Manufacturers leading economic changes

While the national economic recovery slowed in the first half of 2011, the picture improved in the third quarter and job growth in manufacturing led the charge in Missouri, according to a Federal Reserve economist speaking at the Missouri Association of Manufacturers annual meeting in Springfield Jan. 18.

Alex Felix, a senior economist in the Regional Affairs Department for the Federal Reserve Bank in Kansas City, said in her Jan. 18 presentation at the Ramada Oasis Convention Center that manufacturing jobs in Missouri increased by 5 percent in 2011, more than any other industry.

Though manufacturing employment grew, it’s still down roughly 15 percent in Missouri and in the U.S. between December 2007 and November 2011. Citing U.S. Bureau of Economic Analysis and Bureau of Labor Statistics data, Felix said Missouri also still claims 5.6 percent fewer nonfarm jobs than it did at its economic peak in February 2008.

Through the first three quarters of 2011, the nation’s gross domestic product increased by 1.8 percent in the U.S., she said, compared to the same time in 2010. In 2012, the GDP is expected to increase by a moderate 2.5 percent to 2.9 percent, Felix noted.

At Custom Powder Systems in Springfield, co-owner Dale “Mac” McIntosh said the national and statewide data are in line with his manufacturing shop that produces containers and systems that hold, blend and transport dry goods for the pharmaceutical and food industries.

“What (Felix) reflected in her graphs and what they anticipate from the (Federal Reserve) perspective on growth in manufacturing is almost identical to what we’ve seen happening in our business,” he said. “We started last year with 50 people and we’re up to 61. … We found solace and validation in her numbers.”

Statewide, roughly 10 percent of jobs are in manufacturing compared to about 9 percent in the U.S., according to the BLS.

With manufacturers’ orders often tied to consumer purchases, the crowd of 100 manufacturers were pleased to learn consumer spending increased 1.7 percent in the third quarter compared to the previous quarter. “Any increase in consumer spending is good news,” Felix added.

Housing and construction sectors remain lowlights of the recovery, both nationally and in the state. Construction employment is down 30 percent between December 2007 and November 2011. Housing prices in Missouri followed national trends but were somewhat insulated against the highs and lows on the coasts. This trend was reflected in the foreclosure rate, which was roughly 2 percent in Missouri in 2011, or half the national average.

“That means there is less supply in the market, which is encouraging news for the Missouri economy,” Felix said.

Town hall
The annual meeting also featured a town-hall forum with three manufacturing executives who are seeking public office in Missouri: John Bruner, chairman of the board for St. Louis-based Vi-Jon Inc. and U.S. Senate candidate; Dave Spence, president of St. Louis-based Alpha Packaging and Missouri Governor candidate; and Doug Libla, vice president of Poplar Bluff-based Libla Industries Inc., who is running for a state Senate seat.

Each individual chimed in on the state of the economy and offered suggestions as to how the business climate in the state could be improved.

Libla said Missouri priorities should include workers’ compensation and tort reforms – two items on the Missouri Chamber of Commerce and Industry’s legislative agenda. In the last year, he said his flagship company, Mid Continent Nail Corp., has seen its workers’ compensation premiums increase by 35 percent.

Along with calling for tort reform, Libla said business recruitment and retention is as much about the image a community projects as it is about government incentives.

“We need to be able to look at ourselves in a good light, otherwise people will never look at us twice,” Libla said.

Spence emphasized a void in common sense government and said he’d run the state more like a business. Right now, he said “Missouri Inc.” was failing.

“You’ve got to take care of the customers you have,” he said, adding that working with business already operating in the state to expand was the quickest path to prosperity.

He said tax credits through the Missouri Department of Economic Development needed to be reviewed for the effectiveness before they should be allowed to continue. Spence agreed with Libla that tort reform and workers’ compensation were important issues that needed to be addressed so that businesses shouldn’t have to face an unnecessary amount of exposure.

“We shouldn’t have to tell people to be careful drinking their hot coffee,” he said. “We don’t need to live in fear.”

Bruner said the federal government needs to be scaled back and focused on protecting the country.

“The No. 1 goal of the federal government is to defend liberty and protect freedom,” said Bruner, a former Marine. “Just get out of the way. Americans love to compete; they love to expand.”

Across the board, the candidates said Missouri should be a “right-to work” state, and that the government should work to reduce the burdens placed on businesses.

“On every carton of nails we (package), we have to tell people not to shoot themselves in the eye with a nail,” Libla said. “By the time you’re done, there is barely room on the package for a logo.”

Bruner’s call for more citizens in public service resonated with Rita Needham, executive director of the 180-member Missouri Association of Manufacturers.

“He even kind of urged manufacturers in the audience to get involved with making public policy and seeking political office because they understand what it takes to make a payroll,” she said.[[In-content Ad]]