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Manufacturing
Wednesday | 19 December, 2012 | 3:40 pm

Staying close to home

By Lauren Duensing

Many Americans are lobbying to increase the amount of manufacturing jobs in their communities

December 2012 Although this year’s presidential election campaigns are over, the memory of around-the-clock coverage of both major and minor issues—including the future of U.S. manufacturing—still is fresh. The fourth annual “Public Viewpoint on Manufacturing” survey, released at the end of October from Deloitte and The Manufacturing Institute, notes Americans believe the country’s leadership is “off-course” 

regarding the issue of manufacturing competitiveness. This belief is “seeping beyond manufacturing, dragging down optimism about an economic turnaround,” said Jennifer McNelly, president of The Manufacturing Institute, in a press release. 

The survey sampled a nationally representative group of 1,000 Americans and found 84 percent either “strongly agree” or “agree” the United States should cultivate a more strategic approach to developing its manufacturing base. In addition, 82 percent of survey respondents support further investment into the U.S. manufacturing industry. 

mm-1212-manufacturing-image1“This year’s survey found that Americans also maintain a remarkable belief in manufacturing despite year after year of economic turbulence. In keeping with previous years, 90 percent of respondents rated manufacturing as ‘important’ or ‘very important’ for their economic prosperity and America’s standard of living,” Craig Giffi, vice chairman, Deloitte LLP and consumer and industrial products industry leader, said in a statement.

“What is more, when asked what type of facility they would establish if given an opportunity to create 1,000 new jobs in their community, Americans again placed manufacturing at the top of the list—ahead of all other industries, including energy, technology, health care and communications,” he noted.

Creating wealth

The wealth creation pendulum in the United States is swinging between an industrial model based on labor and a post-technological model based on the sale of common stock. For many communities, however, increasing the amount of industrial jobs offers an opportunity for continued wealth creation and growth. 

According to the 2012 edition of the “Facts about Modern Manufacturing,” a collaborative report generated by the The Manufacturing Institute, the Manufacturers Alliance for Productivity and Innovation and the National Association of Manufacturers, “every dollar in final sales of manufactured products supports $1.34 in output from other sectors, the largest multiplier of any sector.”

The report also illustrated the strong compensation offered by manufacturing employers. “In December 2011, manufacturing employers paid $32.93 per hour in wages and benefits, while all employers in the economy paid approximately $30.44 per hour, an 8 percent premium for manufacturing employees.” 

However, structural costs for U.S. manufacturers, such as corporate tax liability, employee benefits, tort litigation, regulatory compliance and energy, have risen relative to the country’s nine largest trading partners.

Negotiating and analyzing these types of costs is a major consideration when companies choose to build a new manufacturing location.

“Companies want to invest in a location where they can grow and succeed,” says Joey Roberts, senior project manager for the Mississippi Development Authority, the state’s lead economic and community development agency, which works to recruit, retain and expand industry and businesses. Roberts says to accomplish this goal, the organization focuses on each company’s specific needs. “We tailor incentive packages and workforce training programs to continually meet the needs of each prospective business and each existing business.”

Some of these companies are relocating to be close to customers, and  others are taking advantage of opportunities in fast-growing markets. Roberts says the steel and metal industries represent major manufacturing sectors in Mississippi. ‘These types of projects offer significant investments and create a substantial number of jobs for our state,” he notes. “Mississippi has a cluster of steel processors and fabricators located throughout the state, including Tishomingo County and the Yellow Creek port region, Golden Triangle region, which is where Severstal is located, and Ingalls Ship Building located in the Gulf Coast region.

“Our automotive industry continues to be a growing market,” he continues. “Nissan and Toyota have manufacturing operations in the state, and with the numerous automotive OEMs located in the Southeast, we continue to see a large number of automotive suppliers interested in locating in Mississippi.”

