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February 22, 2021

CT manufacturers, hit hard early on by pandemic, now lead state’s jobs recovery

HBJ Photo | Steve Laschever To overcome the pandemic-related decline in commercial aerospace, Burke Aerospace President Brittany Isherwood pushed her company successfully into more defense contracts, saving jobs at her Farmington-based business.

Heading into 2020, Farmington manufacturer Burke Aerospace was coming off its best-year ever, buoyed by a strong and growing commercial aerospace business that makes components for turbines used in jet engines.

Jason Howey

Then COVID-19 hit, sending airline passenger traffic into a tailspin, reducing it by as much as 90% in the early days of the pandemic.

The situation foreshadowed trouble ahead for Burke, which relied on commercial aerospace for 80% of its business at the time.

"We never thought people would stop flying and we'd all be walking around with masks on," said Burke Aerospace President Brittany Isherwood.

But instead of panicking, Isherwood and her team pivoted into more stable sectors.

She hired a Washington, D.C., consulting firm that helped her figure out how to attract more defense business, which has remained strong during the pandemic. It won her company new work from existing clients.

Today, 70% of Burke's business is defense manufacturing, which has stabilized the company’s revenues and prevented deeper cuts to its 60-person staff.

"It was eye-opening to realize how critical it is to have a diverse portfolio,” Isherwood said.

The steep and sudden decline in commercial aviation that started last spring could have been devastating for Connecticut's manufacturing industry, nearly 30% of which is made up of companies in aerospace and transportation, according to the Connecticut Business & Industry Association (CBIA).

Jeff White

But recent employment numbers show the industry has been resilient. While Connecticut manufacturers shed nearly 12,000 jobs last March alone, the sector has helped lead the state’s slow and uneven economic recovery, adding jobs in each of the last nine months.

At the end of December manufacturers had recovered 61% of those 12,000 lost jobs, employing 158,000 workers. That compares favorably to the national manufacturing industry, which has recovered about 57% of the 1.4 million jobs lost early last spring, according to the Bureau of Labor Statistics.

Local industry experts say there hasn't been a silver bullet that's aided the jobs recovery. Rather, several factors have contributed.

Companies pivoting into new markets, including production of personal protective equipment, has helped. So has the state’s decision to allow manufacturers to remain open amid early COVID-19 lockdowns.

State and federal grant and loan programs, including the Paycheck Protection Program (PPP), have also provided much-needed capital that has saved jobs and kept production lines moving, experts say.

"When COVID hit, we saw innovation and resiliency that caused a pivoting like I haven't seen in my 20 years in manufacturing," said Chris DiPentima, CEO of the CBIA

Necessary pivots

Colin Cooper, the state's chief manufacturing officer, said the commercial aerospace industry is in for a slow and long recovery. There’s general consensus the industry won’t reach pre-pandemic passenger levels until 2023.

That’s forced some companies heavily reliant on commercial aerospace, like East Hartford jet-engine maker Pratt & Whitney, to trim their workforces.

However, other manufacturing sectors that saw initial downturns are showing signs of a much quicker recovery, he said.

Burke Aerospace makes components for turbines used in jet engines.

Companies making medical devices, for example, saw a halt in orders early in the pandemic, as supply chains in China faltered, and people postponed elective surgeries.

But as supply chains have recovered or adapted and people reschedule surgeries, medical device makers are seeing renewed demand.

Meantime, defense manufacturing has remained stable throughout the pandemic, Cooper said, and companies that make consumer hand tools or other products for home improvement experienced a surge in business as home-bound people embarked on do-it-yourself projects. New Britain toolmaker Stanley Black & Decker had a banner year in 2020, with year-end profits of $1.2 billion, up 26% from 2019.

The fact that manufacturers in certain industries are booming, while others are floundering demonstrates the importance of having a diverse portfolio, said Michael Schweighoffer, a senior vice president of commercial banking at People's United Bank.

