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Analysis: State needs clear policy for retaining jobs in manufacturing

Presto plant in Jackson closing mid-December

JACKSON — In 1954 National Presto Industries, a small appliance manufacturer, chose Jackson for the location of its first plant outside of the company’s headquarters in Eau Claire, Wis.

The company thrived through the years, becoming a strong brand name with products such as the Presto aluminum and stainless steel pressure cookers and aluminum canners. But after 48 years, one of the oldest employers in Jackson will be closing its door — another casualty of the “global economy.”

“Company officials expressed both anguish and heartache over the decision to close the Jackson plant, while extending their very sincere appreciation for the overall performance, dedication and work ethic of the company’s workforce,” a press release from national headquarters stated. “Officials pointed out that although through no fault of their own, long-term and loyal employees will end up losing their jobs.

Presto attributes its decisions to the effects of the global economy.”

Presto employed 147 full-time employees and 50 seasonal workers with an annual payroll of nearly $4 million at the plant in Jackson that will close in mid-December.

The company blamed the loss of the jobs at the Jackson plant on the need to match aggressive pricing from competitive small appliance companies, most of whom have discontinued U.S. operations and taken advantage of lower cost, foreign sourced products. Company profits were eroded “beyond endurance,” in turn making the decision to transfer manufacturing to foreign sources unavoidable.

By 2003 all significant products marketed by National Presto Industries will be sourced from China.

Mississippi has seen a net loss of about 50,000 jobs in manufacturing in the past seven years. Were all those job losses unavoidable? Could the jobs at Presto in Jackson have been saved?

Pete Walley, director of long-range economic development planning for Mississippi, believes there are things that could have been done to save the jobs at Presto, and at other manufacturers in Mississippi hard pressed to stay afloat because of foreign competition.

“What plants do we think we want to save?” Walley asks. “I will state that we can save the plants we want to save with public sector dollars. But what is the public sector dollar strategy? Clearly, with all due respect to current and past administrations in Mississippi, there is no strategy. We are just responding by trying to recruit to replace whatever we lose.”

While the state does a good job recruiting new industry, it has been far less successful in preventing the loss of jobs at factories such as Presto and Emerson Electric, a fractional horsepower motor plant in Oxford that employed 520 people before the jobs went offshore. While the state puts forth a great deal of effort to attract new industry, what assistance was offered to Presto or Emerson to keep their doors open?

“We do what we know best to do,” Walley said. “We know recruiting very well. We are probably as shrewd a recruiter as any state in the nation. But that is only one action that we need to pay attention to the manufacturing sector. We need to understand existing industry needs, and we need to really understand what capability we have in the public sector to maintain our industry. We don’t understand that very well.

“There are numerous programs at different entities to assist manufacturing. Each is doing the best it can with the money each is getting, but the net result is we have lost 50,000 jobs. There is a lack of focus in what we can do in the manufacturing sector.”

The state obviously can’t afford to keep every factory open that is squeezed by cheap foreign labor and materials. But Walley believes it would make sense to strategize and pick certain types of plants with the best possibilities of staying profitable and keeping Mississippi workers employed.

“Because of limited resources, we can’t be everything to everyone,” Walley said. “So we have to decide what we can be best in, and utilize scarce public dollars to be the best in that area. We need to look at different business sectors, market sectors and world forces, and decide which industries to concentrate on. We would tell the other people that, ‘We wish you well, and are not going to try to check you. But we can’t put any public sector dollars into helping you.’”

Obviously, choosing the industries/jobs to support would be controversial. But might it not be better than losing all the jobs?

“There is the dilemma of the public sector moving into the business decisions of the private sector,” Walley said. “And, I think there is reluctance in the public sector to make those kinds of decisions. We’re doing all kinds of things to assist business in Mississippi, but it isn’t a coherent policy. We’re not saying, ‘Here are the sectors we are going to help and this is how we’re going to do it’.”

Three-pronged strategy

Walley believes there are three things that could be done to save manufacturing jobs in Mississippi.

First, sweeten the incentive package for existing industry. Ask the manufacturers, “What would it take in the way of tax relief and bonding programs to make your plant more competitive?” Even though the state has the capacity to help existing industry with incentive packages, few plants take advantage of that, which leads Walley to assume there must be some legal or technical problems with incentives for existing industry.

Second, concentrate on training the workforce and encouraging them to get skill sets that complement the strategy of the type of plants the state has chosen to concentrate on retaining. “Pick some industries we think we have the best shot at,” Walley said. “Understand the skill sets for those industries and encourage the workforce to get those kinds of skill sets. I know if we brought our system to bear, we could do those kinds of things.”

The third thing, and one Walley believes is critical, is bringing the state’s academic capacity to bear on solving the practical problems of the manufacturing sector. States that are most successful in retaining manufacturing firms have learned to couple their academic capacity to solving the practical problems of manufacturers. An example is neighboring Alabama. Mac Portera, the former president of Mississippi State University, was a major advocate of using the capacity of higher education to help industry solve problems and remain competitive.

“We did not heed his warnings very well,” Walley said. “So he went back to Alabama where he is doing it over there. They have the mindset that they are going to help manufacturing solve their problems. Core research can be used to develop new products and new processes. Supposedly the thinking ability in our state is in our universities. How do we get them out there helping?”

If Mississippi doesn’t do anything, the current trend in plant closings doesn’t bode well for the future. The state has been spending large amounts of money on recruiting efforts, and is still 50,000 jobs in the hole. And many more manufacturers are struggling, which could mean the bleeding of jobs offshore could continue unabated.

“China is going to kill us if we don’t learn how to compete with them,” Walley said. “They are smart. I read a technical article a week ago where they took one of our computer products, reverse engineered it, and brought it back to market in less than 90 days. That implies smartness, not just hard work. They did this for a fraction of cost for the competing product.”

Other issues also important

Jay C. Moon, executive vice president, Mississippi Manufacturers Association, says the state also has to look at issues such as tort reform, the cost of health care and ma
ining a good transportation infrastructure in order to remain competitive.

“The cost of health care has continue to escalate strongly in the past few years,” Moon said. “That is a cos


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