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Defense bill vital to state job prospects

September 30, 2018

The defense and aerospace industries may be the key to leading Connecticut out of its job-growth doldrums, according to a Fitch Ratings review of the 2019 Defense Authorization Act.

The 2019 defense budget includes several billion dollars for projects that will impact Connecticut, including $10.6 billion to purchase 77 F-35 Joint Strike Fighters. Connecticut-based Pratt & Whitney, a subsidiary of United Technologies, is part of the partnership that makes the fighters.

The authorizations also include billion-dollar projects for Sikorsky and Electric Boat. Stratford-based Sikorsky is a subsidiary of Lockheed Martin and Electric Boat of Groton is a subsidiary of General Dynamics.

“Connecticut is such an integral part of defense, for the Navy’s plans in particular,” said Nicholas Varone, Fitch’s associate director for corporate ratings in U.S. aerospace and defense. “It’s an important state when we talk about defense spending.”

A report by the Connecticut Institute for the 21st Century backs up Fitch Rating’s conclusions. “The Future of Defense Workforce: How Can Connecticut Promote Growth and Retention?” details the strength of the defense industry in the state and the ambitious hiring plans by the large companies. Loren Dealy Mahler, a Milford resident and senior fellow with the Institute, prepared the report.

Electric Boat plans to expand its workforce in Connecticut from 11,000 to 18,000 by 2030. The Navy has hinted at increasing the numbers of ships and submarines it will order.

“The nuclear submarine will be a focal point of the Navy for a number of years,” Varone said. “At least as far as we can see on the horizon.”

Pratt & Whitney, according to the report, expects to double production by 2020 and again by 2027. It plans to hire 8,000 workers in the next 10 years.

The good news about the defense authorizations go well beyond the big corporations in the state. Smaller manufacturers sprinkled throughout the state make up much of the supply chain for the large companies. Pratt & Whitney, according to the report, gets 85 percent of its engine parts from outside suppliers. Electric Boat has about 450 suppliers in the state and doled out $485 million in contracts to Connecticut manufacturers in the last five years.

“The supply base is strong in Connecticut with a significant number of suppliers to support defense,” David Petu, Fitch’s director of corporate ratings for U.S. aerospace and defense, said.

Finding the workers

Many manufacturers across the state are finding out that it’s one thing to need to hire employees, but something else to find skilled workers to fill those positions. An aging workforce and lingering perceptions about manufacturing jobs being dirty, low-paid and low-skilled have created a shortfall of workers for the industry.

“That’s a concern for the industry as a whole and in Connecticut,” Petu said.

The state has addressed the situation by creating programs in community colleges and high schools that train workers for advanced manufacturing jobs. The programs have proven to be highly successful for the companies looking for workers and the trainees seeking employment.

Joseph DeFeo, director of the Advanced Manufacturing Technology Center at Naugatuck Valley Community College in Waterbury, said students have a 100 percent placement rate since the center was created in 2012.

“Manufacturing is hot throughout the state and country,” he said a recent manufacturers roundtable held in Danbury. “There are probably more jobs than people to fill them. There are a lot of positions, but people need the right skills. At least at this point, you’re guaranteed a job coming from our program.”

Connecticut is known to have a highly educated and skilled workforce, but when it comes to manufacturing, the skills often do not match up. The state cannot afford a skills gap as it continues to lag behind the region and country in terms of job recovery from the recession, analysts say.

Connecticut has recovered only 88.5 percent of the jobs lost during the recession that started in 2008, according to the state’s Department of Labor. Much of that is due to governmental cutbacks as the state’s private sector has regained 113 percent of the jobs lost, but that still lags well behind that of the region and the U.S.

Connecticut has seen four consecutive months of job gains and the defense industry may play a major role in continuing that momentum. Dealy Mahler, in her defense workforce report, suggested the state increase its support of college and high school training programs and increase the number of manufacturing instructors to include retired or soon-to-retire workers.

The state recognizes the importance of the defense industry and has provided millions of dollars in incentives for the large companies to stay in Connecticut. In September 2016, the state gave Sikorsky $220 million in incentives to keep the helicopter manufacturer in Stratford. In 2014, the state provided $400 million in state tax offsets to United Technology to keep Pratt & Whitney in Connecticut. Also in 2014, Electric Boat received a $10 million loan to expand its facility.

Now boarding

The commercial aerospace industry is jetting along as well, and Connecticut is reaping benefits. Pratt & Whitney makes engines for the Airbus A320 and that craft is facing a large backlog and increased production.

Petu said the commercial aerospace industry is expected to remain strong, barring a global recession that reduces demand for air travel.

“You can’t discount the health of commercial aerospace — that’s a huge part of it,” he said. “Commercial aviation is very healthy. Aerospace is more cyclical than defense, but it is at its height of backlog and production. We don’t expect that to change in the near term.”

The writer may be reached at cbosak@hearstmediact.com; 203-731-3338

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