”

The report from the Connecticut survey can be reviewed online at: blumenthal.senate.gov/download/2012-manufacturing-report.

Associated Press content was used in this report.