A Look Back at Manufacturing’s Resurgent Decade
This article appeared in the December 2018 issue of MiMfg Magazine. Read the full issue and find past issues online.
Michigan has enjoyed a manufacturing-led economic resurgence over the last decade.
In June 2009, the Great Recession challenged the Great Lakes State. Yet manufacturers never quit; they rolled up their sleeves and redoubled their effort to bring jobs and investments back to Michigan. By January 2011, when Rick Snyder took office, Michigan was beginning the long road to recovery. Now, eight years later, Michigan is again the global hub for manufacturing. The state’s unemployment rate is at a decades-long low. There are nearly 613,500 total new jobs, and 193,000 new manufacturing jobs have been created. West Michigan is a national example for diverse manufacturing career paths. And the Motor City is attracting the world’s best and brightest.
“Michigan went through dark times and manufacturing was one of the hardest-hit sectors of the economy — in 2008 and 2009, uncertainty was everywhere and in the last 10 years, I think a lot of the success we’ve had has been a result of manufacturers never wanting to go through those days again,” said Chuck Hadden, MMA president & CEO. “There’s a greater willingness to develop partnerships and to diversify your customer base and product offerings. The talent challenge has led to manufacturers working harder to clean up the industry’s image and showcase the exciting careers that are available. Those tough times also strengthened manufacturers’ resolve — they are more focused on the future and what needs to happen to keep the industry competitive.”
MMA has proudly led the charge on countless issues impacting Michigan manufacturing’s ability to compete with other states and in markets around the world. Over the course of the last eight years, manufacturing has seen strong growth resulting from many of these efforts; legislative and regulatory advocacy which has led to billions of dollars in cost-savings and an economic boom period that has made Michigan attractive to both new job seekers and new employers in the manufacturing sector.
As we look toward the 100th Legislative Session and a new agenda full of priority manufacturing issues, it’s important to look back at some of the successes already achieved and the ways they have shaped our state’s long-term stability.
Michigan Votes Yes on PPT Reform
(savings total over $1.7 billion since 2016)
The successful legislative effort and statewide ballot campaign on Proposal 1 of 2014 locked in a $576 million annual Personal Property Tax (PPT) cut, primarily for manufacturers. MMA led the multi-year charge through a series of complex legislative bills and the eventual partnership with local governments and representatives of Michigan’s local essential services including police, fire and ambulance workers. Thanks to the leadership of Lt. Governor Brian Calley and the commitment of the Snyder Administration, the legislation passed and the MMA-led ballot question committee, Michigan Citizens for Strong and Safe Communities, successfully educated voters to have Proposal 1 pass with a 69 percent support on 8/5/14, one of the highest yes vote totals since the 1963 constitution.
Since then, MMA has spent the last four years streamlining the exemption process to ensure every manufacturer who can receive their share of the $576 million annual tax cut has the ability to apply. This statewide effort has resulted in hundreds of manufacturers saving thousands of dollars for their local businesses; savings that can be used to create new jobs, invest in new equipment and compete effectively against other states and countries.
MMA Leads the Way on HICA Tax Elimination
(annual savings = $275 million)
As employers and individuals struggle with the rising cost of health care, it is more important than ever to eliminate additional cost burdens like the Health Insurance Claims Assessment (HICA) tax, which has added more than $1.5 billion to the cost of health care in Michigan since 2011. Following years of vocal opposition from MMA and manufacturers, the foundation for the tax’s elimination was set in place on 6/11/18 as MMA reached an agreement with the Snyder Administration for a plan to repeal the HICA tax and replace the revenue, used to finance Michigan’s traditional Medicaid program, with a smaller tax on fully insured health care policies.
