Maryland Gov. Larry Hogan visited Baltimore-based Marlin Steel Wire Products on March 28 to promote his More Jobs for Maryland Act of 2017 (SB 317), and to discuss the administration’s efforts to invigorate the state’s manufacturing industry.
SB 317 has passed the Senate, and the House of Delegates was expected to vote on the legislation during the last week of March. A cross-filed House bill has not yet been considered.
A small group of manufacturing business owners joined Hogan for a tour of the factory, as did Howard Bank representatives and other banking industry officials interested in learning more about opportunities to assist manufacturers hoping to take advantage of the legislation if it succeeds.
“I’ve been focused on manufacturing because we particularly took a hit during the past eight years before I was governor,” Hogan said. “We had lost 27% of our entire manufacturing base and 30,000 jobs. I’m happy to say that we have created more manufacturing jobs in Maryland over the last two years than all of the states in the mid-Atlantic region added together.”
According to Hogan, 2016 was the state’s best year for job growth in 15 years.
“[In February], we added 11,500 more jobs, and the past three months have been the best three months for job growth since The Great Recession,” he said. “We’ve gone from the previous administration losing 8,000 businesses and 100,000 jobs to gaining businesses, businesses expanding, and we’ve created 104,000 jobs in two years.”
Hogan’s legislation would provide specific incentives for businesses that locate within a qualified distressed county, entitling them to 10-year income tax credits for 100% of qualified income, 100% property tax credits, sales and use tax exemptions for specified purchases and an exemption from paying corporate filing fees.
The legislation specifically targets Baltimore City, western Maryland and the lower Eastern Shore.
As this issue of The Business Monthly went to press, senate amendments made to the legislation included a recommendation that the governor work toward an agreement with surrounding states, and North Carolina, to repeal laws providing tax subsidies intended to create new jobs or entice new jobs to an individual state.
“The General Assembly finds that the widespread adoption of tax subsidies intended to move jobs from one state to another reduces revenues in all participating states without increasing the total number and quality of jobs,” members of the Senate Budget and Taxation Committee wrote.
Marlin Steel President Drew Greenblatt said one reason he supports the legislation is because it permits accelerated depreciation.
This consideration raises the current $25,000 write-off limit for expensive equipment purchases to $500,000 for all manufacturers in the state, an amount equal to the credits already provided in Delaware, Pennsylvania, Virginia and West Virginia.
“It’ll give companies like [Marlin Steel] the testosterone to go out and buy more technology,” Greenblatt said, gesturing toward a 2,500-watt laser cutter on the production floor. “This machine’s from 2011; we want to go out and buy something that’s a 2017 version, but that’s a lot of money. I can’t even get the electricals for $25,000.”
Greenblatt said employee conditions have steadily improved since he acquired the company in 1998, a time when he was the only person in the factory who owned a car or had health insurance.
“More than half of our employees have homes, and two employees bought homes in January because we have more manufacturing in our city [paying their wages],” he said. “[Gov. Hogan] has created such a nice ecosystem that small business factories throughout our state are getting more confident, more bullish. We’re hiring more people [and] if we want more American companies to move to Baltimore and invest in our state, we have to have that legislation passed.”
Fighting for Growth
Another aspect of policy that may help manufacturers is the assistance they receive through apprenticeship, training and workforce development programs.
“They really look at connecting the business owners, how they are going to participate in the training of their employees so that we can provide jobs for the employees once they finalize that training,” said Maryland Department of Labor Secretary Kelly Schulz. “We have now been expanding into cybersecurity and green jobs, thanks to some of the funding we have received.”
Hogan stressed that employers are being included in the designing of this training.
“You in the private sector tell us what kind of skills you need and help us set it up,” he said. “Instead of training people for something where there’s no jobs existing, we work with the private sector and help you train your employees.”
The Department of Labor’s renewed focus on existing apprenticeship programs, some of which have stagnated for decades, have generated increases of up to 25% in the number of participants.
“That’s important because it doesn’t just provide a job for individuals, it creates a pathway for them to really start at a level where they can grow and expand into the future, just like they can do here [at Marlin Steel],” Schulz said. “Maryland is being considered the best practice in the United States in what we’re able to do and the [workforce development] models we’re able to provide. It’s very successful, and we’re very grateful for that.”
Hogan said he was hopeful that his More Jobs for Marylanders Act would pass the legislature, “but we’re not going to take anything for granted.
“We believe this legislation literally can help businesses grow all over the state and can help us create thousands of jobs,” he said. “We’re going to keep fighting for small businesses, and we’re going to do everything we can to help the manufacturing industry.”