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Tort reform vital in manufacturing’s role in development

It’s wonderful that there are major new projects in Mississippi that will generate thousands of new jobs; however, manufacturing jobs are going out the back door much faster than they’re coming in the front.

Since Jan. 1, 2001, 146 Mississippi manufacturers have closed their doors, putting countless Mississippi residents out of work.

Jerry McBride, president of the Mississippi Manufacturers Association (MMA), is concerned that from 1981 to 2002 there were 269,684 new jobs announced, and of those, 88,681 were new jobs at new companies. The other 181,003 were expanded industry jobs. So about one-third of the jobs created from 1981 to 2002 were at new industry and two-thirds of those created were in existing industry. McBride’s concern is existing industries that were lost.

“Many will never come back,” McBride said. “It’s not a matter of cutbacks. They’re being closed.”

Manufacturers blame the current situation in manufacturing in Mississippi on a variety of things. High on the list are the high cost of healthcare in Mississippi and the difficulty in competing on a worldwide basis with the existing labor force. But manufacturers in the state blame the loss of jobs more on the lack of tort reform than on anything else.

“There certainly aren’t, in the industry that we’re in, any bright spots,” said Sam Moore, president of Double G Coatings Inc. in Jackson and chairman elect of the MMA. “We’re just trying to survive at this point.”

Double G Coatings specializes in coated steel products for the metal building construction industry. Mississippi manufacturers aside, the steel industry has experienced its own hard times recently. More than 30 steel manufacturers nationwide are currently in U.S. bankruptcy courts.

Moore, a generally optimistic person, said the future of manufacturing in the state looks bleak from where he stands. “I’m hearing far more negatives than I’m hearing positives right now,” he said. “I wish I could say I’m excited, but I just don’t see it.”

Larry Cox, president of Steel Service Corporation, which has plants in Flowood, Brandon and Batesville with a total of 400 employees, agreed with Moore that the future does not look good for Mississippi manufacturers. And, Cox said, “You need manufacturing before you have anything else.”

As McBride put it, “We can’t all cut each other’s hair and expect to make a living at it. No one’s going to put money into the economy if you don’t have manufacturing, and you’ll see those services close up. You’ve already seen them close up.”

Lex Taylor of Taylor Machine Works in Louisville called manufacturing the “kingpin” of the economy.

“It’s the value-added side,” Taylor said. “You can’t have job creation or value- added services if you don’t have manufacturing. The rule of thumb is that for every manufacturer there are so many industries generated as a result to support or distribute around the manufacturing base. So manufacturing is a job creator.”

Cox said addressing tort reform would help attract manufacturers to the state.

“I have people in my industry who wouldn’t come to Mississippi because of the lack of tort reform,” Cox said. “But manufacturing is sort of in the tank right now. It’s competitive and business is limited.”

But bringing new manufacturers in will not solve the problems that existing manufacturers are having. And while many look at Nissan as a welcome project for the state, Cox is worried about what it might do to other manufacturers.

“The main Nissan factory will hire over 5,000, but the first, second and third tier suppliers will hire another 5,000,” Cox said. “That’s 10,000 people needed to work in a close proximity to our plants, and we have an unemployment level of less than 3% in Rankin County. Where will those skilled workers come from?”

For that reason, Cox said, more training dollars are needed for manufacturing.

“It’s the chicken and the egg here,” Cox said. “Obviously we need a greater manufacturing base and we need greater industrial development in order to get our tax base up to where we can afford to pay our teachers more and retain some of the brighter minds.”

Ron Aldridge, the state director of the National Federation of Independent Business and a member of the executive committee for Mississippians for Economic Progress, the business and medical tort reform coalition, said it’s important to help new and existing industry.

“I would hope that in the future that when we look at opportunities like Nissan that we also look at the opportunities that are already here in Mississippi for our own entrepreneurs to expand their small businesses all across the state,” Aldridge said. “And let’s make sure we take care of our people here at home. I think we have to do more in that area to make sure our small businesses can grow into larger ones.”

Taylor said there are positive attributes to Mississippi and to its manufacturing base. The problem is those positive attributes are being overshadowed by the negative ones.

“We have great natural resources, I think our people resources are good,” Taylor said. “But the negative perception right now is detrimental.”

Aldridge agreed. “It doesn’t take business entities long to figure out that staying in Mississippi with the court systems here now can be devastating,” he said. “As an individual, the one message I hope we can send to the next generation is not that the next thing you need to think about is to sue someone. Instead, I think we need to teach our next generation how to sit down and resolve something in an orderly fashion.”

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

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