Best states for manufacturing
It takes talent, incentives, and a favorable business environment, and some states have it all
What makes a great state for manufacturing? It takes a combination of factors, like an existing industrial base, the availability of talent, investment incentives, and favorable tax and regulatory environments. Here are Global Trade’s choices for the states that have the best combinations of all of these.
Alabama. The state has seen a continued influx of manufacturing investment—much of it from the international auto industry—and it’s not hard to understand why. Alabama ranks fifth in the nation in auto production, with Toyota, Mazda, Mercedes, Hyundai, and Honda all locating factories here. Vehicles are now Alabama’s number-one export. Alabama also enjoys a leadership position in aerospace production.
When Toyota and Mazda chose Alabama for a new plant, the state’s package of incentives was reportedly worth over $350 million. The package included jobs and investments credits, capital costs reimbursements, sales- and property-tax abatements, and the building of a training center at the site a state agency.
The Alabama Department of Environmental Management (ADEM) expedites investments by coordinating the work of state and local economic development agencies at the project outset. Barring any serious issues, all permitting can be completed in 120 days.
Pre-certifying development sites tend to attract major projects, and Alabama’s the AdvantageSites program has attracted over 20 projects in the last decade, generating $1 billion in capital investment and 4,000 jobs.
AIDT, Alabama’s workforce development agency, initiates training programs to attract new industries. Training is often provided in mobile training units that meet specific company needs. Honda, Hyundai, Mercedes, Navistar, and Airbus are among the companies that have benefited from AIDT training.
Florida. Orlando may be best known as a tourist destination, but business leaders in Florida’s third-largest city are working at turning the area into one of the nation’s hubs for advanced manufacturing. Contrary to the city’s image, two-thirds of its economy is based on manufacturing, with companies like Lockheed, Siemens, and Mitsubishi all locating plants there.
Half a million college students are to be found within 100 miles of Orlando, providing a ready talent pool for advanced manufacturing and other areas such as sensors and optics.
Florida continues to attract traditional manufacturing as well, such as Nucor, the steel manufacturing giant, which plans to build a $240-millon steel mill near Tampa that to employ 250 people.
Florida has a flat corporate income tax rate of 5.5 percent and its maximum marginal corporate income tax rate is the fifth lowest in the country.
Texas. The Lone Star State has one of the most competitive incentive programs in the county. The Texas Enterprise Fund awards cash grants as a financial incentive to close deals that bring significant job creation and capital investment to the state. Since 2004, TEF has invested $600 million across a number of industries, creating more than 80,000 jobs.
Texas has a long history of tax and regulatory reform. In 2015, the state passed a 25-percent reduction in the franchise tax, freeing up capital for companies to invest in their operations. The state also offers sales tax exemptions on equipment and machinery, research and development-related exemptions, and property tax abatements. The state, which has no corporate or personal income tax, is also positioned to provide its manufacturing industry with highly skilled workers from its population of one and a half million college and university students.
The state, known as an energy powerhouse by virtue of its large oil reserves, also leads the nation in wind power.
Georgia. The state’s Quick Start workforce development program is highly regarded, having trained over one-million employees in 6,500 projects, many of them for large-scale manufacturing. Quick Start’s experts have designed and implemented training programs for workers in aerospace, biotechnology, pharmaceuticals, advanced manufacturing, and food and beverage, among other industries. The program is flexible and will provide training in classrooms, mobile sites, on site, or at customs sites at nearby technical colleges.
The Georgia Department of Economic Development collaborates with state and local agencies and with industry to help businesses find a fit for their operations. State economic development representatives customize incentives and tax credits to meet a company’s requirements.
Georgia also has a great reputation for fiscal and financial responsibility. State law mandates that it must maintain a balanced budget and it’s one of a few states to boast AAA bond ratings from all three major municipal bond rating agencies.
Mississippi. The state’s Mississippi Development Authority (MDA) promotes collaboration and cross-communication among state and local officials and prospective businesses for quick decision-making. The authority also works with local economic developers and state and local leaders to find the ideal site, and helps businesses apply for permits, and start the screening and hiring processes.
MDA also opens new markets for Mississippi businesses by leading and funding trade missions overseas. Businesses are invited to participate at subsidized cost to explore new markets and make contacts. Additional services include scheduled meetings with potential buyers, free pre-mission market research and business-potential assessment, and a customized itinerary and logistical support. Post-trip, MDA works with Mississippi companies to capitalize on opportunities resulting from the development mission.
Michigan. The state’s Collateral Support Program helps companies acquire financing that might otherwise be unavailable, supplying pledged cash collateral accounts to lenders for approved projects. Grow Michigan, a public-private partnership, offers loans of up to $3 million in a secondary collateral position at attractive rates. This capital helps businesses perform on new contracts and/or finance acquisitions.
CNBC recognized Michigan in 2017 as the most improved state for business. Among the changes cited were an overhaul of the state’s corporate income tax and the passage of a right-to-work law.
South Carolina. Manufacturing is one of the primary sector’s targeted by the state’s incentive packages. Three discretionary grant funds are administered by the South Carolina Coordinating Council for Economic Development to secure high-value projects.
South Carolina is also committed to regulatory reform. A framework promulgated by the governor in an executive order establishes a four-part test in promoting new regulations and sets out the goals of reducing regulations and promoting greater transparency in the regulatory process.
South Carolina’s readySC is a statewide technical and industrial training program for its workforce. The program designs and implements customized training for new employees through South Carolina’s technical colleges and works with existing employees to update their certifications and credentials. The program has trained 289,000 employees at 2,000 companies since its inception.
Tennessee. Nissan, General Motors, Volkswagen, Bridgestone, Hankook, and Denso Manufacturing, Beretta USA, and Whirlpool are among the manufacturing companies calling Tennesse home.
The state is making significant investments in education to make its workforce stronger. The commitment to educational programs is aligned with business needs and the state provides the funding to make it happen. The Drive to 55 program aims to bring the percentage of Tennesseans with college degrees or certifications to 55 percent by 2025. Students graduating with STEM-related qualifications at Tennessee institutions recently saw an increase of 20 percent in five years, while graduates in engineering, technologies, and related fields grew by over 25 percent.
A right-to-work state, Tennessee has no personal income tax on wages and salaries and has a long history of bipartisan fiscal responsibility, reflected in its Triple A rate by all major rating services. According to The Tax Foundation, Tennessee has the lowest state debt per capita in the country and is the second lowest in the United States for state and local tax taxes paid per capita.
Ohio. Back in the day, manufacturing employed more than half the state’s workforce. Despite shrinking over the years, and even after taking a big hit during the Great Recession, the manufacturing sector remains a vital part of Ohio’s economy, employing one in eight Ohio workers.
That makes the Buckeye State the state third largest for manufacturing in the nation, after the much-bigger California and Texas. Most Ohio manufacturers are small businesses: around 50 percent employ less than 10 people, and less than one half of one percent employ more than 1,000.
Ohio’s manufacturing legacy has contributed to its resurgence in the last few years. The state boasts a deep talent pool and an environment that is friendly and supportive of manufacturing. Ohio’s manufacturing output has come roaring back since the recession, now standing at 20 percent above pre-2009 levels, thanks primarily to investments in technology made by the Ohio manufacturing sector. And those technology investments have made Ohio competitive with any region on the globe from the standpoint of the cost of doing business and the quality of goods produced.
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