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Mississippi's Manufacturing Growth Expected to Double 2005 Expenditure

Manufacturing growth reflected in payroll increases; manufacturers investing in new equipment and technology

Steady growth in manufacturing has companies making bigger investments in Mississippi, reports The Clarion-Ledger, and growth in manufacturing could mean a growth in wages, according to the Mississippi Department of Employment Security.

After several years of struggling, the manufacturing sector is expected to more than double the $1 billion spent on construction projects in 2005, according to the Industrial Info Resources, a Sugar Land, TX, marketing information service.

The expansion is seen in the the beginning of site work at SeverCorr's $700 million steel mill in Starkville, expected to open in early 2008, and the pending start up of the $140 million Loblolly Inc., in Lauderdale County.

The two companies are among the $2.4 billion of investments in Mississippi expected to start this year.

The wood-laminating plant near Meridian promises eventually to employ 140 people at average salaries of $48,000 annually. SeverCorr will employ some 450 people at an average wage of $70,000 a year and benefits.

"There are a number of other projects that have agreed to locate in the state. Generally, those involve capital expenditures," said Jay C. Moon, president and CEO of Mississippi Manufacturers Association.

Moon said some of the investments may have been highlighted by money spent since Hurricane Katrina in August 2005, but much of it was planned before the storm.

"A lot of manufacturers are investing" in new equipment and technology, Moon said. "I think it's also indicative of the fact that manufacturing has sort of settled back down. It is a reflection of the economy as a whole.

"We talk a lot about the impact of Katrina. Once you get off the coastal area, the rest of the state is doing very, very well."

Moon said pay continues to be a strong point for workers who are hired in the field.

A team assembler, someone who works on an assembly line, was earning an average salary of $11.49 per hour in 2004, according to the state statistics. The starting salary was $7.88 at the time. The occupation paid $27,650 on average for an experienced worker.

"I think number one is that if you're working for a facility that's expanding I think you're doing very well indeed," Moon said. "Manufacturing pays better salaries in the economy and it carries better benefits."

Moon said the entire economy gains from manufacturing jobs because for each one held, three support sector jobs are created.

"It's the whole community that creates and gets the benefits from it because you're circulating that money," Moon said.

Leland Speed, executive director of the Mississippi Development Authority, pointed to the increased tax revenues as proof of heavy investments in the manufacturing sector.

The state collected more than $170 million in sales taxes in April - about $21 million more than what lawmakers had anticipated in the budget process. For the fiscal year, which ends June 30, collections are 12.4% ahead of estimates.

Part of the credit also goes to benefits that businesses can gain under the Gulf Opportunity Zone Act, or GO Zone, approved by Congress in December to provide federal tax incentives to businesses in areas affected by Hurricane Katrina. It also reflects on the way corporate America has viewed investing in Mississippi since the adoption of tort reform, which limits the amounts of civil liabilities, said Speed.

Barbour's spokesman Pete Smith credits the governor's efforts and tort reform with being key to the growth of manufacturing in the state.

"We've netted 20,000 more jobs across the board. Even in the wake of Katrina after losing those jobs we've gained those jobs back, plus an additional 20,000," Smith said. "Mississippi is poised for tremendous growth over the next several years."

Jim Stringer, director of membership services and educational services at the Mississippi Manufacturers Association, said manufacturing jobs have remained steady, despite what the industry thinks are skewed figures.

In March 2001, there were 204,800 manufacturing jobs in the state. In March 2006, the number had dropped to 177,100 because of what Stringer thinks is a flawed accounting system by the government.

More than two years ago, the system was changed to remove from the tally employers like sawmills and printers, Stringer said.

"Within that in my opinion, we lost roughly 20,000 jobs," Stringer said. "That 177,000 in my opinion is too low."