Volume 26, Number 25
June 21, 2004-June 27, 2004

Manufacturing sees improvements, but challenges abound

A Mississippi Business Journal Q&A

Lynne W. Jeter MBJ Contributing Writer

When Jay Moon took over as president of the Mississippi Manufacturers Association (MMA) in 2002, the manufacturing industry was on a downward spiral, with a record-breaking number of plant closures and job layoffs. Even though the trend has slowed, especially with the growth of the automotive industry in the Southeast, Moon faces daily challenges in his leadership role for MMA — the voice of more than 2,200 manufacturers and associated members.

Before joining MMA, Moon, a certified economic developer, held the number- two post at the Mississippi Development Authority, where he led the successful effort to locate the $1.4-billion Nissan automotive assembly plant in Canton, which, at full capacity, will employ 5,300. He earned an undergraduate degree in international relations and masters of public administration degree from the University of Georgia. For five years, he directed the economic and community development programs for the City of Gulfport.

Moon served on the American Economic Development Council board for two terms and currently serves on the board and the certification and international committees of the International Economic Development Council, the largest organization of its kind in the world. A graduate of the Economic Development Institute, where he taught international trade and investment, Moon is the current chairman of the Mississippi Extension Partnership and serves on the boards of the Mississippi Intermodal Council and the Mississippi Japan-American Society.

The Mississippi Business Journal spoke with Moon about challenges and changes in the manufacturing sector, including global competition and free trade agreements and MMA’s priorities now that state lawmakers have passed significant tort reform.

Mississippi Business Journal: Now that the Legislature has passed significant tort reform, in what ways will we see positive developments in the manufacturing sector of the state?

Jay Moon: Mississippi moves from a center of jackpot justice to the new model for a civil justice system. The changes enacted two weeks ago will ease uncertainty and enable individuals and companies to calculate risk. This certainty should promote expansions and put the state in the hunt for new locations.

MBJ: With tort reform passed, what are MMA’s priorities?

JM: A stable legal climate is only one element in the mix that encourages the start-up and expansion of manufacturing plants in Mississippi. We must have workers trained for the jobs that come our way so workforce development becomes a key element. Controlling external costs is another key to keeping manufacturing jobs here in Mississippi and the U.S. These include healthcare costs, energy costs, taxes and regulatory costs. We work to keep all these low so that Mississippi manufacturers remain competitive globally. We work with our congressional delegation to make them aware of unfair foreign competition. Mississippi manufacturers can compete with anyone, but they cannot compete with “free” (i.e., China subsidies to its manufacturers). Many countries skirt regulations and free trade agreements that we abide by in the U.S. MMA works with local community leaders to make them aware of the value of manufacturing to their communities.

MBJ: Some of the state’s economic developers have expressed concern that MDA is shifting its focus from manufacturing development to service sector development. Do you see that occurring, and if not, how do you feel about the progress being made moving manufacturing in Mississippi forward?

JM: We are working closely with the Barbour administration and all of the agencies under the governor’s control. The governor continues the position he maintained during the campaign of the importance of manufacturing to our state and local economies. The governor is a strong and successful advocate for positions that will positively impact manufacturing. These include the: (1) Workforce Consolidation Bill, (2) a 50% tax credit for training, and (3) opposition to tax and fee increases. We appreciate his efforts on the part of manufacturing. The governor and MDA have been successful in attracting several new manufacturers to our state. We are working with MDA to support additional locations and we are working with the Mississippi Legislature to support the expansion of important companies such as Viking, Northrop Grumman and Baxter.

MBJ: Why is manufacturing important to the state?

JM: We believe that a strong state economy will result if we have a diversified economic base. Strong retail, service sector and manufacturing growth will collectively combine to provide mutual support and a healthy, growing economy. Manufacturing is the bedrock upon which the nation’s and our state’s economy has been and continues to be based. Manufacturing is responsible for: (1) three-quarters of all research and development, (2) higher wages, (3) higher benefits and (4) the strongest contributions to state and local economies. Manufacturing certainly is changing. It is more technology-intensive and requires higher skill levels. The movement of low wage/low skill job offshore as a phenomenon is not unique to manufacturing. The same pressures that impact manufacturing apply to the service sector as well with thousands of U.S. jobs moving offshore to India, the Philippines and other locations.

MBJ: What particular manufacturing product lines show the most promise for future development?

JM: First, low-skill, low-pay jobs have gone or will soon be gone. Mississippi must transition its workforce through continuous training and retraining to meet the requirements of the manufacturing jobs that we will be able to attract or retain. The areas where we will be able to maintain our competitive capability include: (1) value-added products where raw material originates locally, (2) technology-intensive products, (3) products requiring end-use proximity, such as medical equipment, (4) bulky items too costly to ship, (5) niché items, in which we have an advantage and (5) perishable products such as processed foods.

MBJ: What is your opinion of the actions by many groups calling for an end to trade deal discussions and instead favoring the negotiation of changes to existing trade agreements? Could you explain other avenues MMA believes should be pursued to develop manufacturing on the state and federal level?

JM: The MMA supports free trade because we recognize that we are living in a world economy. Manufacturers around the world are now selling in the U.S., and our manufacturers must be able to sell in their markets. Fair and enforced free trade agreements lower trade costs and barriers for both trading partners. However, we are working with our congressional delegation to ensure that we have fair trade. WTO trade policies must be equally enforced for all parties. We believe that our manufacturers can compete with anyone if the playing field is a level one. Statistics provided by the National Association of Manufacturers have shown that the U.S. has been a clear winner when trade agreements are equitably administered. Other priorities include supporting manufacturing by: (1) beginning a corporate headquarters visitation program, (2) developing a common database on manufacturers, (3) working closely with our state’s congressional delegation and our state Legislature, including regular visits by manufacturers to Washington, D.C. and (4) improving communication with MMA members to provide real time feedback to federal and state lawmakers on issues important to manufacturing.

Contact MBJ contributing writer Lynne W. Jeter at mbj@thewritingdesk.com.