State of Business

The state of business in the area, Missouri and beyond appears to be improving in many cases but, in others, it’s as fickle as the Ozarks’ weather.

While unemployment is dropping, many are dropping out of the workforce. While local stainless steel manufacturers are in hiring mode, electric motor builder Regal Beloit Corp. (NYSE: RBC) is bleeding out its Springfield staff.

Putting the economic climate into words to start the year, Gov. Jay Nixon addressed the state of Missouri and President Barack Obama delivered his State of the Union address. Common themes in both speeches were education, tax reform and manufacturing job growth.

Balancing act
Legislative attention on business issues could have a far-reaching impact on area employment and development, but the influence of executive voices remains to be seen.

Springfield Public Schools Superintendent Norm Ridder said he was pleased education funding is one of Nixon’s top priorities in the fiscal 2015 budget. Specifically, Nixon’s budget proposal funds another 4,000 early childhood education students in Springfield and boosts preschool support by $30 million statewide. Ridder said he’s optimistic at least some additional funding will come the district’s way next year.

“When I talk to legislators, it doesn’t matter which party, they feel there will be some additional support,” Ridder said, noting SPS currently educates between 200 and 250 preschool children each semester.

On the K-12 side, the governor proposed $278 million in additional funding statewide next year, whereas Ridder said he’s hearing from local Republicans $200 million is more likely. The district stands to gain $7.5 million under Nixon’s plan, which increases overall funding by 5 percent to $8.7 billion.

George Connor, director of Missouri State University’s political science department, said Nixon came out swinging against lawmakers who might favor tax cuts over education funding. Ultimately, he said Nixon’s push to fully fund the educational funding formula within two years likely received a lukewarm reception. The current level funds 93 percent of the formula.

“Is there support in the legislature to sacrifice other goals for education or increase taxes of some sort to support these lofty goals? I think the response from the legislators will be tepid at best,” Connor said.

Ridder said the United States has evolved this past century from an agricultural-based economy to more focus on communication and utilizing skills developed early in life. Moving forward, he said lawmakers at the state and federal levels need to support the foundation of tomorrow’s workforce, and early childhood education is key.

In Ozark, school Superintendent Kevin Patterson said it’s important state legislators don’t over-emphasize cutting corporate taxes to attract businesses if they have to kill support for schools that develop the workforce companies will need when they set up shop.

Last year, Patterson conversed with Rep. Lynn Morris, R-Ozark, as Morris weighed whether he should support an override of Nixon’s veto of a Republican-developed broad-based tax cut plan, which Nixon said threatened school funding. The fiscally conservative Morris was among a small group of Republicans who did not vote in September to override the tax-cut measure.  

“We understand the need to make sure we, as a state, are encouraging businesses to come to Missouri,” Patterson said. “At the same time, there is a workforce we’re developing and we don’t want to hurt schools as we’re trying to lure revenue opportunities to our state. It’s a balancing act, and I think Lynn understood that.”

Connor said a similar tax-cut proposal in 2014 would face similar challenges.

Small-business strategy
Obama’s address received much attention for his threats to use executive power to make changes favoring the middle class.

For instance, Obama could move to increase the minimum wage for federal workers to $10.10 per hour. However, broad legislative changes might be harder to come by, said Drury University political science professor Dan Ponder.

Ponder doesn’t expect Republican lawmakers and the president to see eye to eye on certain business issues outlined in his speech – such as tax reform, infrastructure development and energy independence.  

“I think everybody feels the tax code needs to be revised, but to what degree?” Ponder said. “Closing loopholes is a very dangerous and dicey proposition because everybody has their sacred cows.

“We might see some tinkering at the margins, but nothing substantive.”

Bill Schahuber, president and owner of Watson Metal Masters Inc., said there are things the government can do to help grow jobs. He should know.

Through a $4.8 million capital expansion to Republic from Nixa, Watson Metal plans to add 77 positions to the 43-employee stainless steel manufacturing firm after receiving local and state incentives. For 10 years, the city of Republic is abating half of Watson Metal’s property taxes, and for the first six years, the state is waiving employee withholding taxes through the Missouri Works program for an estimated total savings of $370,000.

Schahuber said the federal government similarly could help grow jobs by considering small-business needs as they expand.

“If we could do something to create a tax incentive for training on the job, that would be one of the most important things we could do,” Schahuber said. “That would put money in the hands of manufacturing immediately and motivate them to train.”

John Peine, a supervisor of programs at the Missouri Career Center on East Sunshine Street, said the center offers assistance for companies to find the workers they need when they need them.  

Trade readjustment assistance allows laid-off workers to effectively extend unemployment benefits to 130 weeks from the standard 20 weeks, while they receive training for a new career, Peine said.

Through the Re-employment Training Adjustment Assistance Program, laid-off workers ages 50 and older who were at the top of their pay scale can receive up to $10,000 during a two-year period to supplement income lost with a job transition. Through Jan. 29, Peine said roughly 60 Regal Beloit workers have been assisted through job placement or other programs at the career center.  

Peine said the center is applying for a multimillion-dollar U.S. Department of Labor grant that could help train individuals in the economically challenged areas of Buffalo and Louisburg, north of Springfield, for the types of jobs Schahuber needs to fill.

“Something like that is ideal,” Schahuber said.

Still, the weight of regulatory burdens, such as health care reform, on businesses remains.

“I think there was a lack of specificity on regulatory relief,” Ponder said of the president’s speech. “I don’t think small businesses were terribly pleased.”