Fourth Quarter 2020 Economic and Credit Availability Survey
CBIA Fourth Quarter 2020 Economy and Credit Availability Survey found that while a quarter of the companies surveyed suffered losses last year, more companies made profits than expected.
Just under half (49%) now believe Connecticut’s business climate is in decline, down from previous polls.
Of those who see a decline, 58% cite government policies, state spending and regulations as the cause.
Six percent think the state’s business climate is improving and 45% see it as static.
“Our state’s economic recovery is still fragile and we cannot ignore the challenges that businesses continue to face,” said Chris DiPentima, President and CEO of CBIA.
“Businesses have pivoted to create essential PPE, continue to invest in their workforce and put their community first.
“We need policies that support their recovery and growth, not those that add burdens and costs to the companies that have struggled the most. “
Only 26% of those surveyed reported current growth in sales (up from 39% in 2019), while 40% hold steady and 34% contract.
When it comes to the impact of COVID on business operations, 73% of businesses report operating on normal hours and capacity, while 24% are still operating with reduced hours and / or capacity, and 3% have increased their hours and / or their capacity.
Almost a quarter (24%) of employers plan to increase their workforce size in the next six months, while only 11% plan to cut.
For employers reporting reduced operations, 35% said they used layoffs, 33% reduced hours without using the state work-sharing program, 12% used the work-sharing program, and 8% reduced their use of temporary and / or contract workers.
However, supply chain issues persist, with 40% of businesses reporting continued disruption due to COVID-19 restrictions.
Almost a third (29%) of those surveyed said their supply chains were disrupted but returning to normal, 21% reported no disruption and 10% said this did not apply.
Several outstanding political issues worry Connecticut business leaders as they look to the future.
Health care costs are a major concern for employers.
Ninety-eight percent of respondents say they are somewhat (23%) or very concerned (75%) about employee health care costs, with almost identical levels of concern about the financial impact on their business.
More than two-thirds (69%) oppose a public health care plan, 57% fear taxpayers will subsidize plan deficits, and nearly 50% say they do not trust the state to run the plans health insurance.
The Connecticut Unemployment Trust Fund became insolvent in 2020, forcing hundreds of millions of dollars to borrow from the federal government.
When asked about the impact that the increase in unemployment taxes will have on their businesses, 43% of respondents predicted it would be moderate, 34% thought it would be important, 16% thought it would be minimal and 6% were not sure.
More than two-thirds (67%) support reforms to Connecticut’s unemployment benefit system, including higher income thresholds and requiring the exhaustion of severance pay before collecting unemployment.
Employers were asked to indicate their level of support for various sources of income for financing transport infrastructure investments.
The least popular among the proposals were increasing taxes and fees, including gasoline tax (75% opposition), license or permit fees (69%), and sales taxes (68 %).
The most acceptable were the prioritization of projects in terms of profitability (87% support) and the implementation of reforms to encourage public-private partnerships (71% support).
Concepts such as tolls, accounting changes and revenue embezzlement, reducing discounts on electric vehicle purchases, and increasing sureties produced mixed levels of support.
Access to credit and adequate funding opportunities, excluding state and federal COVID assistance programs, appear reasonably healthy, with 53% of respondents saying they were able to meet their demands. needs in 2020.
A quarter (25%) of businesses said they did not need access to credit at all, 13% said partial satisfaction and 9% said they were unable to meet their financing needs.
When asked to rate the current loan climate in Connecticut and share their credit outlook for the next six months, more than half (54%) rated it as satisfactory.
Eighty-six percent of employers said they applied for the first round of the federal paycheck protection program, while 40% said they applied for the second round.
More than half (57%) of companies said they have recently delayed their investment and investment decisions.
For the 60% of companies still looking for financing, more than half (58%) say they need it the most for working capital (daily operations, inventory, bridging loans), while 22% need it for capital investments in machinery and equipment and 10% for the expansion of a factory or office.
Of the 231 companies that responded to the survey, 88% have fewer than 100 employees. Forty-four percent are manufacturers, 12% are in commercial and professional services, 9% in construction and 7% in retail trade.
CBIA Fourth Quarter 2020 Economy and Credit Availability Survey was emailed to 3,213 companies in January, with a response rate of 7.2% and a margin of error of +/- 6%.