Defending U.S. manufacturing

May 3, 2006
A recent report named the top 10 "pro-business" states. They showed exemplary can-do attitudes and innovative approaches. Who are they and what does this mean to U.S. manufacturing?

If  you live and work in South Carolina, Virginia, South Dakota, North Carolina, Wyoming, Georgia, Florida, Maryland, Alabama or Kansas, congratulations. These are the “Top 10 Pro-Business States for 2006” according to the annual report of the same name by Pollina Corporate Real Estate, Park Ridge, Ill. The can-do attitudes and innovative approaches these states exhibit show what can be accomplished and what can be learned from them.

These states have been innovative in 15 distinct areas, among them taxes, human resources, right-to-work legislation, energy costs, infrastructure spending, and jobs, according to the report, which is in its third year. In addition to data on the top states, the 104-page report contains a wealth of information about the U.S. and world economies, free trade and offshoring, and who will be the 21st-century superpower.

The various strategies that the top 10 states used to gain their places on the list are examples that can be applied globally or at the company level to gain competitive advantage. For example, South Carolina is described in the report as “aggressive” in its approach to attracting jobs, workforce training is a top priority and the state has a relatively low cost of doing business. Job training there is supplemented with a job development credit program that provides cash back for companies that manufacture goods within the state.

“Today, if a job is relocated out of state, it is more likely to be moved offshore than to another state,” Ronald Pollina, president and real estate economist, Pollina Corporate Real Estate, says in his executive summary of the report. “In the 21st century, if communities do not have a clear understanding of how their economy relates to their state and in turn their state’s relationship to the national economy and the international economic system, their economic development efforts are proceeding with at least one eye closed.”

People who have lost jobs to offshoring are being re-employed at a 20% average loss in wages, says the report. Less than 6% of U.S. high school graduates are pursuing engineering degrees, a 36% decline from 10 years ago. During 2004, 70,000 engineers graduated in the U.S. compared to 350,000 in India and 600,000 in China, according to the National Academy of Sciences.

“In the U.S., for the first time in our history, our children, and certainly our grandchildren, will see a diminishing of their standard of living, while indeed countries like China and India will see major advances in their standards of living at the expense of the U.S.,” says Pollina. “The U.S. government has failed to create and enforce trade policies that are in the best interest of the nation. In fact, we create policies that are not only not in our best interest, but are detrimental to job creation and improvement of our standard of living.”

There are approximately 8,500 manufacturing plants closing each year throughout the U.S., the report says. Meanwhile, China and India are enjoying a booming market being primarily fed by U.S. outsourcing.

“Our nation became a superpower because we invested in manufacturing and research and development,” says Pollina. “We are rapidly becoming a nation that makes nothing, nor are we investing in research and development anymore… Today, America risks becoming the next Old Europe — desperately trying to slow the global march of progress in a vain attempt to retain past glories.”

The top 10 states are combating the factors weighing heavily against success, and they’re winning. The federal government could learn a lesson or two from these successful approaches.

Downloads of previous top pro-business state reports are available at www.pollina.com. This year’s report also is available for purchase at the site.

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