PhillyInc: Plan says tax breaks, education would boost Pa. manufacturing

Gov. Corbett formed an advisory council in November to find ideas to promote manufacturing.
Gov. Corbett formed an advisory council in November to find ideas to promote manufacturing. (CHARLES FOX / Staff Photographer)
Posted: August 25, 2012

Give Tom Corbett, Pennsylvania's manufacturing governor, credit for consistency.

Since he took office in January 2011, he's banged the manufacturing drum so often that the state needs to make him a new one. (Preferably out of steel from a Pennsylvania factory.)

Given that all anyone seems to wants to talk about is Internet-related companies these days, Corbett is a throwback who loves to stomp down production lines wearing a hard hat and closed-toe shoes.

It helps explain why the governor in November formed an advisory council to examine the state's manufacturing industry and make recommendations on ideas to sustain and expand it. Released earlier this week, the report offered suggestions for lower corporate taxes and a permanent R&D tax credit, as well as various educational initiatives to better prepare the next generation of workers.

All in all, the 15 broad recommendations were about what I expected. Most of the changes would seem beneficial to all types of businesses. But what I found surprising about the report was its astonishingly positive tone about an industry that's been in decline for decades in Pennsylvania and is projected to continue to shed jobs over the next 10 years.

Manufacturing often appears to be a global game of "Can you undercut this labor cost?" But the report by the 24-member advisory council - whose work was funded by the nonprofit Team Pennsylvania Foundation, not taxpayers - certainly doesn't make plain what may happen if current state policies don't change.

In fact, the report describes an industry "undergoing a renaissance," "producing more products than at any time in its history," and creating 12,100 jobs in 2011 alone. Manufacturing employs 574,000 people in Pennsylvania and accounts for 90 percent of the state's exports.

So why mess with what's being trumpeted as success?

Well, outside of trying to make sure Pennsylvania remains on site selectors' short list, this report doesn't really suggest that anything is seriously wrong.

But the employment projections of the federal Bureau of Labor Statistics supply some urgency. Of the 20 industries expected to lose the most jobs nationwide between 2010 and 2020, 11 are in the manufacturing sector. The fastest employment growth is expected to come from the health-care and construction sectors.

The Pennsylvania Department of Labor and Industry's Center for Workforce Information and Analysis cites forecasts that indicate the state's manufacturing sector will lose more than 9,000 jobs annually through 2018.

As for what Pennsylvania lawmakers should do to help the good times keep rolling in the Keystone State, the recommendations offered by Corbett's council range from the expected ("Use tax reform to encourage investment, innovation, and job creation") to the needlessly repetitive ("Develop a statewide Pennsylvania energy plan" - see Corbett's Marcellus Shale advisory commission's report from July 2011) to the off-topic ("Create measures and support systems for educators and districts tied to [academic] effectiveness").

One recommendation addresses helping job-seekers better connect with job openings in the manufacturing sector. Great, except that's the lament of just about everyone looking for work as well as employers looking to hire. Individuals have certain skills. Businesses need workers with certain skills. The two don't find each other very efficiently.

And what more should the state really be doing to help small- and medium-sized manufacturers? Corbett's own report states that "existing high-quality state programs and services that support manufacturing are often underutilized."

So Pennsylvania has support programs, manufacturers have been hiring, and the sector remains a key contributor to gross state product. Sound the alarm!

In fact, no alarms or warnings are contained in the report, which bloodlessly chronicles the manufacturing industry's strengths and needs, and suggests strategies to build on its recent success.

There is nothing wrong with drafting a blueprint that addresses the future of Pennsylvania's manufacturing sector. But crisis, not success, is usually the driving force for change.


Contact Mike Armstrong at 215-854-2980 or marmstrong@phillynews.com, or @PhillyInc on Twitter. Read his blog, "PhillyInc," at www.phillyinc.biz.

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