The law, sponsored by state Rep. Bill Huizenga, R-Zeeland, and enacted earlier this year, allows a company that has experienced at least a 30 percent decline in employment over a 36-month period to apply to the Michigan Economic Development Corp. for a Single Business Tax credit based on its unemployment insurance liability.
“As we’ve seen the office furniture industry be heavily impacted by a slow economy, it’s become apparent that we must help them in any way we can,” Huizenga said.
The distressed business tax credit was part of a broader economic incentive package that the MEDC assembled for Haworth. The package made the difference in the company’s decision to close facilities elsewhere and consolidate the work in Michigan.
The package, one of seven the MEDC announced last week for economic development projects that will create nearly 6,000 jobs, including an expansion at Lacks Enterprises in Grand Rapids, reflects the state’s aggressiveness in offering economic incentives to lure and retain employers as Michigan continues to hemorrhage manufacturing jobs.
“We will continue to work hard and do whatever it takes to bring good-paying jobs to Michigan,” Gov. Jennifer Granholm said in announcing the economic incentives for Haworth.
Michigan has lost thousands of manufacturing jobs in recent years and 10,000 in June alone, according to the latest unemployment report from the Michigan Department of Labor & Economic Growth.
In the wake of those manufacturing losses, “We do have to give credit to the state for aggressive economic development initiatives” that seek to stem the tide, said economist George Erickcek of the Upjohn Institute for Employment Research.
In 1995, the “decision was clear” when Lacks Enterprises decided to go to South Carolina to build a new plant, Executive Director Roger Andrzejewski said. Today, the state is willing and able to do much more to compete for jobs with other states that can offer lower labor costs, Andrzejewski said.
“Michigan’s come a long way since that time in being competitive,” he said. “Back then, it didn’t have a chance.”
The Cascade-based automotive supplier last week received a state economic incentive package for a $51.8 million to build three new facilities and expand two others in the Grand Rapids area in an expansion that will create 816 new jobs over five years.
While fully supportive of the incentives the state provided Haworth and other firms last week, Huizenga and state Sen. Wayne Kuipers, R-Holland, believe much more needs to occur for Michigan to effectively and routinely compete for jobs with other states that offer lower labor costs and tax burdens.
“We’re moving in the right direction,” Kuipers said. “At some point we’ll get to a point where Michigan is competitive and we’re not doing it on a case-by-case basis.”
Both he and Huizenga reiterated a need, as pushed by the GOP legislators, to offer more incentives and reduce the regulatory and tax burden for start-up companies and entrepreneurs that can replace the manufacturing jobs the state is now losing.
“I think we have a long way to go if we are going to put Michigan up and (begin) comparing apples to apples,” Huizenga said. “We have to bring about a climate that’s going to allow the next Haworth family to be here, not somewhere else.”
Haworth Inc. was founded in Holland in 1948 by Gerrard W. Haworth, a former Holland High School wood-shop teacher who turned a hobby into a side job and eventually started his own company making display cases for retail stores.
In announcing the company’s decision to consolidate operations in West Michigan, Chairman Richard Haworth cited several factors that play into the health of a state’s business climate.
Energy costs, tax and regulatory burdens, the cooperation and support of the public sector and the attitude of the work force “has everything to do with how efficiently you can run a plant,” he said.
“We need to look at these things very broadly when we decide where we’re going to make an investment,” Haworth said. “It’s important to every state to recognize they have to create a competitive business environment.”