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.