STATE LEADERSHIP SHOULD NOT GIVE UP ON EXISTING MANUFACTURING INDUSTRIES

The slogan, “It’s the economy, stupid,” has become a popular one since it first powered Bill Clinton to the White House, and it certainly is applicable again these days.  Over the past few weeks, the Governor and General Assembly have put much effort into recruiting new businesses to North Carolina by proposing cash outlays, tax incentives, free land – nothing seems out of the question in our quest to bolster the economy and replace lost manufacturing jobs. 

Unfortunately, there doesn’t seem to be equal attention to helping companies that already exist in North Carolina and are providing jobs today. 

According to the reports in the papers and from some economic pundits, one might actually believe that all of North Carolina’s basic manufacturing jobs (textiles, forest products and furniture, etc.) have all moved to other states or overseas. There is no question that North Carolina has lost many manufacturing jobs, but we still have a significant manufacturing base.  More importantly, it’s not too late to help these industries. 

A report commissioned by the National Association of Manufacturers concluded that the manufacturing sector has a greater impact on economic growth than any other sector of the United States’ economy.  If U.S. manufacturing continues to decline so too will our high standard of living.  The state cannot afford to ignore its manufacturing industries, including one of its largest and most important, forest products.

A recent joint report from the North Carolina Forestry Association and the North Carolina Industries of the Future program highlighted the importance of this industry to our economy and environment, the threats facing it and made recommendations on what can and should be done to support it. 

In North Carolina, the forest products industry – made up of lumber and solid wood products, pulp and paper, and wood furniture – remains the state’s second largest manufacturing industry.  This home-grown industry accounts for an estimated 118,000 direct jobs with an annual payroll of $3.8 billion.  If you apply an economic multiplier to capture the indirect jobs and economic impact, the forest products industry supports over 300,000 jobs with an annual economic impact of almost $30 billion.  And, those jobs are not limited to a particular triangle or quadrant of the state.  There are over 3,000 forest product manufacturing facilities in North Carolina, impacting every county.  In most cases, these facilities are small, family-owned entities. 

When our state leadership talks about preventing the development of two North Carolina’s where the urban centers standard of living far exceeds the rural communities, our leaders could pick no better starting place to implement their goal than ensuring the health of the forest products industry.   

The industry is struggling under a surge of cheap foreign imports, an unlevel trade playing field, excessive regulatory costs and a sluggish economy, and this could spell trouble for our environment.  The health and very existence of our forestland is tied closely to the health of the forest products industry.  Not long ago, many questioned if the forests could meet our demand for wood.  After all, the average American uses about 13 pounds of wood and wood products every day.  Now, the concern is whether there will be an industry here to use the timber from our forests.

North Carolina has over 17 million acres of forestland.  This resource provides us all with clean air, clean water, recreational opportunities and wildlife habitat along with providing the raw material that fuels the forest industry. The majority of these forests are privately owned by over 600,000 landowners. 

A major reason we have as much forestland as we do today is because it has economic value to the people who own it.  Consumer demand for wood products gives economic value to timberland and provides a critical incentive for landowners to keep and manage their forests.  If the forest industry falters and the forest loses its economic value to the people who own it, then we will lose much of our forestland.  Landowners, by necessity, will convert forests to some use that does have economic value.

So what can be done to help the forest industry as well as other basic manufacturing segments? 

• The Governor and the General Assembly should make support of existing industries and businesses, including forest products, in North Carolina as much a priority as recruitment of new industry. 
• The General Assembly should remove impediments to new and existing manufacturing and avoid actions that will increase costs or reduce competitiveness. 
• Echoing a recommendation from the N.C. Budget and Tax Center and the Corporation for Enterprise Development, the Department of Commerce should create a Basic Manufacturing Council to focus on helping our traditional industries. 
• The Department of Environment and Natural Resources should recognize business and industry as customer and not an adversary.  How the agency deals with businesses through its permitting programs will often determine whether they continue to operate or locate in North Carolina. 
• North Carolina State University can provide critical research to help the forest products industry compete. 

And these are just a few actions that would certainly help, but implementing them would be a positive signal that North Carolina is serious about supporting this important segment of the economy while enhancing our environment by encouraging North Carolina’s private forestland owners to investment in their forests.  It’s easy to hand out tax cuts and incentives to new businesses but far more difficult to create a positive business climate once those industries are here.

Bob Slocum is the Executive Vice President of the North Carolina Forestry Association located in Raleigh, NC.  His e-mail is rwslocum@ncforestry.org. 

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