Manufacturing a Strategy for Michigan's Future

This article appeared in the January 2019 issue of MiMfg Magazine. Read the full issue and find past issues online.

Manufacturers are impacted by dozens of issues every legislative cycle and any of a thousand proposed bills can hinder the industry’s ability to hire talent, reinvest in new equipment or expand into new markets.

During the eight years of the Snyder Administration, MMA’s advocacy and the support of our members have helped to create a positive business climate where Michigan now leads the nation in manufacturing job growth, with 190,800 new manufacturing jobs since June 2009 and billions of dollars saved in the annual cost of doing business in the state.

Now, as the 2019-2020 Legislative Session begins, MMA has once again developed a member-driven agenda to lead manufacturing forward.

According to MMA president & CEO Chuck Hadden, “Our legislative agenda, Manufacturing’s Strategy for Michigan’s Future, will be the road map to sustaining Michigan’s pro-manufacturing momentum. Thanks to discussion with member companies, participation from our Policy Committees and input from the MMA Board of Directors, our Agenda will help the 100th Legislative Session continue to place the needs of manufacturers front and center.”

Breaking Down Manufacturing’s Top Priorities

“It’s important for manufacturers to send clear and consistent messages to our government officials. Other economic sectors, such as the health care industry, are very good at government communication and the only way manufacturing can compete is as a cohesive voice,” said Bill Henderson, president of Aircraft Precision Products and chairman of the MMA Board of Directors.

Manufacturing’s Strategy for Michigan’s Future takes all the individual issues affecting the competitiveness of your business and offers seven essential topics of focus:

• Tax Policy
• Employment & Workforce
• Talent
• Energy Policy
• Environmental & Regulatory
• Health Care
• Infrastructure & Transportation

These are the areas your business must focus on in 2019-2020 to ensure the long-term competitiveness of Michigan and its manufacturing industry.

Tax Policy

Competing in the global economy means competing against manufacturers anywhere in the world — all on the basis of price. Manufacturers cannot win if Michigan’s tax climate undermines their competitiveness.

Michigan has delivered clear progress on significant tax reforms, including the $1.5 billion savings since 2016 brought about by the elimination of manufacturing’s Personal Property Tax. The state must embrace the concept of continual improvement to remain competitive in a dynamic global environment.

To support a competitive manufacturing sector, Michigan must:

• Compete effectively with other states to attract and retain manufacturing investment
• Ensure tax policy continues to drive a strong manufacturing-based business climate
• Recognize that capital is mobile and tax policy can influence location decisions
• Ensure administrative agencies are efficient and responsive to be effective partners in our efforts to compete in the global economy
• Protect Michigan taxpayers from negative impacts of federal tax reform (“Tax Cuts and Jobs Act”)
• Promote free and fair international trade

In order to ensure tax policies remain competitive, Michigan must undertake a regular process of comparison to ensure tax rates, tax methods and economic development incentives offered elsewhere are matched or improved upon here at home.

Employment & Workforce

Tremendous progress has been made in recent years to streamline, stabilize and properly balance Michigan’s employment and workforce regulations.

From securing a more competitive unemployment insurance system, to reforming Michigan’s workers’ compensation law, to the stability of the state’s Self- Insurers’ Security Fund and the continued defense of the employer-employee relationship, Michigan has seen a trend of legislative efforts keeping manufacturing as a top career path for the next generation.

To support a competitive manufacturing sector, Michigan must:

• Resist intrusion in the employer-employee relationship
• Protect employers’ ability to create and retain jobs
• Guard against efforts to reverse the downward trend in workers’ comp costs
• Ensure the employer-funded unemployment system is effective and efficient
• Defend fundamental employer property rights in the workplace
• Fairly enforce credible workplace safety regulations with a focus on education and compliance rather than just penalties
• Address safety, talent and legal risks in the workplace stemming from legal and illegal drugs in a tight labor market
• Protect job-providers from unnecessary harassment and frivolous lawsuits
• Ensure continued economic vitality by affirming the right of individuals to work without being compelled to belong to a union

In the coming years, manufacturers should continue to fight for the core rights of employers in the workplace and promote workforce policies that allow job creators to stay competitive and grow their business.

Talent

Talent and workforce development is essential to the continued strength of Michigan’s manufacturing industry. Michigan has experienced an incredible manufacturing jobs-based recovery — creating 190,800 new manufacturing jobs since June 2009. However, manufacturers continue to face the challenge of locating, training and retaining the skilled trades talent necessary to remain competitive with other states and around the world.

To support a competitive manufacturing sector, Michigan must:

• Invest in demand-driven manufacturing training
• Ensure that job training programs effectively deliver the skills needed in the 21st century economy
• Provide a comprehensive education system that meets the technological needs of 21st century employers
• Improve the image of manufacturing careers

The 2019-2020 Legislative Session will provide manufacturers the opportunity to build on the successful initiatives of recent years, including the proper funding of the Going PRO Talent Fund (formerly the Skilled Trades Training Fund), the Marshall Plan for Talent and other career and technical education options. By putting skilled trades funding into the K-12 system and moving away from the outdated belief that all good careers must follow a singular path to success, Michigan’s manufacturing future will be as bright and impactful as its past.

