Businesses continue to persevere in the wake of the pandemic, though acute labor shortages, high costs and supply chain disruptions represent major challenges for Connecticut employers.
Excerpt from a panel of business leaders discussing the CBIA/Marcum 2022 Survey of Connecticut Businesses at the Connecticut Economic Conference in Hartford, Sept. 23.
The discussion was moderated by Michael Broder, Managing Partner of Mark LLP’s Hartford office, and included Derek Cole, Vice President of BL Companies, John Green, President and CEO of Lux Bond & Green, and Deb Gerty, Principal of Ritz Inc. [pictured above, from left to right].
“This survey was filled with inflation, rising costs, labor shortages and, yes, still remote workforce issues related to Covid,” Broder said.
‘Looking for opportunities’
Gertie said her company would be profitable overall for the year and heading into 2023 very strongly, “due to global supply chain issues and people being slow to get back to work.”
“It’s been very strong throughout the pandemic,” Green said of his jewelry business.
While everyone was stuck inside during the pandemic, “people said they wanted to spend some money” and passed it on to each other, he said.
Our challenge is that we don’t have enough staff to take advantage of many opportunities.
BL Companies Derek Kohl
“2022 is off to a very strong start, despite the many headwinds we’re seeing,” Green continued.
Cole said his outlook for the rest of 2022 and 2023 is “positive, but with some caution.”
“There is work out there, and our challenge, like many others, is that we don’t have enough workers to take advantage of those opportunities,” Cole said.
“We will tread very carefully next year, but look for those opportunities and continue to recruit the great talent we see.”
Economic perspective
The survey found that by 2021, 68% of businesses will post a profit, 17% will break even and 15% will experience a loss—seven percentage points higher than last year’s survey projected.
However, only 26 percent of businesses expect Connecticut’s economy to grow next year — down from 39 percent last year — with 36 percent forecasting unchanged conditions and 38 percent forecasting, reflecting broader concerns about labor shortages, inflation and supply chain disruptions.
Gertie told the audience or more than 300 business leaders that she could see the impact of supply chain bottlenecks on the ground at construction sites.
“What we’re trying to do is really look forward, be proactive, know what’s out there and engage with people early so we understand their needs,” she said.
She added that although local manufacturers are doing their best to supply businesses, supply chain disruptions are a “global issue”.
When asked how their companies have been affected by high inflation, three-quarters (75%) of businesses surveyed by CBA and Markham said they have raised prices to stay in business.
Just under two-thirds (64%) saw profits erode, 23% invested in equipment and other capital assets, and 6% laid off workers.
Explore the bottles
Green emphasized the importance of advance planning and communication in preparing for supply chain disruptions.
“Something that took eight weeks will take 16 weeks,” he said.
“So I think it’s all about planning, and if you don’t, you’re going to find yourself in a really bad spot.”
“What used to take eight weeks now takes 16 weeks.”
Lux Bond and Green John Green
Cole has seen construction customers hurt by a lack of product availability.
“We really had to adapt, create and generate other alternative materials,” he said.
But there have been ramifications of delays and cost overruns, and the dominoes set aside for growth and other expansions.
Business climate
This year’s survey found that 50% of respondents believed the state’s business climate was deteriorating, reflecting the release of CNBC’s America’s Top Business Survey this summer, which dropped Connecticut 15 points to 39.
The survey found that by 2021, 68% of businesses will post a profit, 17% will break even and 15% will experience a loss—seven percentage points higher than last year’s survey projected.
When asked what needs to be done to improve Connecticut’s business climate, Cole noted that his company has clients and projects in both the public and private sectors.
The inconsistency in municipal and state assessment processes created an “unfamiliar climate for business,” driving away customers.
Cole also urged to focus on transport and infrastructure.
“Decades of funding have taken their toll,” he said.
Cole praised the $5.4 billion in federal funding coming to the state as a way to “make our communities great to live and play in” and “revitalize cities and downtowns.”
Some of Lux Bond and Green’s employees lived 10 miles from their workplaces, Green said, adding that the infrastructure fund was “crucial”, yet their one-way commute was an hour.
“Investing in the future should be part of our expectations for our region,” he said.
Proportionality
Gearty said some communities in the state are easier to live in than others, and encouraged a stronger sense of community.
