Washington Business Summer 2016 | Page 34

washington business The May 2016 state Economic and Revenue Forecast Council report showed a troubling trend: 1,800 manufacturing jobs were lost in February and March 2016. In addition, the Institute of Supply Management - Western Washington Index, which measures conditions in the sector, had a concerning decline, putting manufacturing on the edge of contraction in the state. One positive that both Marzetta and Vaughan cited is their proximity to the central Puget Sound region. “Access to locally-sourced, advanced materials in the region is critical to their operations, and helps keep jobs in Washington,” Vaughan said. However, Marzetta said the uncertain costs of workers’ compensation taxes — that ratchet up unpredictably yearly — are a huge issue in the cost of doing business in Washington. Another challenge looming is a new regulatory structure that will raise the cost of energy, fuel and natural gas. The state Department of Ecology is in the draft phase of a new rule that would cap carbon emissions. The regulation will drive up the cost of energy for every family and business in the state, but will hit energyintensive operations like manufacturing the hardest. AWB is awaiting the final language of the rule to calculate the cost to employers. Additionally, voters will decide in November whether to approve or reject Initiative 732, which seeks to create a carbon tax that would immediately increase the cost of energy and fuel, once again impacting energy-intensive industries like manufacturing. AWB opposed the proposal when it was before the state Legislature this year, citing the economic uncertainty and cost drivers of such a policy. Add in public discussions about new and higher taxes and that headwind employers are feeling now could feel more like a hurricane in January. economies of scale Another chapter in the story of Washington manufacturers is rural job creation. While central Puget Sound’s unemployment rate hovers at 4.7 percent, the rest of the state is still waiting for the economic recovery to arrive. Rural communities need high-paying manufacturing jobs the most, a reality that could be behind Gov. Jay Inslee’s efforts to work with key manufacturers to reach a deal that will ensure Alcoa’s Ferndale facility and REC Silicon’s operations in Moses Lake get back on line, at least for the short-term. 34 association of washington business “Our machine shop looks more like a hospital than it does a factory.” — Michael Marzetta, president, Altek, Inc. But employees want long-term job security. A fourth-generation, 105-employee operation, Vaughan Company manufactures Chopper Pumps, a 1960 invention that solved a big problem for dairy farmers: manure removal. Today, Chopper Pumps are sold around the world for a variety of applications, but the firm remains in the same place it started: Grays Harbor County. Once home to a booming timber industry, the county now faces 9.2 percent unemployment. Keeping jobs local is important to Vaughan’s. “We’re in a really small area and we like to bring in a lot of the local folks. The high schools come in to our shop and we like to talk about what we do and make sure there is interest in our operation,” Vaughan said.