Public Acts 173-175 of 2018:
- Save job creators nearly $275 million annually on health care on a net basis
- Replace the costly HICA tax with a smaller assessment in the Insurance Provider Assessment (IPA) tax
- Provide stability to the state budget
Talent as a Top Priority
A focal point of his second term, Governor Rick Snyder championed the effort to increase skilled trades training in Michigan and halt the growing challenge of talent attraction and retention in manufacturing and other career paths. MMA has been a strong proponent of this effort and helped lead the charge on numerous legislative efforts:
- The Going PRO Talent Fund (formerly the Skilled Trades Training Fund): MMA spearheaded the legislative effort to preserve and improve the Going PRO Talent Fund into the next administration. More than 2,000 companies, mostly manufacturers, have utilized more than $72.6 million in awards from the program since its inception in Fiscal Year 2014 to fund short-term training that enhances talent, productivity and employment retention, all while leveraging nearly $1 billion in additional funding. An additional $29 million is expected to be awarded to employers for Fiscal Year 2019 for a total six-year investment of over $100 million into Michigan’s talent pool.
- Marshall Plan for Talent: MMA worked alongside Governor Snyder’s legislative team on the passage of a $100 million strategic investment designed to ensure Michigan can compete for and win the race for the most and best talent in the world. The Marshall Plan directs Michigan’s education and talent development systems toward competency-
based learning, increased career exploration and creates multiple pathways to better prepare students and adults for in-demand careers.
- Career Pathways: With the support of the Snyder Administration and a diverse coalition of business interests, MMA successfully passed seven bills intended to provide students with increased education options as they position themselves to enter the workforce. Public Acts 229, 230, 231, 232, 234, 235 and 266 of 2018 work to support stronger Career and Technical Education (CTE) programs and greater opportunities for career exploration and discovery.
Costs Fall with Workers’ Compensation Rate Reduction
(total savings = $492 million over 2011-2019)
Michigan again saw gains in manufacturing competitiveness in 2018 as the state’s Workers’ Compensation Agency announced that Michigan’s workers’ compensation pure premium rate would decrease for an eighth straight year, dropping 8.3 percent in 2019 for a cumulative and Midwest-leading 49 percent decrease from 2011 to 2019. Thanks to sweeping reforms to the workers’ comp system supported by MMA and signed by Governor Snyder in 2011 and strong, safety-focused cultures in today’s advanced manufacturing sector, this annual reduction will save Michigan employers an estimated $492 million in total premiums.
The pure premium rate is a key factor in determining a job provider’s overall expenses for workers’ compensation. The MMA is proud of its work with Governor Snyder and the bold steps taken to improve the competitiveness of Michigan’s business climate through workers’ compensation, an issue which has been at the forefront of MMA’s policy agenda since its founding in 1902.
Reducing Regulatory Barriers
(2,365 rules eliminated)
In 2011, as part of his first months in office, Governor Snyder created the Michigan Office of Regulatory Reinvention (ORR). MMA was appointed by the Governor to represent the manufacturing community and work together with other groups on issues of workplace safety and environmental regulations, setting the stage for the ORR to begin eliminating the unnecessary rules and regulations that clogged up Michigan’s regulatory process. The effort resulted in hundreds of recommendations from various review committees representing all sectors of the state economy.
As of December 2018, the state has eliminated 2,365 rules. This has helped situate Michigan’s economy to better compete with other states and with countries globally.
“The strides Michigan’s economy has made since the dark days of 2008 have turned our state from one on the brink to a leader in manufacturing job creation, a top choice for new business investment and an innovator in 21st century technology and R&D,” said Hadden. “From the elimination of the PPT to our renewed focus on skilled trades talent investment, Michigan is again on the rise. As Governor Snyder has said time and again, ‘manufacturing is a part of Michigan’s DNA’ and our state’s future is brighter than ever.”
Watch for the release of MMA’s 2019-2020 Legislative & Regulatory Agenda in January which will outline the Association’s priorities for the coming legislative session. For information about the Agenda or to learn more about the legislative and regulatory victories achieved for Michigan manufacturers over the last decade, contact the MMA Government Affairs team at 517-487-8552 or go to mimfg.org for regular advocacy-related updates.