REDI outlines state of manufacturing in Columbia

When Collins & Aikman closes its auto parts factory on May 11, it will be the third major manufacturing plant in Columbia to shut down in about 15 months. Summit Polymers and Knernschield Manufacturing, which also made components for the automotive industry, closed last year. In all, about 540 jobs have been eliminated as a result of the dip in the auto parts manufacturing industry, causing a significant drop in local tax revenue.
The total employment at the city’s major manufacturers will be less than 5,500 after Collins & Aikman closes, compared with more than 6,000 a decade ago.

There have been some gains in manufacturing, particularly at Columbia Foods, which makes Oscar Mayer hot dogs, and OTSCON, which makes parts for Japanese automakers, according to figures compiled by Columbia’s Regional Economic Development, Inc. (REDI). But in the last six years, 3M has reduced its staff from 950 employees to 520, and a year ago Dana Corp., a supplier for domestic automakers, filed for bankruptcy protection.

Adding to the economic impact felt by the community is that fact that no new players are entering the field. No major manufacturing firm has been established in Columbia since Quaker Oats opened 12 years ago.

Consequently, Columbia has nearly 550,000 square feet of manufacturing space sitting vacant.
In addition to the decline in Columbia’s manufacturing base, the community has also suffered a decline in average annual wages, dropping from $30,758 a year ago to $28,431 today.

The Causes:

A long-term decline in the domestic automotive industry is being blamed for the most recent plant closings. Geni Alexander, public relations director for REDI since 2000, said fallout from the heavy focus on one industry indicates why communities such as Columbia should seek industry diversification. “It’s important to try to diversify our entire manufacturing employee base, so we don’t fall victim to any national downward trend,” Alexander said.

David Meyer, REDI’s marketing director, agrees that there is a direct relationship between the national decline in automobile production and the local plant closings; however, he said, there is a larger picture.

“Quite frankly, since 2000, there has been, in general, a severe contraction in U.S. manufacturing,” Meyer said. “Labor-intensive, assembly-line jobs are going overseas. We are seeing far fewer deals in manufacturing today than we did seven years ago,” he adds.
Since 2000, Missouri has lost about 65,000 jobs, according to the National Association of Manufacturers.

The Impact:

According to REDI statistics, the loss of revenue to the county through the combined personal and real property taxes from the three most recently closed plants is in excess of $1.75 million dollars; most of that tax money would go to public schools. If 3M were to close its doors, the tax loss would exceed $6 million annually.

In addition to lost tax revenue is the drop in annual employee income. “A $2,300 drop in the average wage should be a pretty serious wake-up call to some folks,” said Dave Griggs, past chair of the REDI board. “This is a signal of the decline in the average wage. It’s a perfect sign that we’re losing some better-paying manufacturing jobs while bringing in more lower-paying retail jobs.”

Economic indicators look primarily at full-time positions with benefits, which typically don’t include the majority of hospitality and retail jobs. Currently, manufacturing work makes up less than 5 percent of the jobs in Boone County, while retail and hospitality make up nearly 20 percent.

The Solutions:

Working with existing manufacturing firms so they can continue to thrive is crucial, Alexander said. “Our Columbia 3M is a company with other 3M locations around the world. Each time a new product is launched, this 3M competes with the other locations to win the new product or process,” she said. “We work with them to get those.”

Attracting new facilities requires providing incentives. Prior to the adoption of the Chapter 100 Revenue Bonds by the Boone County Commission, there were no monetary incentives to offer businesses interested in locating here.

“In literally every … prospectus of every company looking to locate to Boone County in the last four years, the first or second question is ‘What incentives do you offer?’” Griggs said.

Because of the lack of incentives, Meyer said, Columbia may never even be mentioned to prospective clients. Alexander concurs. “Columbia has become known as a community that doesn’t offer incentives,” she said.

REDI representatives agree that the adopting of Chapter 100 Revenue Bonds is a start in the right direction but add that more is needed. While Ashland and Centralia city governments also approved a policy similar to the county’s, Columbia did not. Still, the county’s adoption of the program supercedes individual cities within the county.

Griggs said that the city’s lack of response is disconcerting. “I am concerned that the lack of the city’s consideration and open endorsement of the ‘100’ policy tends to send a message,” he said.

Alexander and Meyer agree that “attitude” is an important component in the recruiting process. “Incentives are an indication that communities want the companies to locate here,” Meyer said.

Columbia offers aesthetic qualities, affordable healthcare, quality education, skilled workers and other amenities, according to Meyer, but for nearly all businesses looking to build or relocate, it comes down to the bottom line. “Industries that are bringing money into a community could be located anywhere in the U.S. or in the world. Costs are the bottom line.”