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Issues interrelated, experts say

Training, lawsuits, offshore competition on minds

Workforce training, the legal climate, rising insurance costs and competition from offshore — these issues have been on the minds of Mississippi’s manufacturers for some time, and manufacturers are now hoping an end is in sight.

Tort reform seems to be the issue most on the minds of the state’s manufacturers, although they point out that all the issues are connected.

“If a person is having trouble finding a trained workforce and they’re having problems with the legal climate, offshore is awfully attractive,” explained Greg Robinson, past Mississippi Manufacturers Association (MMA) chairman and president of Robinson Chemical Coatings.

Robinson, whose company manufactures industrial paint, said many of his customers are farming out more of their business to offshore companies as a result of the lack of a trained workforce and of the legal climate in Mississippi, which has in turn led to higher workers’ compensation insurance costs.

“I think it’s a real concern,” Robinson said. “If you have a bad legal climate and training’s not good, industry is going to move production and prepare to do more in China. This whole thing kind of rolls into a ball.”

For Mississippi, the legal climate, high costs of insurance, the lack of a trained workforce and competition from offshore manufacturers has meant the loss of about 50,000 manufacturing jobs over the past decade. Needless to say, ways of finding solutions to these issues is a priority of manufacturers across the state.

Jerry McBride, president of the MMA, believes there will be a conclusion to the tort reform effort because of the “lawsuit frenzy that’s taking place in Mississippi,” he said.

“Eventually the public is going to know full well that we’re going to lose doctors and businesses — they’re going to fully realize that there are negative implications of someone who has taken one prescription or who is not even ill filing a lawsuit,” McBride said. “I don’t know when it’s going to get done, but it’s a cancer and it’s going to keep eating at the state until something can be done.”

Dan Bowman, general manager of Midland Container Corporation, a manufacturer of corrugated shipping containers, said in spite of the fact that there has been some success on a grand scale with Nissan locating in the state, the legal climate in Mississippi has made it very difficult for the state to attract other new industries.

“Believe me, Nissan is not going to offset all the losses we’ve had in the last 12 months,” said Bowman, who also serves on the MMA’s board of directors. “It’s going to be great but things are really going to have to change before we start attracting the business we need to have here.”

Over the past 18 months, Bowman has watched as two box plants in metro Jackson have closed.

“There are a lot of reasons for the decline in industry, but I have to believe that the decline in industry is not centered around anything but the legal climate,” Bowman said.

Even Midland Container Corp., which has been in operation since 1963, is feeling the pressure of the state’s adverse legal climate, and they have moved much of their marketing area outside of the state.

“If you look at our business from 30 years ago the overwhelming majority of it was in Mississippi,” Bowman said. “But now we have a considerable amount of business that is out of state. Our work in Mississippi is dwindling.”

Bowman said states with better laws are more attractive to industry than Mississippi.

“I think virtually any state around probably has a better (legal) environment (than Mississippi),” Bowman said.

MMA director of industrial relations John Baas recalled a survey Mississippi manufacturers took two years ago. The top two issues at that time were the cost of healthcare insurance and finding skilled labor. The current legal climate, he said, has caused medical costs to go up, and healthcare and workers’ compensation insurance to go up.

“If you’re going to attract the right people you have to have the right benefits package,” Baas said. “I don’t know the answer to the legal climate but we’re going to have to have some changes or we’re going to continue to lose business.”

Robinson said the legal climate is a complex one, and finding a solution will be, too.

“You can’t inhibit a person’s right to the legal system,” Robinson said. “A person has to have the right to arbitrate or litigate.”

However, he said, to file so many frivolous lawsuits against companies simply to win some sort of “award” is ridiculous.

“It really shows up that there’s something amiss there,” Robinson said.

Compared to the legal climate, competition from offshore and the rising costs of healthcare and insurance, finding a trained workforce seems like small potatoes.

It is not.

“I went to Kentucky last summer and they had a situation in Kentucky when the automobile manufacturers started moving in up there,” Baas said. “They decided the answer was to start a local industrial training consortium, stop stealing employees from each other and determine the key areas to train people in.”

But Mississippi, Baas said, already has District Workforce Councils and the Workforce Investment Act to help companies get workers trained.

“We have a major, major, major problem in Mississippi between applications and valuable candidates,” McBride explained. “There is a great concern that we have many people who do not have enough education to meet the needs of a modern manufacturer. A modern manufacturer uses high-tech tools, equipment and computers. It’s not the same manufacturing environment that it was even 10 years ago. It’s different and even more competitive and technical and Mississippians need to understand that they have to have the education to work in those environments.”

McBride said the Legislature and others are going to have to understand that industries such as agriculture, mining and manufacturing are important and must be preserved.

“We’re not all going to be high-tech and service industries,” McBride said.

Contact MBJ staff writer Elizabeth Kirkland at ekirkland@msbusiness.com or (601) 364-1042.


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