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Manufacturing anticipating new openings, expansions

Despite challenges on a global scale, manufacturing remains strong in Mississippi. The governor, Mississippi Development Authority (MDA) and the Mississippi Manufacturers Association (MMA) agree on the positive outlook and expect this year to be another good one for that sector of the state’s economy.

Gov. Haley Barbour’s spokesman, Pete Smith, said 20,000 new manufacturing jobs have been netted during the governor’s term despite losses from Hurricane Katrina.

“Manufacturing has remained steady for two and a half years. Prior to Gov. Barbour taking office, there was a decline of about 35,000 jobs,” he said. “We now have 20,000 more Mississippians working than when his term began.”

Smith says there are numerous reasons for this growth and lists Momentum Mississippi and tort reform as two. “We’ve had a lot of good pieces of legislation that have contributed to a better business and manufacturing climate in Mississippi,” he added. “We can point to a couple of new plant openings — Raytheon and SeverCorr — that are a result of Momentum Mississippi.”

Expansions emphasis

Gray Swoope of MDA acknowledges that manufacturing is changing, making the three programs of Momentum Mississippi dedicated to existing manufacturers very important.

“The emphasis is on expansions. We must look at the impact of productivity. With increasing technology, job numbers have changed, even in China,” he said. “We need to look at rewarding productivity and the investment a company makes in a community.”

Although the state is seeing lots of good activity with the new programs, he feels that will get better. “We haven’t had a full year yet,” Swoope said. “We’re just now getting the word out about the new programs and the feedback is positive. Momentum Mississippi will bring results.”

The MDA assistant executive director also said the state agency is developing a database of all the manufacturers in the state with Entergy, Mississippi Power and Tennessee Valley Authority (TVA) on board as partners. There are already close to 500 companies in the database.

“We’re asking what keeps them from expanding, what are their concerns and obstacles, what do they need?” Swoope said. “This information will be very useful.”

The MMA’s executive director, Jay Moon, is also sold on the state’s incentives for new and existing companies. “The existing incentives were made better,” he said. “They recognize the changes in manufacturing. That’s very important.”

Before the passage of Momentum Mississippi, state developers did not have the resources and tax credits for existing businesses. Reaping those benefits does not require an increase in the number of employees of existing businesses. An expansion with updated equipment may require fewer workers because of improved technology. That scenario, however, is recognizing changing times and working with existing companies to keep them in the state.

In addition to Raytheon and SeverCorr, Moon points to two other new companies as a result of Momentum. Trio Industries will open in Greenville, employing 100 workers initially. The company makes a coating for wood that is impervious to water and humidity. It can be used in construction areas such as bathrooms and kitchens not usually good for wood. Raybestos, a biodiesel company opening in Natchez, will make diesel out of coal.

Growth pattern

“So far this year, we’re doing well and a significant part is with existing companies. Statewide, it’s looking good,” Moon said. “We’re taking part in the national economy. I talk to my colleagues all over the country and they’re seeing a good growth pattern in manufacturing.”

Noting there were more jobs created in 2005 than were lost, he expects that trend to hold true for 2006 due to expansions and openings. While a few manufacturers closed on the Coast because of Katrina, the majority are up and running.

“Some closed, but we have to look at each individually,” Moon said. “Some might have already had problems and the storm was the final blow. Others that were impacted were able to get back up quickly.”

The MMA leader expressed appreciation to Entergy and Mississippi Power for getting plants back into production. “I can’t say enough about them,” he said. “They were critical for our economy.”

Not in the Momentum package but also important is the workforce training legislation that allows some unemployment taxes paid by employers to be diverted for training. Over $18 million was transferred over the last year to the state’s community colleges. Training is not exclusive to manufacturing but a lot of it will be used for that sector.

“This is an incremental process over the year and the community colleges are setting it up for all kinds of training on a first come, first serve basis,” Moon said. “Historically, we’ve had only $12 million available. We estimate there will be $15 million this year so this was a significant ramp up.”

Shot in the arm

The diversion of unemployment funds to workforce training stops when the unemployment trust fund falls below a certain level. Katrina could have caused that diversion to stop but an injection of federal funds offset the drain on the trust fund.

“This piece of legislation is really a great shot in the arm,” he added. “Before, we had to go to the Legislature each year and didn’t know how much we would have. We couldn’t plan. Now we can do a multi-year commitment for training. Any funds not used roll over and do not go into the state’s general fund.”

Moon says the biggest impact on manufacturing at this time is a shortage of workers all over the state. “It sort of defies the trend,” he said. “It’s also problematic that employers tell us they see many applicants who don’t pass drug and alcohol tests. They can’t hire people with those kinds of problems and have them operating equipment.”

Contact MBJ contributing Lynn Lofton at llofton656@aol.com.

About Lynn Lofton

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