To read mainstream media reports, you would think that South Carolina’s manufacturing industry had already gone the way of the 8-track. Or parachute pants. Or Gary Busey’s acting career.
Even the heralded Boeing announcement – which is bringing an estimated 3,800 new manufacturing jobs to the S.C. Lowcountry – was set against a disappointing backdrop of major job losses in a sector of the economy that has served as the Palmetto State’s job creation backbone for years.
In fact, according to the most recent data from the S.C. Employment Security Commission, the manufacturing sector has shed nearly 30,000 jobs over the last year – or approximately half of the total job losses in the state over that time period.
Ruh-roh, right?
Not exactly …
Obviously, one reason that figure is so high is the fact that America is currently finishing up the second year of a major economic recession, one that has disproportionately hurt small businesses – and small manufacturing firms. Another reason is South Carolina’s anti-competitive business climate – specifically its punitively-high tax rate on industrial property.
At 10.5%, South Carolina has the highest such rate in the entire nation, which is a huge disincentive to attracting jobs and capital investments.
No wonder the state has lost 151,000 manufacturing positions over the past decade …
Anyway, state policymakers should pay particular heed to that 10.5% figure – and to our broader competitive climate – based on new data contained in a report released Wednesday by the S.C. Manufacturers’ Alliance.
According to the report, South Carolina’s manufacturing industry generates a whopping $141 billion a year and supports 585,000 jobs. That easily makes it the largest industry cluster in the state – as well as one of the better-paying.
“While the manufacturing sector has declined in total number of jobs in the state, it still pays some of the highest wages of any sector in South Carolina,” said Dr. Harry Miley of Miley, Gallo & Associates, LLC, the firm which prepared the report. “The average manufacturing job pays more than 27% above the statewide average.”
Miley went on to note that the manufacturing industry represents 13% of the state’s tax base, despite making up just 5% of its corporate filings. Manufacturing firms also pay 20% of all wages in the state and directly accounts for 15% of all jobs.
“The benefits and economic impact of manufacturing in South Carolina are great – historically and today,” said BMW’s Bobby Hitt, Chairman of the South Carolina Manufacturers Alliance. “Contrary to what we too often hear and see in the public dialogue, manufacturing still matters and the growth potential for South Carolina’s manufacturing sector is significant.”
The report also found eight South Carolina counties in which at least 25% of the local tax base is derived exclusively from manufacturing.
“This study makes the case that manufacturing is the foundation of our economy,” said Lewis Gossett, President & CEO of the South Carolina Manufacturers Alliance. “Manufacturing still matters and its impact is enormous. If South Carolina hopes to emerge from the current economic downturn soon, the state must adopt and maintain pro-manufacturing public policies.”
Indeed. And it can start by slashing that punitive industrial property tax …
Pic: BMW North America
WEB EXTRA
The Economic Impact of Manufacturing In South Carolina
<span style=”font-size: xx-small;”><em>Pics: Getty, Reuters</em></span>
By Liberty For Me December 9, 2009 at 2:52 pm
We could be the leaders of the Country….The guys up on Gervais are the only thing stopping us.
By southernmapart December 9, 2009 at 9:11 pm
Let’s be reasonable about reporting the 10.5% tax on industry. Most large industries in the state apply for resolutions from the local county to pay a fee-in-lieu of taxes (FILO) which fee usually ranges from 4% to 6%. So, the industry is paying no more in taxes than most of the rest of us, except for commercial properties and small business, which are hit with the 10.5%
Ask a legislature “why” we have this outrageous tax system and some will explain that it is the legislature’s way of making sure the state gets only the industry that it wants. If “they” don’t want you, you can come, but you pay 10.5%. It’s a holdover from the carpetbagger days.
Small business does not get a FILO option. On top of this 10.5% hit on small business, the legislature moved school operations off homeowner’s (voters) tax bills. Somebody has to pay for school operations and homeowner’s share gets moved to ….. small business.
Ever wonder why your dentist bill is so high? One reason, he gets taxed at 10.5%.