Massachusetts Needs To Preserve Its Industrial Base

Why is Massachusetts losing its manufacturing jobs? Although some manufacturers have managed to keep their heads above water in Massachusetts through technology and increased output, it is unclear how long that will keep them afloat.

Most of us act like we really want them to just sail away to somewhere else.

Manufacturing provides good jobs with good wages, resulting in a high standard of living for families and communities. As an added benefit, factories spawn new jobs in other industries with whom they work, and they drive technological innovation as they strive to compete.

As we reported in MassNews in March, some state lawmakers are looking to gambling casinos - which are always low-paying jobs - rather than industry as a source of new jobs and revenue.

Fabric is folded into bolts for shipment at Cranston Print Works.

Rep. Christopher Asselin (D-Springfield), a casino advocate, tells MassNews this is necessary because there are no more manufacturing jobs coming into our state.

His remarks prompted us to write this story. He's right about jobs. Manufacturing jobs in Massachusetts declined by 17% over the past two years, or a total of 70,900 manufacturing jobs lost, according to the U.S. Bureau of Labor Statistics. But that doesn't mean we should take up gambling as a result.

The loss of manufacturing jobs is just as severe as in the recession of the late 80's and early 90's - in percentage - which was the worst since the Great Depression.

While there are some concrete things we can do here in our state to become more industry friendly, we are also feeling the effects of a national manufacturing crisis.

Some of the factors contributing to the national manufacturing crisis - decline in investments, trade policies, unfavorable currency exchange rates, the high cost of doing business and even disdain for gritty blue-collar work - have combined to send good American jobs to foreign countries.

There is still some good news despite the hemorrhaging of jobs here in our state.

Manufacturing still accounts for half of the "base economy" jobs in our state at about 9000 manufacturing establishments, many located west of Rt. 495 - where the suburban ethic is not as dominant.

The "base economy" is made up of those industries that generate real growth by exporting products or services out of state.

Massachusetts remains an attractive state for some manufacturers to locate.

A Winter, 1999 report by the Mass Insight Corporation titled "Made in Massachusetts," identified three important and related trends in the nature of manufacturing operations that choose to locate here in high-cost Massachusetts.

A shift to high-tech manufacturing processes, even in traditional sectors like textiles.

As a result, a need for higher worker-skill levels typically found in higher-cost locations.

A need for other businesses to locate their research and development, engineering, and customer service operations in close proximity to the manufacturing facilities-creating another strong advantage for regions with high skills and a strong university system.

The way that manufacturing in the state has adapted and survived is a testament to the competitive resourcefulness of Massachusetts companies - but no one will guarantee how long they will be able to last.

Many have abandoned the old, high inventory assembly lines for servicing smaller clients with custom jobs and quick delivery. They have also utilized cutting-edge technology and processes to increase productivity.

An economic growth report issued this winter revealed that even the technology advantage in Massachusetts is now at risk, according to Mass Insight.

Despite budget problems of their own, other state governments are offering grants and actively facilitating strategic alliances and collaboration between businesses and research universities, while Massachusetts state government remains a passive - or often a hostile - bystander.

Massachusetts manufacturers have fought mightily to remain competitive against all odds. Many economists believe they are the lifeblood of our economy and do not deserve to be written off or to have the rug pulled out from under them.

Sidebar:
Even Mass. AFL/CIO, Which Has Switched
Its Attention to Government Employees,
Is Concerned

Even though manufacturing represents over 50% of the state's economic base, there does not seem to be any sense of crisis over its steady decline, wrote Central Mass. AFL-CIO president Joseph P. Carlson in the January "Massachusetts Labor Leader"

Titled "Pay Attention To Manufacturing," Carlson said in the article, "If manufacturing were to be considered an eco-system necessary for the support of the state's economy, you would have a myriad of governmental actions to save the system, yet there is no awareness or concern."

Carlson said that manufacturing-sector jobs, which average $51,000 in wages per employee, are thirty- to forty-percent higher in total compensation than the average service sector job.

As for the cost of doing business, Carlson said: "Historically, firms in Massachusetts have always had to deal with high structural costs in doing business. In attempting to absorb such high costs in health care, energy, taxes, etc., manufacturers in our state were either good or they were gone."

As a result, Massachusetts manufacturers are 20% more productive than the average state, but we must compete in a global marketplace based on a currency that is grossly overvalued, he said.

"Machinery and equipment used to be the leading industry in this state, but our firms are trying to sell machines against Canada and the Far East that are 40% cheaper solely because of the difference in currency. How do you compete with a machine that is 40% cheaper?"

Carlson said the annual double-digit rise in health care costs comes at a time when any additional costs cannot be absorbed by profits or passed on to customers. He said we can expect companies will reduce their investments to absorb the costs, which will reduce jobs.

"State policy makers must reach a much greater understanding of the role that manufacturing plays in the economy and they must monitor its health. They also need to analyze how new policies will impact manufacturers and find ways to lower the cost burdens.

"We need to give manufacturers reasons to expand their businesses in our state, and right now we do not have too many. Policies for lowering energy costs, for buying health care in coalitions, etc. would be a good start."

Carlson said the promise of new jobs in industries of the future, such as nano-technology and biotechnology, will not materialize without manufacturing to assist in the applied research.

"As we lose our manufacturing capabilities to the other parts of this world, we will be losing our future as well, and things that are made in Massachusetts will be collectors items-assuming that we will have people left with money."

Speaking to MassNews, Carlson says "No two ways about it, we have certainly been losing manufacturing jobs in the last several years."

He says trade polices that do not require our trading partners to operate under the same pollution and labor standards as American companies leads to a loss of American jobs.

"None of the trade policies we put together have been good for the small guy on the plant floor who doesn't really want to know about the whole global future and just wants a job. I don't think any of those have been especially good for that."

Carlson says all defense-related manufacturing should remain here in the United States.
The national AFL-CIO recommends that Congress take immediate steps to rectify trade, dollar and tax policies that put American manufacturing workers at a disadvantage.

Key measures include:

Fair trade policies that reduce the U.S. trade deficit, protect U.S. trade laws and require inclusion of enforceable workers rights and environmental standards in trade agreements.

Revise tax laws in order to eliminate incentives for corporations to move production overseas and to punish those that do.

Strengthening the manufacturing base for national defense through procurement reform, enhanced "buy American" requirements, an updated assessment of critical defense manufacturing capabilities and limits to "offsets" that drain critical technology and good jobs.

Health care reform.

Sidebar:
Industries Want Twenty New Laws
Twenty new bills have been filed for 2003-2004 to promote a better business climate and more job opportunities for Massachusetts residents by Associated Industries of Mass.
Forty-seven senators and representatives from both parties sponsored the bills.

Some would update and strengthen tax credit statutes for research and development and investment. Another would help with employee training with a tax credit.

One seeks to update the state's tax code for manufacturers. Parts of the bill would exempt from the sales tax, electricity, pollution control equipment and materials used to manufacture tools and machinery.

Another would accelerate a deduction on the state tax return for the full cost of health insurance premiums for self-employed individuals.

Other bills seek reform of the unemployment insurance system, improvement of the MCAD, a requirement for state agencies to provide a "regulatory impact statement," and institute automatic expiration of regulations after five years absent a legislative review and a new cost/benefit analysis.

Reform of the state's product liability system is the subject of another bill. Part of the bill would make available a "state-of-the-art" defense for manufacturers whose products meet all scientifically available standards at the time products were made.