🔒Labor shortage, inflation will weigh heavily on CT manufacturers in 2023

As Connecticut manufacturers look to 2023, the labor shortage will continue to be a top-of-mind issue.

While Connecticut manufacturers added 4,600 jobs through the first 11 months of 2022, the industry has thousands of unfilled positions as the aerospace and defense sector in particular experience growth from major government contracts, including Electric Boat’s multibillion-dollar deal with the U.S. Navy to build a new fleet of ballistic missile submarines.

That’s feeding business to suppliers across the state.

According to a survey released by the Connecticut Business & Industry Association in October, 87% of the state’s manufacturers report difficulty finding and/or retaining employees, and 44% say the lack of skilled applicants is the greatest obstacle to growth.

Of the state’s approximately 100,000 open positions, more than 10% come from the manufacturing sector, according to the CBIA.

In addition to the skilled labor shortage, manufacturers will also continue to face inflation and supply chain challenges. The Hartford Business Journal spoke to several manufacturing leaders about what to expect in 2023.

Here’s what they had to say.

Labor concerns

Connecticut Chief Manufacturing Officer Paul Lavoie said the lack of an available workforce will continue to limit manufacturing growth next year, and the state is still looking at ways to address labor shortages.

For example, the Lamont administration last summer launched the $70-million CareerConneCT program, which offers free job training in high-demand industries, including manufacturing, and promises to graduate workers quickly for immediately available jobs.

“We are working on multiple fronts to get a trained workforce in manufacturing and we are confident we will make significant progress in 2023,” Lavoie said about the state’s efforts.

Mark Auletta, chief operating officer of Bristol aircraft test equipment manufacturer Bauer Inc., said the state will continue to foster relationships with trade schools and community colleges, particularly those with advanced manufacturing programs.

“The availability of talent, both engineering and trades, will remain scarce, particularly experienced staff,” Auletta said. “At the same time, retention is critical but also a challenge as larger companies are pushing up the average salary.”

Jason Howey, CEO of New Britain-based medical device components manufacturer OKAY Industries, said his company has between 15 to 20 open positions but it’s had difficulty finding qualified employees.

He said hiring, training and retention must be a focus for the state’s manufacturing sector in 2023.

“We’ve been hearing all over the place that there’s just not enough skilled workers, which is greatly impacting and driving growth strategy in Connecticut,” Howey said.

Supply chain and inflation

Auletta, who is also president of the state’s largest manufacturing trade organization ManufactureCT, said supply chain disruptions will continue to impact Bauer and a majority of manufacturers across the state “well into 2023.”

“We have had to select alternate parts and brands to satisfy customer commitments,” Auletta said. “Although necessary, this has required unplanned engineering time, which increases costs.”

Lavoie said supply chain pressures will ease in 2023 but remain an issue. To mitigate that, the state is encouraging companies to “re-shore” supply chains closer to home.

“We are working on a project for Connecticut Shoring, connecting Connecticut manufacturers together to shorten supply chains and improve lead times and deliveries,” Lavoie said.

Howey said inflation has impacted manufacturers “quite hard.” Even though the costs of goods and supplies have been increasing, it’s hard to pass those higher prices onto customers that have already signed contracts.

“A lot of manufacturers are in multiyear contracts, so it’s very difficult to go back to your customers to get price increases when you’re in a multiyear contract and customers are multibillion-dollar companies,” Howey said.

Howey said costs of labor, raw materials and services have gone up “across the board” for many businesses.

Innovation, collaboration

Lavoie said manufacturers will continue to innovate in the year ahead to remain competitive.

“Innovation continues to accelerate at the speed of relevancy while the speed of relevancy is accelerating,” Lavoie said. “We will continue to invest heavily in Industry 4.0 technologies to continue to drive efficiencies, improve performance and create resiliency in the manufacturing supply chain.”

Auletta said he expects Connecticut manufacturers to continue to use the state’s various resources and support organizations such as ManufactureCT, CCAT and CONNSTEP. Collaborative work at these organizations will allow companies to share best practices, find local suppliers, identify training opportunities, access matching funds and stay ahead of emerging technology, Auletta said.

Growth projections

Even with the significant challenges, the state’s manufacturers see growth prospects in 2023.

Sixty-nine percent of Connecticut producers expected to report a profit in 2022, while 47% forecasted sales growth last year, according to the CBIA manufacturing survey.

Howey said OKAY Industries will see some top-line growth in 2023 but it’s not without concerns.

“The fear is whether we’ll have enough people to execute it,” Howey said.

Auletta said Bauer is projecting 20% sales growth with both its core aerospace test equipment products and contract manufacturing sectors going into next year. The company recently opened a new 30,000-square-foot expansion at its Bristol facility that he said includes “a significant investment in state-of-the-art fabrication equipment.”

“We more than doubled our manufacturing footprint, giving us the ability to expand build-to-print services, primarily with sheet metal, welding, machining and light assembly, for virtually any industry,” Auletta said.