Commentary: Massachusetts manufacturers making a comeback from recession

By Rick Lord | The Republican | November 12, 2012

Manufacturers are reconsidering their supply chain strategies due to higher labor costs in developing countries, energy costs, political stability issues, and time-to-market concerns. Some companies, including auto parts and electrical equipment manufacturers, have already moved operations back to the U.S. from overseas plants.

Here in Massachusetts, manufacturing is alive and well, as shown in a recent report by Professor Barry Bluestone and his team at Northeastern University. Manufacturing employment in the Bay State has stabilized after a sharp decline in the recession. Manufacturing is the state’s sixth largest sector in terms of employment and the second-largest in terms of payroll. The number of manufacturing firms in the state rose in 2011 for the first time in decades. While cost issues and global competition are challenges, the skills and work ethic of the state’s work force are powerful reasons to stay in Massachusetts.

But employers are already experiencing difficulty in hiring skilled workers, and an upcoming wave of retirements will create up to 100,000 job vacancies over the next 10 years.

The 70 percent of manufacturing firms foreseeing expansion of employment over the next five years must face up to this recruitment challenge by focusing on workforce development and promoting manufacturing careers.

Steps have been taken to help the manufacturing rebound on Beacon Hill: a recent cut to the corporate excise tax, legislation to control medical and energy costs, and efforts to strengthen the Workforce Training Fund Program and community colleges.

Nationally, however, the reality has been partisan deadlock. If Congress cares about manufacturing, there are issues that demand immediate action. Most urgent is heading off about $500 billion in tax increases that will hit the U.S. economy on Jan. 1, along with huge automatic spending cuts.

The top tax rate on dividends will almost triple, the top tax rate on capital gains will increase by more than half, and many small and mid-size manufacturers will see their top marginal tax rate rise, because nearly 70 percent of manufacturers file taxes at individual rates. The U.S. corporate tax rate is the highest in the developed world. Action in other areas, such as work force development, is equally vital, if less pressing.

America’s manufacturing sector, historically the backbone of our economy, is entering a period of renewed opportunity. We need congressional action now to ensure that future expansion takes place here rather than abroad.

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