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Large industries economic anchors for communities in state

Despite being largely rural, Mississippi is a big business state. Almost half of the workers in the state are employed by companies that employ 500 people or more.

“That fraction of the workforce earns more than 54% of the wages paid to Mississippi workers,” said Pete Walley, director of long-range planning for Mississippi.

“From an employment and wage perspective, large employers are very important to our economy and to state revenue principally in the form of income taxes and state sales taxes.”

Several sectors of the Mississippi economy have significant percentages of workers in firms of 500 persons and greater. According to current statistics from the U.S. Census Bureau, of the 175,000 workers in manufacturing, 69% of the workers are in firms with 500-plus workers. Of the 142,000 workers in retail, 51% are in firms of 500-plus workers.

Jay Moon, president and CEO of the Mississippi Manufacturers Association, said larger companies benefit from economies of scale.

“They generally have the resources to offer competitive wages and benefits,” Moon said. “For national or multi-national companies, wages and benefits are set across the company. This means that Mississippi employees of these companies have the same pay scales and benefits as their peers in other states.”

Another benefit Moon points to is that larger companies often have the resources to invest in the local communities, whether through cash or in-kind donations to charitable groups or schools, or through the availability of employees to volunteer in the community. Having larger companies in a community can also significantly add to the tax base of the area.

“Larger businesses also utilize more local suppliers and services purchased from other local businesses,” Moon said. “This creates new jobs and puts more dollars back into state and local economies. Finally, large companies can help to attract other businesses to the state, which also creates more jobs and new capital investment, generates more local taxes and enhances the state’s business supportive image.”

Stabilizing employment

In many communities, large industries and the larger employers are vital to their economy because they help stabilize employment, said Mitch Stennett, president, Economic Development Authority of Jones County,

“However, the difference between a large industry that is locally owned and one that is a satellite facility may be monumental,” Stennett said. “Locally-owned large businesses, similar to small home-owned businesses, generally can make local decisions, purchase more products locally and are often more involved in the civic life of a community, whereas large corporations which govern satellite plants from afar may not be as in touch with local initiatives and the local culture.

“The owners or management team of large local industries also live in the community, whereas satellite facilities may be managed by people who live elsewhere. That’s not to say that large businesses owned by out-of-town or out-of-state firms don’t play a significant role in a local economy, because they do. For example, both Masonite and Wayne Farms in Jones County have worked to not only fit in with local customs and cultures, but also have people who are heavily involved in community affairs. However, some communities aren’t as fortunate as we are.”

Support and supply spreads wealth

Jerry St. Pé, chairman, Mississippi Gaming Commission and former head of the state’s largest private employer, Ingalls Shipbuilding (now Northrop Grumman) in Pascagoula, said large industries spur the creation and provide viability for smaller businesses throughout the region.

“I know that is true at the shipyard where we had thousands of suppliers,” St. Pé said. “The same is true for the gaming industry in the state. The gaming industry has a large reservoir of local Mississippi-based businesses that provide many services in support of the industry. Large businesses represent the anchors for the economy. But in terms of their contribution to the economy, they are also the lifeblood of many, many small businesses.”

St. Pé said after Hurricane Katrina, large businesses like Northrop Grumman, Chevron and Keesler Air Force Base got back into operation in incredibly short periods of time. As a result of that, within weeks after the hurricane thousands of people were able to go back to jobs.

“That is another tremendous value, being fortunate to have some large anchors in the economy as part of the economic base,” he said.

The large capital investment is important from the tax viewpoint, said Jim Pilgrim, executive director, Warren County Port Commission and Economic Development Foundation.

“I think even more important is larger businesses have a large number of employees,” Pilgrim said. “That generates not only tax revenues, but also the purchasing power that they bring. The payroll dollars that are available are a great attraction for the smaller businesses in the community.”

Larger business and industries will create satellite industries such as tier one or tier two suppliers for big companies like Nissan in Canton.

“Large industries are a major attraction for smaller suppliers,” Pilgrim said. “Overall, I would say it has to be a balance. You have a need for the large industries, but also the smaller. In today’s environment, a lot of the smaller service companies are more numerous than the large industries. But the large industries will help bring the smaller ones.

“It makes for an excellent marriage or partnership to have the two. I wouldn’t want to have a community that had nothing but two or three large industries because if anything happens to them, it would be major hit to the community. So a balance of the two, I think, would be an ideal situation.”

Intangibles

In addition to the direct benefits of jobs created, large industries benefit the state in other ways especially when they are recognizable names, said Whit Hughes, deputy director of the Mississippi Development Authority.

“Their experience makes others comfortable with the idea of locating their business in the state,” Hughes said.

Hughes said although the state isn’t basing it’s expectations on the experiences other states have had, it is interesting to note that 10-15 years after Toyota sited its plant in Georgetown, Ky., approximately 70 to 75 suppliers had located in the area.
“Toyota will have a long-term significant impact on North Mississippi,” he said.

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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