After the dust settled in Annapolis this week, Gov. Larry Hogan revealed that his greatest disappointment of the General Assembly session was the failure of lawmakers to approve his proposal to create a Manufacturing Empowerment Zone Program to encourage companies from outside Maryland to locate manufacturing facilities in the state's most economically disadvantaged areas, including Baltimore.
We share his disappointment. No sector of Maryland's economy has suffered job losses like manufacturing has endured over the last quarter-century. Toboggan runs are less steep than the descending graph line that runs from the state's 198,100 manufacturing jobs in 1990 to the 103,900 jobs the sector produced last year, a 47.6 percent drop during a period when the total number of jobs grew by nearly 20 percent, according to the U.S. Bureau of Labor Statistics.
The loss of well-paying jobs that don't necessarily require a college degree has been disastrous for Baltimore. And this lack of opportunity has been a theme raised not only by the candidates for mayor but by many running for City Council as well. How can Baltimore's economy be revived and families find opportunities to bring home a living wage if not through the manufacturing sector? Even those candidates who are most skeptical about the use of tax increment financing at Port Covington generally concede there's a logic to using public financing if it can produce such jobs.
To hear certain presidential contenders talk about U.S. manufacturing this year, some voters might assume that the sector overall was in similar straits with a poor outlook for growth and that China was "cleaning our clocks" by luring businesses with low wages and fewer environmental regulations. But while there has been a decline in U.S. manufacturing jobs, the long-term outlook is actually quite positive.
In reality, many experts believe U.S. manufacturing is headed for an upswing. Why? Because the country can offer advantages that China and other competitors lack and the evolving sector needs — the availability of advanced technology and strong protections for intellectual property rights. According to the Maryland Department of Commerce, about 60 percent of the state's existing manufacturing is already regarded as "advanced," meaning it produces high-tech products using sophisticated materials — think unmanned drones instead of steel I-beams.
That's the future of manufacturing in this state — businesses that produce products that benefit from the state's strategic assets such as its location in the Northeast corridor, its deep-water port in Baltimore, its high percentage of skilled workers, strong public schools and the proximity of some major defense contractors like Northrop Grumman and Lockheed Martin.
Other states want these jobs as well, and many have already demonstrated a willingness to provide tax packages to attract them. To be competitive in this environment, the Hogan administration had proposed offering both income and property tax credits to qualified businesses. The measure had a number of protections — businesses would have to bring jobs that had not previously existed inside the state and be located in a high-unemployment, low-income area served by mass transit, among others — so that tax dollars would not be wasted.
Admittedly, this can be a complex area, and Maryland already supports some programs like Enterprise Zone Property Tax Credits and the One Maryland Program (which similarly offers incentives to businesses that locate in economically distressed areas). But this latest approach might prove an especially useful arrow in the economic development quiver, one that specifically targets manufacturing where the potential rewards are quite high.
Democrats in Annapolis like to complain that Mr. Hogan has given little more than lip service to the needs of Baltimore in the year after Freddie Gray. That's not entirely true (although the loss of the Red Line tips the scale heavily against the governor), and it's especially unfair if lawmakers deny him the tools to improve opportunities for people living in neighborhoods like Freddie Gray's Sandtown-Winchester.
Lawmakers ought to use the time between now and the 2017 legislation session to either muster support for manufacturing empowerment zones or a similar tax credit or devise their own methods for attracting manufacturing jobs as soon as possible. Baltimore and other economically disadvantaged areas of the state need exactly these types of opportunities — just ask the voters and most anyone seeking to serve in city government.