For the states near the Marcellus and Bakken shale plays, a growing energy market is spurring investment. Industrial Info Resources, Sugar Land, Texas, notes a surge in U.S. natural gas development has spurred $226 billion in spending plans for pipelines, storage, processing facilities and power plants, most slated for the next five years. In addition, according to the Energy Department, the United States remains one of the fastest-growing markets for wind power, with a majority of the equipment for turbines and components coming from domestic manufacturers.

“A lot of manufacturing can feed off the energy industry,” says Brandon Marshall, manager of business recruitment and development for the Wyoming Business Council, Cheyenne, Wyo., the state-level economic development agency that focuses on building a strong job creation base with manufacturing and technology as core competencies while strengthening existing business and industry groups. “Worthington Industries is committed to building a facility to support wind manufacturing in Cheyenne. The wind industry is beginning to be a huge deal in Wyoming. We’re near the end of the permitting process for a 1,000-turbine wind farm, which would be the largest wind farm in the world.”

Marshall says there are a “lot of successful companies in the state that work in manufacturing, including a startup operation that began as a welding truck, going to the gas welds in the Rock Springs region. They developed a product that took care of venting and exhaust issues on the welds.”

He says the state isn’t known as a manufacturing state yet, but “what we have has been very successful. Among others, there are some steel building fabricators and another company in Cheyenne that provides switches for rail lines.”

mm-1212-manufacturing-image2

Company checklist

Concentrations of industry can create clusters of companies that thrive on each other’s expertise.

An economic cluster often attracts groups of like-minded companies to a particular region, which as it grows, necessitates investment in transportation and other infrastructure. Before making the decision to expand operations, companies account for the overall cost of doing business in a state, including taxes, energy costs, access to transportation and amount of ready-to-work employees.

“Whether it is rail, water, or highway and interstate access, industries look for various ways to reach their customers and provide them with the best possible service,” Roberts says. “[Mississippi] has six interstate highways, 80 airports, 17 rail systems that provide more than 2,500 miles of track for businesses to utilize, and 15 ports, including two deep-water ports on the Gulf Coast that offer businesses access to worldwide commerce.”

Marshall points out transportation expenses will continue to increase so Wyoming has “invested a lot of money in rail parks. We have nine across the state. One particular park in Cheyenne has both the Burlington Northern and the Union Pacific railroads, as well as access to I-25 and I-80.”

He adds a lot of companies are looking for abundant power, as well. “That’s something we can provide in both alternative and traditional forms. We produce 40 percent of the nation’s coal, so abundant power is not an issue from any of our power providers. Within the next five to 10 years, we’ll also have more than 10,000 megawatts generated by wind power in Wyoming,” Marshall says. 

Today’s manufacturing jobs require talented, highly skilled employees.  Companies, trade associations and schools are working together to ensure worker shortages aren’t holding back growth. 

mm-1212-manufacturing-image3For companies who are planning expansions, “a ready-to-work and skilled workforce is one of the most important criteria, if not the most, for companies to operate successfully,” says Roberts. “As manufacturing becomes more advanced and high-tech, it’s essential that companies have access to a quality, trained workforce pool. You must have strong and competitive incentive packages to attract investment in your state, and over the last few years, the workforce component continues to be an area that is highly scrutinized by companies.”

It’s important to cultivate relationships with universities and technical schools to develop and sustain a manufacturing workforce, Roberts says. In addition, it’s  necessary “to have programs in the high school system steering students toward career opportunities available in the manufacturing sector.”

“Wyoming is a small state, and one of the things we work hardest to address for companies is the workforce issue,” Marshall says. “All of our community colleges provide training, and we have seven community college campuses that offer AWS Certified welding programs. Any one of the community colleges in the state can put together a customized training program that the state will help pay for.”

Cities and towns near growing industries all over the country are clamoring for manufacturing jobs. The ultimate goal, however, is to move beyond job creation to wealth creation. “If you don’t create wealth, you don’t create jobs,” Marshall says. “There has to be a capital formation that happens, and that’s what feeds growth.” MM

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