Miss. aims to lure factories from other countries

Published 12:07 pm Wednesday, August 22, 2012

Mississippi spent 50 years poaching factories from the North with cheap land, labor and government incentives before hitting headwinds from China, where labor was even cheaper.

However, industry leaders said Monday at Mississippi State University that the Magnolia State and the rest of the U.S. have a chance to reverse manufacturing losses.

“I am optimistic we will be a leader in onshoring,” said Brent Christensen, head of the Mississippi Development Authority, the state’s economic recruiting agency.

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Harry Moser, president of the Reshoring Initiative, said industries have mistakenly ignored many of the hidden costs of making goods for the American market overseas. He said increasing awareness of those costs, as well as increasing wages in China, are leading many companies to bring work back to the United States.

“So many companies offshored when they should not have done so,” said Moser, who formerly worked for a machine-tool company.

MSU is focusing on bring back furniture and auto parts factories, saying the state can provide higher productivity and shorter delivery times than overseas factories.

“This is a really good opportunity for us to be a reshoring solution,” said Clay Walden, director of MSU’s Center for Advanced Vehicular Systems.

Mississippi’s manufacturing workforce peaked at 244,000 in 1994, falling to 134,000 in 2011. Manufacturing jobs have increased so far in 2012, and could rise in the state for the first time in eight years.

Manufacturing is 16.7 percent of Mississippi’s overall economic output, sixth highest among the 50 states. The value of manufactured products in Mississippi climbed steadily, despite declining employment, until output fell sharply in the depths of the recession in 2009. Output rose as Mississippi switched to higher-value products and as productivity per worker rose.

Manufacturing overall has driven much of the economic recovery. Moser estimated that as much as 10 percent of U.S. manufacturing employment growth in the last two years has come from work brought back from overseas. He said he thinks the movement of manufacturing to and from foreign countries is roughly balanced right now.

Advantages of bringing back work includes faster shipment times to customers, better protection for trade secrets, less money tied up on inventory being shipped, greater ability for engineers to work with factories to make improvements and better quality. Also, wages have risen quickly in China, eroding cost advantages there.

Moser argues that bringing back production aimed at the American market may be a better economic opportunity than the Obama administration’s push to increase exports. Moser argued that in the same way that there are hidden costs to American companies that buy goods from overseas, there are hidden costs to American companies trying to make goods domestically and sell them abroad.

One Mississippi success story is Multicraft, an auto-parts maker in Pelahatchie. The company won bids to make electric switches and magnetic systems that had previously been made in Mexico.

Furniture makers also are hiring after a decade of steep job losses. Southern Motion of Pontotoc resisted heavy pressure to move some or all of its recliner manufacturing to China, said CEO Guy Lipscomb.

“We are big-time selling ‘Made in America,’” he said. “We think it’s going to be the wave of the future, particularly for the furniture industry.” Moser said it’s possible to bring back even some products that would seem unlikely candidates for American production, citing one company’s decision to start making Frisbees in California and Michigan.

Jay Moon, president of the Mississippi Manufacturers Association, urged a focus on technology-heavy products, though.

“Low skilled, lower-value, mass produced items, those are all but gone from the South,” he said

As is traditional for the association, he urged a focus on lower corporate taxes and less burdensome regulations. He also said the federal government needs to do more to end unfair trading practices, theft of trade secrets and currency manipulation.

For Mississippi, Moon said making sure people are well-educated is key.