Business

Manufacturers bubbling with optimism as tax reform looks more like a ‘go’

Dec. 18. Things are looking up for 7,800 manufacturers in North Carolina. The National Association of Manufacturers says manufacturers’ optimism has risen to “unprecedented heights” amid the legislative progress made on tax reform.

Nearly 95 percent of respondents said they are positive about their own company’s outlook. In fact, the optimism quotient is the highest in the 20-year history of surveying manufacturers’ outlook. Manufacturing is a key part of the North Carolina economy, accounting for one-fifth of the total output in the state, and employing one in 10 workers.

Total output from manufacturing was $100.07 billion in 2015 in North Carolina, and growing. Average annual compensation was $69,417 in 2015, according to the manufacturers’ association, which is based in Washington, DC.

NC Sen. Jeff Tarte said North Carolina has pulled off a massive turnaround in terms of a business-friendly environment. Crediting work started by former NC Rep. Thom Tillis, The Mecklenburg County Republican said North Carolina is among the very best states for business in the US.

Forbes says North Carolina has one of the country’s strongest business climates, thanks to low taxes, incentives and a young, educated workforce as well as the smallest union workforce. In-migration continues unabated, providing a steady stream of workers for growing companies.

On the national front, Republicans released their final tax bill late Friday, which includes some significant changes from earlier discussions. The GOP goal is to pass the tax overhaul package this week in Congress. President Trump wants to sign a bill before year end.

Optimism is at historically high levels this year, averaging 91.8 percent in the four quarters of 2017, up strongly from a 64.3 percent average in 2016.

Failure to enact tax reform would have ramifications for manufacturers, the survey also found, with nearly 60 percent of respondents saying they will lose opportunities to grow their businesses and more than 20 percent saying they will be unable to expand their facilities and hire new workers. An overwhelming two-thirds of manufacturers would consider a vote against tax reform as a vote against their businesses.

“Four quarters of record-setting optimism don’t happen by accident,” said NAM President and CEO Jay Timmons. “It is the direct result of manufacturers witnessing a sea change in policymaking in Washington, D.C., empowering them to hire more, invest more and build more—all in America. These incredible numbers demonstrate the absolute urgency of getting tax reform signed into law because manufacturers are saying loudly and clearly that more jobs, better pay and manufacturing growth are on the horizon. This also serves as a warning to lawmakers: Fail to get this done, and American manufacturing workers will suffer the consequences of inaction.”

In addition, the results show more than three-quarters of manufacturers surveyed support the current tax reforms being debated in Congress. Nearly 63 percent of respondents said comprehensive business tax reform would encourage their company to increase capital spending, and more than half said they would expand their businesses (57.9 percent) and hire more workers (53.8 percent), while nearly half would increase employee wages and benefits (48.8 percent).

Still, not everyone is happy. Job losses were severe during the recession and they piled up over the course of a slow recovery. It took almost seven years for North Carolina to reach its way back to the number of jobs that existed before the recession. By comparison, the state regained pre-recession job numbers within 54 months of the 2001 recession, and only 22 months in the wake of the 1990 and 1981 recessions, according to the NC Justice Center, which suggests the recovery is uneven.

Employment among the disadvantaged has not kept up with growth in other sectors of the population across the country. According to the Justice Center, total employment in North Carolina is 6.5 percent higher than it was on the eve of the Great Recession, but the state’s population has expanded at more than twice that rate (15.6 percent) over the same period. “This combination of rapid population growth and slow improvements in the job market mean that North Carolina is still well below the level of employment that existed before the Great Recession. Had job offerings in North Carolina kept pace with the pace of population growth over the past 10 years, we would have roughly 375,000 more jobs today than currently exist,” said Patrick McHugh, an economic analyst at Justice Center.

 

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