Download the complete Agenda for Manufacturing Renewal in New Jersey in PDF format

About the Campaign for Manufacturing Renewal

Mission Statement

The New Jersey Business & Industry Association has undertaken a campaign for manufacturing renewal in New Jersey. The goals of the campaign are to:

1) raise awareness among State policymakers, the media and the public about why a strong manufacturing sector is important to New Jersey;

2) call attention to the challenges faced by New Jersey's goods producers while trying to operate their businesses competitively in their industry; and

3) identify and advocate changes in State policy that will support and strengthen this vital sector of the State economy.

Background

Over the last five years (2001-2005), nearly 100,000 manufacturing jobs have vanished in New Jersey, almost a quarter of the pre-recession total. This decline has accelerated a longer-term trend of manufacturing employment losses in this State.

In spite of these losses, New Jersey manufacturers still employ approximately 320,000 full-time workers, nearly 10 percent of the State's entire private-sector workforce. They pay above-average wages and benefits and make many other significant contributions to the economic well-being of the citizens of this State. Furthermore, manufacturing generates 11 percent of New Jersey's economic output and has a significant multiplier effect on the rest of the economy. (See Why Manufacturing Counts, NJ Policy Research Organization, March 2006.) Until recently, the plight and concerns of this important group of employers were all but ignored. The New Jersey Business & Industry Association and its Manufacturing Council have succeeded in shining a light on this very important sector of the State economy through their Manufacturing Counts! Campaign for Manufacturing Renewal, which was initiated in June 2004.

Message from NJBIA President Philip Kirschner — About this Agenda

A year and a half after kicking off its Manufacturing Counts! Campaign for Manufacturing Renewal in New Jersey, NJBIA can point to meaningful accomplishments and new laws that will help lower manufacturers' costs of doing business. The Governor and State legislators now recognize the important role manufacturing plays in our economy and are focusing on what the State can do to keep good manufacturing jobs here in New Jersey.

But our work has only just begun.

This 2006-2007 Agenda for Manufacturing Renewal builds on the early successes of our first Agenda, which was presented in June 2004. It contains proposals for legislative, regulatory and executive action that will address the biggest State-level obstacles to manufacturing success in this State and strengthen New Jersey 's manufacturing climate. These proposals are designed to encourage manufacturers to stay in New Jersey and to expand their operations here.

The New Jersey Business & Industry Association initiated its Campaign for Manufacturing Renewal in 2004 to bring attention and resources to this valuable but long-neglected sector of the New Jersey economy. Concerned about the decline of manufacturing employment in this State, we made a commitment to work with our manufacturing members and State government leaders to devise a comprehensive strategy for manufacturing renewal.

Our Campaign was initiated with a Manufacturing Summit in June 2004. Since then, our manufacturing members and a majority of State legislators have embraced the Campaign. Consequently, it has seen early success. The Legislature in 2005 enacted seven laws that will directly help the State's manufacturers by lowering their costs of doing business. These successes are detailed in the Campaign Progress Report that follows, which was written by Cliff Lindholm, III, Chairman of NJBIA's Manufacturing Council and CEO of the Falstrom Co. in Passaic.

The Manufacturing Council has been central to the success of our Campaign. The Council, under Lindholm's leadership, has given NJBIA excellent ideas for the direction of the Campaign, set policy goals and developed legislative proposals for this Agenda. I would particularly like to thank Cliff for his tireless efforts.

Another factor in the early success of our Campaign was the formation of a bipartisan Manufacturing Caucus in the State Legislature. Co-chaired by Senator Paul Sarlo (D-36) and Assemblyman John Wisniewski (D-19), the Caucus counts 75 of the State's 120 legislators among its members. The Caucus has been particularly helpful in giving manufacturers a voice during legislative deliberations. For the first time in 20 years, two legislative committees—the Senate Legislative Oversight Committee and the Assembly Commerce and Economic Development Committee—recently held separate hearings devoted solely to the issue of strengthening manufacturing.

This 2006-2007 Agenda for Manufacturing Renewal lists the priorities of the Manufacturing Council for the current legislative session. It builds on many of the successes from our previous agenda and once again focuses on lowering the high cost of doing business in New Jersey. The high and rising costs of health insurance, energy, taxes and regulation make it particularly difficult for manufacturers to remain competitive in New Jersey.

The findings of NJBIA's 2006 Business Outlook Survey show just how far we have to go. Only 16 percent of manufacturers responding to this survey said New Jersey is a good place for new or expanded facilities. And a large majority said New Jersey has a worse attitude toward business than other states.

It is important to remember that this Agenda reflects the thinking of NJBIA's manufacturing members. It represents the real concerns and best ideas of manufacturers who have been doing business in New Jersey for many years, and in many instances, for generations.

Whether you are a legislator, a State agency official, a member of the Administration, a private-sector employer or a concerned citizen, I hope you will take a few minutes to review this Agenda and join NJBIA in its Campaign for Manufacturing Renewal.

Sincerely,
Philip Kirschner
President
New Jersey Business & Industry Association

Message from Council Chairman Cliff Lindholm, III — Campaign Progress Report

In its first 18 months, the Campaign for Manufacturing Renewal in New Jersey has accomplished a great deal. As Chairman of the NJBIA Manufacturing Council, I have had the privilege to work with the members of the Council and the Legislature as we have raised awareness about the importance of manufacturing to New Jersey and have taken steps to strengthen this sector of the State economy.