"It all goes back to the mix of revenue, and what industries you're involved in," said Schweighoffer, who counts manufacturers as clients. "Not every company's facing many challenges, there are some companies that are doing great."

Burke Aerospace ended 2020 with a 30% drop in revenue, but that was much better than was projected at the beginning of the pandemic, Isherwood said.

"If we hadn't shifted from commercial aerospace to defense, we could have been down about 50%,” she said.

The company’s pivot was aided by American Defense International (ADI), a D.C. consulting and lobbying firm focused on military issues.

Isherwood also worked to expand the amount of work her company does for existing defense contractors — including Pratt & Whitney and Raytheon Technologies Corp. Among changes the company made was its name.

Burke Aerospace was formerly called Turbine Technologies, which Isherwood said made some defense contractors think the company made green energy turbines.

Additionally, Isherwood said she’s looking into possibly diversifying into making components for guns or medical devices.

Some Connecticut manufacturers have seen opportunity in shifting production to make personal protective equipment (PPE), which was in especially high demand when supply chains from China were shaky last spring.

Hartford-based commercial printer Joseph Merritt & Co. Inc. offset some lost revenue amid COVID-19 closures by pivoting to making face shields.

Modern Plastics, a Shelton-based defense subcontractor that supplies plastic components to a range of weapons systems, pivoted to making plastic face shields, and then acrylic plexiglass barriers used in retail, restaurants and casino settings to separate workers from customers.

Shifting into gear

Revenues at New Britain manufacturer OKAY Industries fell by about 25% at its pandemic low point, CEO Jason Howey said. Now business at the company, which designs and makes metal and plastic parts used by medical device makers, is about 5% lower than in a normal year.

Howey attributes much of the rebound to people scheduling previously postponed elective surgeries, which increases demand and orders for medical devices. And amid that bounce back, he's hiring.

"We've actually been adding some key talent for manufacturing and project management," Howey said of his approximately 300-employee company, adding that he thinks manufacturers will soon be struggling with the industry's pre-pandemic problem of finding enough skilled workers to fill open positions. "[Workforce issues] haven't gone away, they just got delayed because of COVID."

The federal PPP program also played a role in keeping OKAY Industries and Burke Aerospace going during the uncertain early days of the pandemic. They received $2.7 million and $1.2 million, respectively, from the program, according to U.S. Small Business Administration data.

PPP funding has been critical to Connecticut manufacturers, Cooper said.

"It allowed companies that were suffering significant demand declines to keep their workforce in place," Cooper said. "In the absence of it you would have seen a lot more layoffs."

Another factor aiding the manufacturing recovery is the fact the pandemic didn't ravage local supply chains as much as initially predicted, said Jeff White, who leads the manufacturing industry and aerospace supply chain groups at Hartford law firm Robinson+Cole. Gov. Ned Lamont's decision to categorize all manufacturing as essential and not subject to COVID-related shutdowns helped protect Connecticut's supply chains, White said.

White said some of his clients are seeing record sales and need to hire more people to keep up.

"There was a significant rebound for a lot of manufacturing businesses as we hit the end of 2020," White said. "It doesn't surprise me that the job numbers rebounded. … I expect that [the industry will] continue to recover."

Additionally the state's Shared Work Program kept many manufacturers from laying off employees, said CBIA’s DiPentima. Shared Work allows people who've experienced a 20% to 60% reduction in work hours to claim partial unemployment benefits.

White and DiPentima are both bullish about continued recovery in Connecticut's manufacturing industry, partly because of state efforts to bolster its manufacturing workforce.

Cooper said the mix of out-of-work residents needing employment, manufacturers needing talent and the state's creation of a manufacturing industry workforce development plan could lead to a historic long-term restoration of Connecticut manufacturing.

"If we crack the code here in Connecticut and have a trained and flexible and abundant workforce, that demand [for skilled workers] is going to find a supply here," Cooper said. "That demand is going to come here to Connecticut."

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