In a state known for its gambling, manufacturers may sometimes feel like they’re playing roulette.
New Jersey is home to some of the world’s largest and best-known manufacturers –Ingersoll-Rand, Merck, and Schering-Plough among them – but from healthcare costs to the lack of skilled employees, these companies are feeling more of a pinch than ever.
It’s Bruce Sisler’s job to help ease their pain.
In August, Sisler became the regional manager of the New Jersey branch of the National Association of Manufacturers. Over the past five years, New Jersey has lost more than 100,000 manufacturing jobs, so his task is no small one.
In a 2004 study by the New Jersey Business and Industry Association (NJBIA), 438 manufacturers identified the largest state-level obstacles for manufacturing success in New Jersey. Healthcare costs topped the list, but the overall cost of doing business, including things like property taxes and regulation, was not far behind.
The environment was cited as the biggest concern in the area of state regulation. While clearly of vital importance, Sisler said the state has such strict regulations in place they basically “handcuff manufacturers every step of the way.”
“The State of New Jersey is one of the more hostile regulatory places to do business in the nation,” he said. “Manufacturers have to look at the tax structure of the state, their ability and speed when building new plants and regulations that effect their day to day operations. Many manufacturers find it extremely difficult to do business in New Jersey as they find operating costs much higher than other places in the country.”
(According to the 2007 State Business Tax Climate Index from Tax Foundation, a nonpartisan educational organization aimed at educating taxpayers on sound tax policy, New Jersey ranks among the 10 worst states in terms of tax climate. For the second year in a row, it is number 48 in the rankings, and New Jersey has the worst individual income tax system and the fifth worst property tax system, the report said.)
Healthcare costs, meanwhile, are a major concern for both large and small companies. Sisler recalled a conversation he had in which a member company noted it “can’t hire an employee for less than $75,000.” Although that may sound like an impressive salary, the $75,000 isn’t what the employee is paid, but what it costs for the employee once benefits and healthcare are factored in.Sisler said there’s a Board-of-Directors-level committee in New Jersey that is investigating health care costs, with the goal of removing the paperwork involved and focusing on healthcare IT, as well as chronic care prevention. Eighty percent of companies’ healthcare costs are for chronic issues such as asthma and diabetes, and work-related problems like hearing loss. Some of those chronic problems can be prevented - it’s a matter of educating employers and employees, he said.
Creating an effective energy policy is also high on the list of things to do. Like Florida, New Jersey has to deal with tourism concerns when it comes to offshore drilling.
“They say they don’t want to go to the beach and see machines, but that wouldn’t really happen,” he said. The machines that would be exploring the ocean would be so far out that they would not be visible from the shore. “And the environmentally-conscious members of Congress are worried about a potential spill. We need to talk to the people of New Jersey and educate Congress and keep it safe for everyone.”
Sisler said a robust, comprehensive and forward-looking energy policy would consist of five crucial elements: A national commitment to further reducing the energy intensity of the U.S. economy; strengthening and focusing on public-private research and development efforts; rationalizing existing statutes and regulations; increasing domestic base load power generation; and increasing domestic energy supplies.
He stressed, however, that NAM isn’t a group of politicians telling companies “do this, don’t do that,” but rather a member-driven organization that acts on what its member companies want and need. And while those needs are plenty, he also feels the situation in manufacturing isn’t quite as grim as the media often depicts.
“Manufacturing is much stronger than it is portrayed in the media,” Sisler said. “The media shows the upper echelon as ogres, looking to move jobs to cheaper areas. For the C-suite, big or small, that’s the furthest from what they’re looking for. Do they want to reduce costs? Sure, but it’s not an obsession.”
One area that might become an obsession is finding enough qualified workers in the state.
The NAM has implemented the “Dream It, Do It” program on a national level, which aims to help youths find a career in manufacturing that “they can be passionate about,” and the South Jersey Chamber of Commerce has been working to educate kids and teachers about the importance of sciences and manufacturing.
“What they want and what they are looking for are ways to get top talent from the U.S. and get youths interested in science and engineering,” Sisler said.
In terms of policy, Sisler said the NAM “is currently reacting to Congress,” adding that John Engler, president of the NAM, wants to take a proactive approach next year. For example, the NAM is seeking to make the R&D tax credit permanent. He noted that, in Rahway, New Jersey, Merck has the only solar powered pharmaceutical facility in the state, with 1,500 solar panels and a hydrogen fuel cell.