Guest Column: Legislative leaders fail to support Missouri manufacturers

Did you know Missouri manufacturers employ nearly 290,000 Missourians, more than 10 percent of total non-farm employment? Did you know Missouri manufacturing workers earned an average $63,000 per year, $13,000 more per year than workers in other fields? Would you be surprised to learn Missouri manufacturing output is about 13.5 percent of the state’s economy?
All true, according to a recent study based on federal employment statistics. But when employers presented the legislature with a bipartisan proposal that could increase Missouri’s ability to attract and retain manufacturing jobs, legislative leaders refused to approve the bill, despite the support of an overwhelming majority of legislators in both chambers and Gov. Jay Nixon.
Missouri employers applauded the passage of bills that reversed harmful Supreme Court decisions, allowed them to avoid full layoffs by extending the Shared Work program and allowed Missouri’s unemployed to receive their share of federally funded unemployment benefits. These measures did not improve the bottom line for our businesses or enhance the business climate but simply allowed us to maintain the status quo.
Business leaders know that lower taxes and a less-burdensome regulatory environment allow employers to create wealth in the economy. We are extremely disappointed that the legislature failed to pass a bill that would have helped attract new product lines to our existing Missouri manufacturing plants.
The bill, called the Manufacturing Jobs Act, would have provided benefits to Missouri manufacturers and suppliers that make new products — products that have never been made by the company in Missouri before. Manufacturers would have been required to make capital investments of $100,000 per employee at the facility and export a percentage of the finished product. The incentive would have allowed these Missouri employers to retain half of the withholding taxes from jobs that would be saved by using the program. Suppliers to these manufacturers that added five or more jobs with good wages and benefits would also have benefited from the program, as they would have been allowed to retain withholding taxes on new employees.
The bill would have provided employers with a valuable tool while protecting taxpayers. Incentives would need to be repaid with interest if a manufacturer did not fully comply with the program. The total amount of the incentives was limited. The bill had an expiration date that required the legislature to review the success of the program and take action before the program could be renewed. The bill established no new tax credits but instead allowed employers to retain some of the withholding tax that otherwise would have been paid for existing employees.
But our legislative leaders did not use the power granted to them by Missouri workers to provide manufacturers this needed tool. Once again, Missouri manufacturers were forced to the sidelines as we continue to watch our manufacturing operations — and the associated jobs — stream to other states and countries. This bill was a top priority for Associated Industries of Missouri and would have had a real positive impact for Missouri manufacturers and their suppliers. We worked on the bill until the legislative session’s final hour, when it became clear that politics would prevail over common sense and the legislation would not become law.
The bill became entangled in a debate over tax credit reform despite our best efforts to educate legislators that this was not a tax credit program. Although we support responsible tax credit reform and make sure our tax dollars are spent prudently to attract and retain Missouri jobs, we are extremely disappointed that the legislature’s inability to pass this bill will result in continued job losses at Missouri manufacturing locations. In the end, the legislature imposed additional costs on Missouri employers that provide health insurance for their employees as they passed another insurance mandate (in addition to more than 40 existing insurance mandates).
The voting public needs to remind legislators of the importance of retaining quality jobs in manufacturing in Missouri, and employers should hold legislators responsible for providing the tools necessary to ensure that Missouri continues to be a leader in manufacturing — an industry that is vital to the state’s economy.
Ray McCarty is president of Associated Industries of Missouri in Jefferson City. He has more than 25 years of economic development and taxation experience from state business organizations and departments.