Democratic State Senators Seek Spark to Ignite Manufacturing Expansion

Brewster, Hughes, Yudichak to introduce comprehensive legislative package

HARRISBURG, January 11, 2019 – Three Democratic state senators today announced a comprehensive package of legislation aimed at sparking a rapid and sustained expansion of Pennsylvania’s manufacturing sector. 

State Sens. Jim Brewster (D-Allegheny/Westmoreland), Vincent J. Hughes (D-Philadelphia/Montgomery) and John Yudichak (D-Luzerne/Carbon) said they will sponsor legislation that would better focus state efforts to develop manufacturing opportunities and create jobs.   

“We need to focus our efforts and address all aspects of economic development, including manufacturing,” Hughes said.  “We have to do better coordinating our efforts, funding job training, purchasing new equipment and investing in communities in need.

“Manufacturing is a large and important part of our economy and it needs to continue to grow and develop. Our urban and rural areas are heavily dependent on this sector of our economy.”  

According to the Center for Manufacturing Research, 12 percent of Pennsylvania’s gross state product is directly related to manufacturing with more than 550,000 workers engaged.   Manufactured products account for $33 billion annually in exports. 

Yudichak’s legislation calls for the creation of a “Chief Manufacturing Officer” within the governor’s office and a “Manufacturing Competitiveness Board” to help craft an overall manufacturing strategy. 

“A chief manufacturing officer would serve as a strong advocate for manufacturing at the highest level of state government,” Yudichak said.  “The individual who serves in that position should be well-schooled in the development of manufacturing strategies, especially as it relates to rural areas.”

A key aspect of growing the manufacturing sector is having capital on hand to help businesses invest in new equipment and training.  Brewster’s legislation would channel up to $5 million in state grants for vocational technical schools, vocational programs and equipment purchases from the state’s Machinery and Equipment Loan Fund.   The proposal would increase the maximum loan amount from $5 million to $7.5 million and authorize loans to retrofit equipment. 

“This grant program is essential for vocational schools and small businesses,” Brewster said.  “The grants would allow schools to purchase state-of-the-art equipment to train a new generation of skilled workers.”

Over the next decade, nearly 3.5 million manufacturing jobs will likely be needed, and 2 million are expected to go unfilled due to the skills gap, according to Deloitte and the Manufacturing Institute.

Hughes’ legislation would expand the Manufacturing Tax Credit by lifting the credit cap to $12.5 million from its current $4 million.  A portion of the tax credit – up to $2.5 million – would be set aside for businesses in distressed communities.  It would also be used for disadvantaged, minority, women and veteran-owned businesses. 

Brewster said that the investment in manufacturing pays dividends for Pennsylvania’s workers.  The average annual compensation for manufacturing employees in Pennsylvania in 2016 was $72,151. The average statewide salary for non-manufacturing and nonfarm business in Pennsylvania in 2016 was $49,059, according to National Association of Manufactures – State Data. 

“We must have investments in manufacturing to ensure that Pennsylvania has a well-rounded and diverse economy,” Brewster said.  Brewster’s Senate district includes many areas dependent on heavy manufacturing operations in the Monongahela and Allegheny River valley’s in Allegheny and Westmorland Counties.

Yudichak, who is from Northeast Pennsylvania, has a diverse district that includes manufacturing operations in cities and rural areas.  He said it was critical that Pennsylvania policy stay current with national and international economics. 

“A small manufacturing business, often located in a rural area, produces products that are used in goods manufactured all over the world,” Yudichak said. 

The changing world economic landscape has altered how manufacturing is being developed and sustained in the United States.  In 2015, compared to urban areas, manufacturing represented a greater share of both private nonfarm rural jobs (14 percent vs. 7 percent) and rural earnings (21 percent vs. 11 percent) according to the U.S. Department of Agriculture. 

While the legislation was also introduced last session, the Democratic senators said they are hopeful they can advance the legislative package this year.  They said will question state officials about their commitment to manufacturing during the upcoming budget hearings. 

