Commentary: Loss of manufacturing jobs continues to plague state

 By Senator Tim Golden

Valdosta, GA - June 26, 2006 - A recent article in the Atlanta Journal-Constitution reported that the loss of manufacturing jobs – and their replacement with lower-paying service jobs – has contributed to higher home loan delinquency rates in Georgia and the Deep South, compared with other states.  With the General Motors and Ford plant closings on the horizon, experts predict that rates will continue to escalate.

The vacuum left by the manufacturing exodus has been filled by marginal job growth, and the pay of these new jobs is substantially less. Dr. Roger Tutterow, Dean of the Stetson School of Business & Economics at Mercer University, said plant closings present “an interesting challenge” for the state and region. He said the biggest problem for those who are losing jobs at these plants is that they are going to have a hard time finding jobs that will compensate them at the same rate. 

For the most part, our diminishing manufacturing sector is a symptom of globalization, but many experts agree that soaring energy costs have accelerated this process. Since 1998, more than 130,000 of Georgia’s manufacturing jobs have vanished.  Despite silver lining promises made by the current administration, Georgia has continued to endure the withering of manufacturing jobs.

This doesn’t have to be. The state’s Department of Economic Development has made great strides in bringing new jobs to Georgia.  As lawmakers, wouldn’t it make sense to match their effort with a strategy for keeping the manufacturing jobs that are still here?  For two years, that question has gone unanswered by leaders in the State House.

During the last legislative session, I urged my colleagues in the General Assembly to adopt and the governor to sign House Bill 209, which would provide tax relief to Georgia manufacturers in the form of a sales tax exemption on the cost of natural gas, artificial gas or electricity that is used in the manufacturing process.  This measure was offered early in the 2005 session and for some reason it languished for two sessions in the House Ways and Means Committee.

Energy costs now represent the second largest cost in the process of producing goods.  And it appears the trend of such costs is going straight up with no end in sight. Georgia is the only southeastern state – and one of only 10 in the nation – that levies a sales tax on energy used by manufacturers.

So as energy costs continue to skyrocket, we are further punishing our manufacturers with a tax hike.  While state coffers benefit from this windfall, it hits some of our best employers where it hurts the most, driving up their overhead while they struggle to compete in the global marketplace.  And that pressure to compete is the essence of globalization.  In order to keep consumer prices low, manufacturers are forced to scatter operations across the world.

Georgia jobs are at stake right now. It has been well documented that chemical and paper firms are shifting more production abroad in search of lower costs, notably for natural gas.

I recently attended the annual meeting of the Georgia Pulp & Paper Association and spoke to the members on this issue. But they know exactly what is happening on the energy cost front. This sector alone represents thousands of jobs in outside-the-perimeter communities like Valdosta, Albany, Brunswick and Rome – as well as Atlanta. It’s time those of us at the Capitol start listening to them.

HB 209 is also strongly supported by numerous statewide business groups, including the Georgia Chamber of Commerce, Georgia Industry Association, Georgia Mining Association, Georgia Forestry Association, the Association of Georgia’s Textile, Carpet and Consumer Products Manufacturers and the Georgia Chemistry Council. These groups are part of the Coalition for Fair Energy Taxation.

Georgia is supposed to be a business-friendly state. Gov. Perdue himself said the state should not be enjoying a revenue windfall as a result of skyrocketing energy costs. Passing HB 209 and repealing this outdated and anti-competitive tax now to bring immediate help to our manufacturers should be a no-brainer.

Why has this legislation been stuck in committee for over a year? Why aren’t the governor and members of the legislative majority leadership championing a pro-business bill that will save Georgia jobs? How many more thousands of jobs does our state have to wave goodbye to before someone answers the wakeup call?

Addressing the problem of manufacturing job losses in Georgia and the residual effect on other parts of the economy must be our top priority for the 2007 legislative session. In order to remain competitive with our sister states in the recruitment of industry and, especially, to help our existing businesses survive, we must make repealing the state sales tax on energy use in the manufacturing process a part of that solution.

• Sen. Tim Golden is Chairman of the Senate Democratic Caucus, and represents the 8th District in the State Senate.