Connecticut is the most cost-efficient for manufacturers, according to a new report released Wednesday by a Massachusetts-based economic think tank.
Rather than traditional metrics such as cost of labor, energy, materials and real estate, the study from the American Institute for Economic Research takes a start-to-finish approach on the total costs of production.
For example, rather than calculating labor costs, the study looks at productivity, and the variety and availability of skilled labor. Rather than energy costs, the report marries those expenses with how efficiently companies use energy.
Production cost per dollar output of manufactured goods was an important metric in the report.
Using this approach, Connecticut, Oregon and Iowa all tied for the most cost-efficient states for manufacturing, according to the report. Also included in the top 10 most cost-efficient states were those traditionally viewed as being high cost, such as No. 5 New York, No. 7 Massachusetts and No. 9 Washington.
States traditionally held as low-cost labor, energy and real estate places to do business – particularly those in the South – were ranked near the bottom: No. 50 Mississippi, No. 48 Kentucky, and Louisiana and Alabama, both tied at No. 45.
“States that are the most cost-efficient have manufacturing bases that allocate their resources in such a way that relatively low cost inputs replace high cost ones and inputs are used in the most productive manner,” said author Lei Chen, a fellow at the American Institute for Economic Research.
Chen is a former University of Connecticut instructor as is Steven Cunningham, the director of research and education for American Institute for Economic Research.
The organization, founded in 1933, is based in Great Barrington, Mass. and is support by funding from its members. It claims to not accept money from governments, corporations or private foundations.
The group’s report flies in the face of other recent studies and surveys suggesting that Connecticut’s main strength — a productive, varied and skilled workforce – is fading.
According to a June survey from the Connecticut Business & Industry Association, the state’s manufacturing workforce is aging, and there aren’t enough young, highly skilled replacements to fill the positions.
In the CBIA survey, manufacturers said they were having a difficult time attracting skilled labor, and they were worried about the basic math, writing, and employability skills of entry-level employees and soft leadership skills of mid-level managers.
Connecticut has had a difficult time finding and training the manufacturing workforce of the future, as students choose other careers.
The state has bled  manufacturing jobs over the last two decades. Since 1990, employment in the industry fell 45 percent, according to the U.S. Bureau of Labor Statistics.
The sector rebounded slightly this year, with employment increasing 1.3 percent through May compared to the same time period last year. That is the longest sustained increase in year-over-year Connecticut manufacturing employment since 1998.
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