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Democratic Senators to Gov. Wolf and General Assembly: Make Rebuilding Manufacturing a Priority

Senator John Yudichak

Senator Vincent Hughes

Senator Jim Brewster

Op-ed by state Sen. John T. Yudichak (D-Luzerne), Sen. Vincent J. Hughes (D-Philadelphia), Sen. Jim Brewster (D-Allegheny/Westmoreland)

October 23, 2017 − National Manufacturing Day is the first Friday in October.  While noting the importance of manufacturing on this one day is important, the focus on rebuilding our manufacturing base should be a priority for the governor and the General Assembly each day. 

That is why we’ve joined together to sponsor a comprehensive package of legislation that is designed to address the needs of manufacturers, our workers and the communities where they live, work and raise their families. 

Our legislation seeks to better coordinate policy through the creation of a “Chief Manufacturing Officer;” infuse new dollars into targeted vocational and technical training; expand the Manufacturing Tax Credit and earmark credits to help build manufacturing in distressed communities while aiding disadvantaged, minority, women and veteran-owned businesses.

There is no doubt that manufacturing is a critically important part of our economy. Large employers who drive local economies and small mom-and-pop entrepreneurs are all key aspects.  According to the Center for Manufacturing Research, manufacturing accounts for 12 percent of our gross state product, employs nearly 10 percent of our workers — over 565,000 — and accounts for $33 billion in annual exports. 

The value of manufacturing is even more pronounced in rural areas.  A recent study by the Northeast Pennsylvania Industrial Resource Center indicates that manufacturing represents almost 15 percent of non-urban jobs, with average compensation more than 20 percent above the regional worker wage level. 

To ensure that manufacturing remains a viable and valuable force in our state economy, policymakers need to stay up with trends and accommodate changes in the market.   If we fail to work collaboratively, we will face losing more jobs and business opportunities.   According to the state Bureau of Labor Statistics, since 2001 Pennsylvania has lost 264,000 jobs in manufacturing and 5,400 establishments. 

There are a great many challenges that manufacturers face.  A recent study of national manufacturing by Ball State University indicated that manufacturing employment has been affected by three distinct factors: productivity, trade and domestic demand. 

Our workers and our manufacturing establishments have become more innovative, use more technology based systems and require fewer workers per location.  Yet, even with these well-entrenched changes now altering the manufacturing landscape, there is still room for lawmakers to aid large and small manufacturing businesses. 

Senate Bill 923 would create a “Chief Manufacturing Officer” within the governor’s office to provide advice on economic policy and be a singular voice for manufacturers at the highest level.  The measure also establishes a “Manufacturing Competitiveness Board” to help develop manufacturing strategy. 

Another bill (Senate Bill 924) would direct up to $5 million to a grant program for vocational technical schools, vocational programs and equipment purchases.   The legislation would increase the maximum loan amount from $5 million to $7.5 million and authorize loans to retrofit equipment.  This investment would help schools acquire the equipment necessary to produce a skilled workforce that can be employed in state-of-the-art manufacturing operations. 

The third legislative piece in the package would maximize the Manufacturing Tax Credit.  Senate Bill 925 would increase the credit cap to $12.5 million from its current $4 million, expand the credit to include job training costs, and allow small manufacturers to apply jointly for the credit.  A $2.5 million piece of the tax credit would be reserved for businesses located in distressed communities in addition to disadvantaged, minority, women and veterans owned businesses. 

Our legislative work is designed to follow up on a detailed report authored earlier this decade by the Governor’s Manufacturing Advisory Council.  In this sweeping analysis of manufacturing, the blue-ribbon panel recommended several actions that could aid manufacturing.

Specifically, the study reported that 82 percent of manufacturers had a serious gap in worker skill level and 74 percent indicated that the skill-gap hampered the ability to expand.  Meanwhile, 78 percent of manufacturers were negatively impacted by a lack of access to capital. 

Moreover, the report emphasizes the need for a single point of contact in state government to connect manufacturers to solutions.  The report also recommends focusing attention on information sharing to enhance productivity. 

Policy proposals to address each of these needs are key parts of our legislative plan. 

The series of legislative measures that we’ve offered will address the critical needs of manufacturers.  In this month when Manufacturing Day is recognized, it is time for the General Assembly and the governor to focus on policies to rebuild our communities and make our workforce a priority.

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