“Attitude, problem-solving and the way you go about helping those elements come together and get things done is important,” he said.
A CNBC study ranked Connecticut as the eighth most expensive state to live in, with one-third of employers telling a CBIA/Marcum survey that affordability is a concern for workers and their families.
20 percent said higher taxes were a concern of workers, followed by health care (18%), the economy (17%), education (6%) and transportation (5%).
Nearly nine in 10 business leaders (89%) say the cost of doing business in Connecticut is increasing. CNBC ranks Connecticut as the sixth most expensive state to do business.
Flexible workplace
Broder noted that with the rise of remote work, companies that cannot offer jobs will find it more difficult to find and retain workers.
Green – as a retailer, does not offer remote work – has made an extra effort to create a strong employee culture.
“We have to treat our people and listen to them differently than in the past.”
green
“It’s not just about the money, it’s about enjoying the waking hours when people are at work,” he said.
“Creating a culture and then having them give us experience while on the job was really important, it’s a fun experience.
“We really need to treat our people and listen to them differently than in the past.”
Remote work
Gearty can see the argument for and against telecommuting.
On the one hand, she said, there is a big difference in team dynamics when you meet on video platforms instead of in person.
On the other hand, she said, “the pandemic has hinted that some of these jobs may be remote and hybrid.”
“I see it as an opportunity. At the same time, it’s a challenge, and it’s always changing.”
“The pandemic has shed light on how some of these jobs can be done remotely.
Deb Gertie of the Ritz Inc
Kohl’s BL companies have worked hard to create a company culture that is accessible both in person and remotely.
“We don’t want commercial relationships,” he said.
We need strong and established relationships not only with our internal staff but also with our customers.
“We’re trying to be more proactive in maintaining and improving those relationships.”
Lack of manpower
The conversation turned to the most important issue facing Connecticut businesses: attracting and retaining employees.
Eighty-five percent of employers in this year’s survey said it is difficult to attract and retain workers, with 39% citing a lack of skilled applicants as the biggest barrier to growth.
Cole said there’s a “limited resource pool,” and given the state’s small size, “there’s a lot of competition here.”
Instead of just looking for current employees, Kohl’s is “investing in the future” by hiring interns in high school.
“We can’t get that return on investment until they graduate from college down the road,” he said.
“More funding, investment and support can definitely help us.”
Cole also said businesses need to prioritize what the new generation of workers want.
Instead of focusing on health care and retirement, young workers worry about rent, getting a car and housing, he said.
“It was very important to us to try to find a compensation and benefits package that spoke to everyone,” he said.
Why Connecticut?
Broder asked why Gearty, Green and Kohl chose to do business in Connecticut.
Green called Connecticut “a great place to work, play and raise my family.”
He said that although the lack of manpower is difficult, he has employees who are young and have been with his company for more than ten years.
“When you get good people, you have to know exactly how to keep them, and when you can, it’s getting the next generation to work for us, which is the biggest challenge for us.”
Gertie says the lifestyle in Connecticut is what made her stay in the state.
“We really have a great place to live and work here,” she said.
“The workforce here is truly incredible,” added Cole.
“Highly educated, extremely hard working, creative, I would say some of the best in the country.
I think we should be proud of the great workforce we have, we just need to expand that.
Policy solutions
Gerty cited CBIA’s TransformCT policy recommendations, which inform the survey results as a larger package of solutions to make them more attractive to residents and employers.
CBIA President and CEO Chris DiPentima told conference attendees earlier that addressing the workforce shortage requires long-term, sustainable solutions “that make Connecticut more affordable for residents and employers and open to opportunity for all.”
Nearly a quarter of businesses surveyed by CBA and Markham said tax relief should be a top priority for the state’s next governor and General Assembly.
Seventeen percent cited more business-friendly policies, followed by the economy (13%), government reform/regulatory relief (13%), state spending cuts (9%), and addressing the high cost of living and doing business (8%).
“We don’t do enough talking about the good life, how great it is to raise a family here and how much we all love living in the state of Connecticut,” he said.
“Yes, we have higher taxes, but we need to do better job marketing.”
Gertie agreed, “We’re all here [today] Because we want to do something about business here in Connecticut.
“It makes a difference to make sure we can talk about it and celebrate some of the positive things,” she said.
