2023 Legislative Outlook
This article appeared in the Jan/Feb 2023 issue of MiMfg Magazine. Read the full issue and find past issues online.
Every year brings new legislative challenges and opportunities for Michigan manufacturers, and 2023 promises a lot of both. However, making an impact on critical policies to support economic development, improving the talent pipeline and helping streamline complex environmental policies to help speed the permit process remain top-of-mind for MMA’s Government Affairs team.
Partisan changes in the State Legislature may have bearing on legislative actions this year but MMA’s team is prepared to quickly engage. We have already established key relationships in order to move the needle on policies and administrative items that will benefit manufacturing and the state and we remain prepared to defend against potential unraveling of positive longstanding policies. Year after year, MMA remains the tip-of-the-spear in driving solutions for manufacturers.
“The biggest change is the fact that the majority parties in both the House and the Senate have flipped,” says David Q. Worthams, Director of Employment Policy for MMA. The Democrats hold a 56-54 majority in the House and a 20-18 majority in the Senate. The Democrats have not held full control of Legislature and the Executive branch since 1982.
Mike Johnston, MMA Executive Vice President of Government Affairs and Workforce Development, says with so many new faces in the Legislature, a lot of their initial efforts in the first quarter of 2023 will be focused on engagement and education. But, at the end of the day, he has high hopes about working with the new legislative leaders.
“We are optimistic about moving MMA’s Legislative Agenda as Democrats are generally supportive of our top two priorities, talent development and economic development,” said Johnston.
The state’s role in economic development is an important one as the Michigan manufacturing sector competes on a global scale that grows a little more complex each year. Johnston says Michigan has had its ups and downs when it comes to growth incentives but the recently enacted SOAR (Strategic Outreach and Attraction Reserve) fund has led to significant economic impact in the state as it attracts new business opportunities and provides the right environment for expansion. MMA was one of the main drivers for the creation of the fund and the initial $1 billion appropriations, he says.
Economic Development Incentives
Since its bipartisan creation in December 2021, the Strategic Outreach and Attraction Reserve (SOAR) Fund has led to significant economic impact in the state as it attracts new business opportunities and provides the right environment for expansion.
- $1.8 billion in investments made by the state
- Attracted 5 transformational projects totaling $13.575 billion in capital investment and 12,800 jobs to Michigan in the last year
- Assuming a conservative average wage of $50,000, these jobs will generate $640 million annually injected into local communities
“We’ve since led the charge for an additional $850 million in 2022 in economic development incentives to help save the state. The results have been very successful. In the last year, we’ve attracted five transformational investments, totaling $13.575 billion in capital investment and 12,800 jobs,” says Johnston. “That is a tremendous return on the state’s investment, and clearly justifies our strong support for economic development efforts in the future.”
Competition with other states gains steam every year but MMA aims to position Michigan and Michigan manufacturers for long-term success so that growth occurs here.
Caroline Liethen, Director of Environmental & Regulatory Policy for MMA, says that a large part of being competitive is making it easier for businesses to physically build or expand properties here. At the very least, increasing awareness of permitting procedures handled through the Michigan Department of Environment, Great Lakes, and Energy (EGLE).
“Companies must have confidence they will get permits in a timely and predictable manner for Michigan to be competitive for new investment and even retaining existing businesses,” says Liethen. “Business investment capital sits idle waiting for permits and, if other states can issue permits quicker, it is by definition cheaper to invest in other states. Permitting is an economic development issue.”
Workforce Development, Workers’ Compensation and Unemployment
MMA has successfully initiated the passage of numerous bills dealing with workplace issues, including securing a more competitive, properly funded Unemployment Insurance Trust Fund, reforming Michigan’s Workers’ Compensation law and working to stabilize Michigan’s Self-Insurer’s Security Fund. As Michigan continues in a post-COVID-19 economic environment, MMA is working hard on behalf of members and the industry to defend these important policy advances.
Worthams says that the manufacturing industry will have to keep an eye on proposals to make costly changes to Michigan’s employer-funded unemployment insurance system in particular.