Energy Policy

The cost of energy is often the largest percentage of a manufacturer’s product costs. As a manufacturing state, Michigan must implement energy policies to 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. An adaptive and transparent system encourages flexibility, solutions for reduced consumption, and reductions in the cost to produce and deliver energy.

To support a competitive manufacturing sector, Michigan must:

• Ensure manufacturing energy costs are not a barrier to global competitiveness
• Require capacity resources be compared against each other for reliability and cost effectiveness
• Support policy for cost of service rates by rate class
• Oppose cost shifts to industrial ratepayers
• Support the operation and development of energy pipelines
• Value reliability and pricing as equally critical to competitiveness
• Maintain a 10% electric choice market to enhance opportunities for competitiveness

Michigan’s energy policy must constantly search for the best opportunities for lower costs and greater reliability, while maintaining the opportunity for choice in the electric market.

Environmental & Regulatory

A healthy regulatory environment is essential for a competitive Michigan. As the largest sector of the economy, manufacturers find themselves challenged to comply with the heaviest regulatory burden of any sector.

State government has eliminated more than 3,046 outdated rules across all state agencies thanks to discussion with MMA and other stakeholders. Through this effort, Michigan regulations are more closely aligned with existing federal standards and those of other states.

To support a competitive manufacturing sector, Michigan must:

• Stop efforts to adopt local environmental ordinances that create a complicated patchwork of regulations adding to bureaucratic complexity of the state and negatively impacting the state’s business climate
• Ensure Michigan’s environmental rules and regulations do not exceed federal standards without clear justification
• Reduce or eliminate environmental fees which reduce manufacturers’ ability to compete globally
• Ensure federally mandated fees fund only the federally mandated programs
• Develop efficient, timely and responsive permitting programs in the Department of Environmental Quality
• Establish environmental standards based on settled science to encourage environmental cleanups and competitive permitting

As Michigan deals with emerging chemicals such as PFAS and lead in the water, state policymakers should address manufacturing’s call for clarity, consistency and certainty in compliance standards to assure the most efficient use of environmental protection dollars.

Health Care

The rising cost of health care remains a top concern for Michigan manufacturers, who consistently point to health care costs as the number one barrier to business growth. As a leading purchaser of health care, Michigan manufacturers must have every opportunity to control costs so that they do not make benefits cost-prohibitive or reduce the industry’s ability to compete in the global economy.

MMA was on the front lines to eliminate the costly, Michigan-only Health Insurance Claims Assessment (HICA) tax. This laser focus resulted in the tax’s elimination in 2018, an effort estimated to save health care purchasers approximately $272.5 million annually.

To support a competitive manufacturing sector, Michigan must:

• Help employers control health care costs
• Resist interference in private contracts, price fixing and artificial constraints on the health care market
• Encourage innovation and flexibility in plan design
• Support free market principles and protect the intellectual property rights of stakeholders in the health care market

Well-intended but ill-advised legislative proposals to impose artificial constraints on private health care contracts for medical and pharmaceutical coverage have the ultimate effect of driving up costs — both for the employer and the patient. To contain health care costs and ensure Michigan’s competitiveness, manufacturers must continue to oppose costly health care mandates.

Infrastructure & Transportation

Successful commerce relies on critical infrastructure to move raw materials to manufacturers and finished goods to markets.

The Gordie Howe International Bridge is a prime example of the need to improve the busiest connection for commerce between the United States and Canada. The next critical infrastructure needing improvement and revitalization is the Soo Locks. Michigan’s economy is tied closely to the transfer of raw materials through the locks and transformed into vehicles and other durable hard goods.

To support a competitive manufacturing sector, Michigan must:

• Utilize the Enbridge Line 5 pipeline to ensure critical energy resources are available to Michigan manufacturers and citizens
• Secure federal and state funds to rebuild and replace key facilities at the Soo Locks
• Expand broadband capabilities to Michigan’s northern lower and upper peninsulas to provide high speed communications and data transmission for small- and medium-sized manufacturers
• Support a strong and vibrant freight railroad network as critical infrastructure in the manufacturing supply chain and the delivery of finished goods across North America and around the world

Michigan must protect and enhance our critical infrastructure in order to enable economic growth and prosperity for its citizens and local manufacturers.

Looking Ahead: The 100th Legislative Session

“Manufacturing is incredibly diverse. Only by bringing everyone to the table can you get a complete picture of the industry,” explained Bryan Harrison, director of corporate government affairs for Amway. “That’s what MMA has done in developing its agenda and that’s why it’s reliable. It’s the most comprehensive look at the challenges facing Michigan manufacturers today.”

With a new Governor, Secretary of State and Attorney General, a more bipartisan Legislature, and a competitive 2020 election cycle on the horizon, the work of MMA and our members in the legislative and regulatory process will be more important than ever.

“MMA looks forward to working with the Whitmer Administration and legislators in both the House and Senate to make Michigan stronger in the future,” said Hadden. “We are working to remind the world that manufacturing is in Michigan’s DNA and that Michigan is a global manufacturing leader.”

Access Manufacturing’s Strategy for Michigan’s Future or contact MMA at 517- 487-8552 to participate in the policymaking process.

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