January 4, 2019

Kaman CEO Keating: Taxes, fiscal instability drive away next-generation workers

Photo | Alan Grant/CBIA
Photo | Alan Grant/CBIA
Kaman CEO Neal Keating keynotes a CBIA and MetroHartford Alliance economic summit in Hartford on Jan. 4, 2019.

Connecticut's steadily aging population threatens to tarnish in the years ahead the quality of one of the state's current "crown jewels" -- its educated and specialized workforce, Kaman CEO Neal Keating said Friday.

Inability to keep or attract younger residents, particularly those in their 20s, 30s and 40s, is of particular concern for manufacturers, whose employees are older on average compared to other industries.

The Bloomfield-based executive said young people and their parents take notice of Connecticut's middling-to-poor standing in various state rankings by national media outlets like U.S. News, which ranked Connecticut the 24th "Best State" to live in last year.

"Why aren't we in the top five?" Keating said Friday morning to an audience of more than 400 people at the Connecticut Business & Industry Association's economic summit in Hartford. "This is what young people see."

The state's reputation, he said, has been shaped in part by recent tax increases and fiscal instability.

"When you open the paper at least every other day and you hear about large, moving deficits, and you try to plan over a five- or 10-year period of time for your employees and your company, that is a real issue with the uncertainty," Keating said. "We have to change this -- I hate the word 'narrative' -- we have to change the facts that drive the stories."

With the legislature set to convene next week, Keating said he hopes the state continues to invest in workforce development, reduces the cost of doing business and provides more budget stability. He also said tweaks to the state's tax structure could help Kaman -- which employs about 1,200 in the state -- and other aerospace manufacturers, though he didn't delve into specific tax rules.

"The complexity and structure of tax policies in Connecticut really don't incent long-term investment if you're in a cyclical business like aerospace," he said.

Though Connecticut added manufacturing jobs in 2017 for the first time in years (and was on pace as of November to do so again in 2018), its manufacturing growth has been among the slowest in the U.S. over the past decade, Keating said.

For his part, Keating wants to see improvement in Connecticut's ranking in PwC's annual ranking of aerospace manufacturing attractiveness, which had Connecticut in 30th place last year.

The state ranked highly in aerospace workforce and infrastructure, but received lower scores for cost and tax policy, which dragged down its overall ranking. If Connecticut could get to just a median score for those two categories, it would increase its overall PwC ranking to fifth place, Keating said.

"I'm not saying that it's not hard, but I'm saying modest improvement," he said. "Is this unreasonable? I don't think so."

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