“We are expecting to have some challenging discussions about the level of unemployment benefits, both the amount paid each week and the number of weeks that a person can receive unemployment,” he says. “We have successfully fought off bills to this effect that have been introduced in every legislative session in recent history. Defending against costly increases to employers will be a major focus for MMA in the coming years.”
As Michigan continues to face challenges in acquiring and retaining talent, manufacturing businesses need people with the right knowledge and skills more than ever.
Going PRO Talent Fund
MMA has driven expansion, funding growth and codification of the Going PRO Talent Fund. The program has been a critical tool in narrowing the manufacturing skills gap, awarding funds to employers for training, developing and retaining current and newly hired employees.
Learn more about the Fund.
Going PRO Talent Fund
MMA is working with regional partners and the Legislature to continue to move forward with enhanced Career and Technical Education (CTE) resources and programs. With enhanced programming and curriculum in school districts across the state, high school graduates will be ready to step into the jobs manufacturers want to give them.
“Talent will continue to be a big issue for manufacturers, particularly after the pandemic. We believe this creates an opportunity for us to push our 21st century talent curriculum to create clear pathways for students to build technical skills to work in the manufacturing sector,” Worthams says.
Another important focus is on increasing funding for the Going PRO Talent Fund. MMA successfully advocated to increase funding from $40 million last year to $55 million in fiscal year 2023, which runs through 9/30/23. But there’s more work that can be done. MMA is calling for increasing that funding to $100 million, as well as streamlining the application process, opening multiple application periods during the year and creating funding for more industry-led collaboratives.
Implementing tax policies that help Michigan remain competitive on a global scale is a key driver of economic growth. This requires a regular comparison process to ensure tax rates, tax methods, tax adjudication or economic development incentives offered elsewhere are matched or improved upon in Michigan.
At the same time, remaining competitive is an ongoing challenge because corporate and personal income tax rates change regularly across the country, Johnston says.
“We need to benchmark ourselves against other states to see where we can improve in our tax policy,” he says.
Johnston identifies one area where Michigan isn’t competitive at all when compared with what other states are doing and that is research and development (R&D).
“We don’t have an R&D tax credit, and we are one of just 17 states that do not incentivize R&D. Michigan needs to get in the game for doing research and development investment because the future of growth comes out of innovation,” he says.
Because energy is such a significant line item in a manufacturer’s budget, implementing sound energy policies will ensure manufacturers can produce products at prices competitive with the rest of the world. Energy policy must be innovative and adaptive — free of specific source mandates and barriers that raise costs and reduce reliability, according to Johnston.
Technology will continue to revolutionize how Michigan powers its industrial economy, whether it involves natural gas, coal, nuclear, wind, solar or the evolution of battery technology. Michigan’s energy policy must constantly search for the best opportunities to find the balance between lower costs and greater reliability while maintaining the opportunity for choice in the electric market.
“One of the biggest cost inputs is the cost of energy, usually electric energy,” Johnston says.
“Manufacturing is different than other sectors of the economy in that we don’t compete across city streets or down the block or even across county lines,” continues Johnston. “We compete with the lowest-cost location anywhere in the world. We’re a globally competitive sector by definition. Our companies must be able to compete globally on the basis of price from their Michigan location.”
Compounding the issue is that Michigan tends to have slightly higher energy rates because it is a peninsula as opposed to a landlocked state, Johnston says.
“Michigan is two peninsulas, so energy can only come in from one end but the Upper Peninsula and the Lower Peninsula are essentially separate states for power policy,” Johnston says.
At the same time, energy must be reliable enough that manufacturers have uninterrupted power to continue to make products, he says.
“We have to find an energy policy that balances price with reliability,” Johnston says.
Whether it’s formulating sound energy policy or ensuring manufacturers have the right resources to grow and attract new talent, MMA’s Government Affairs team remains the tip-of-the-spear when it comes to creating a supportive environment for the manufacturing sector. When manufacturers speak with their collective voice, we can hit at our weight as the largest sector of the Michigan economy.
Have a manufacturing story to tell? E-mail firstname.lastname@example.org.