In 2005, the Legislature approved and the Governor signed seven new laws that will help New Jersey manufacturers. These new laws are not empty political gestures. They evolved from the Council's original deliberations into steps that can be taken to ensure manufacturing success in New Jersey, and they will help manufacturers lower their cost of doing business here.

These laws repealed an onerous air toxics tax that cost manufacturers $12 million. They created an energy ombudsman to help manufacturers reduce their energy costs. They allowed manufacturers to utilize a federal manufacturing tax credit worth $35 million on their State tax returns. They eliminated the 6 percent sales tax on energy for some manufacturers in Urban Enterprise Zones. And they extended the savings of health savings accounts to New Jersey employers and their employees.

Below is a summary of these legislative accomplishments. I would like to thank the members of the Council and the members of the Legislature who serve on the Manufacturing Caucus for their help in passing these laws.

• P.L. 2005, c. 127 — Permits New Jersey manufacturers to take advantage of a federal manufacturing tax credit on their State tax returns, providing them with an annual estimated tax savings of $35 million.
• P.L. 2005, c. 129 — Prevents a 1 percent tax on HMO policies from being passed on to manufacturers and other employers, saving them an estimated $85 million annually.
• P.L. 2005, c. 141 — Repeals the air toxics tax, which will save manufacturers an estimated $12 million annually.
• P.L. 2005, c. 166 — Makes it easier for employers to meet the required “participation rate” within the State-regulated small-group health insurance market. Employers with 2-50 employees are required to purchase their insurance through this market. This law will allow more businesses to qualify for the purchase of employee health benefits in the small-group market.
• P.L. 2005, c. 215 — Creates the position of a Business Ombudsman at the NJ Board of Public Utilities to help manufacturers secure energy benefits, such as grants and loans available to them for energy efficiency projects.
• P.L. 2005, c. 374 — Eliminates the 6 percent sales tax on energy for manufacturers in Urban Enterprise Zones that have 250 or more employees or 50 or more employees in Salem County. Previously, only manufacturers that had 500 or more employees were eligible for this reduction.
• P.L. 2005, c. 248 — Extends the cost savings and tax advantages of health savings accounts (HSAs) to companies and employees under the New Jersey gross income tax. This law will help many employees gain access to affordable healthcare while easing their tax burden.

Just as important as these legislative accomplishments has been the exchange of ideas between manufacturers and State government. We look forward to continuing that dialogue with the Legislature and the Administration of Governor Jon Corzine. It is through open and honest dialogue that a consensus can be reached on the best ways to support and promote a healthy climate for manufacturers in the State.

The success of the Campaign for Manufacturing Renewal can also be measured in the kinds of programs and services that have been created to help the manufacturing community. A number of State programs are providing immediate assistance to hundreds of manufacturers.

These programs include “lean manufacturing” seminars and other services provided by the NJ Manufacturing Extension Program, low-interest loans from the NJ Economic Development Authority, and free energy and pollution-control audits by the New Jersey Program for Manufacturing Excellence at Rutgers University. I urge you to visit the Manufacturing Campaign Web site at http://www.njbia.org/manufacturing to learn about the full range of State programs and services available to New Jersey manufacturers.

NJBIA member companies that serve on the Manufacturing Council also benefit from regular quarterly meetings of the Council, giving them a chance to talk and trade ideas with one another.

This Agenda and the rest of the Campaign for Manufacturing Renewal are not static ideas to be put on a shelf. Manufacturing renewal is a dynamic process, and our efforts to revitalize manufacturing in New Jersey will continue to change and adapt to meet the needs of New Jersey-based manufacturers.

Please send any suggestions you have for the NJBIA Campaign to me by e-mail at manufacturingcouncil@njbia.org. I look forward to your ideas and to your participation in this effort. We have accomplished a great deal in a short period of time, but much work remains to be done.

Thank you for your interest and participation.

Sincerely,
Cliff Lindholm III
Chair, NJBIA Manufacturing Council
President and CEO, Falstrom Co., Passaic

Executive Summary

Agenda for Manufacturing Renewal in New Jersey

The NJBIA Manufacturing Council has adopted the following agenda items to be included in the 2006-2007 Agenda for Manufacturing Renewal. These ideas for legislative and regulatory action are intended to address some of the biggest State-level obstacles to manufacturing success in New Jersey and to lower the overall cost of operating a manufacturing business in New Jersey.

This executive summary contains background information on seven critical issue areas. A more detailed description of individual Agenda items follows this summary.

Health Insurance Costs — Manufacturers are anxious to find ways to limit the high and rapidly rising cost of health insurance. The Council advocates reform of the State-regulated markets for small-employer and individual insurance coverage. It also supports the use of the Mandated Health Benefits Commission to advise the Legislature on the cost of health-benefit mandates before they are enacted into law.

Business & Property Taxes — In recent years, the State balanced its annual budget on the backs of New Jersey employers, the most egregious example being the $1.5 billion corporate tax increase of 2002. This tax increase doubled corporate taxes in the middle of a recession by imposing an alternative minimum assessment (AMA) on the gross receipts of C corporations. To restore a semblance of tax fairness, the State should allow the corporate AMA to expire as scheduled in July 2006 and also permit the accelerated depreciation of new machinery and equipment per IRS rules. Net operating losses must continue to be fully deducted.

Additionally, rising property taxes, already among the very highest in the nation, are a burden to business property owners, not just to homeowners. While the State wrestles with the larger issue of statewide property tax reform, manufacturers would like to salvage a legitimate protection against even higher property taxes. The State's Business Retention Act states that the property tax should not be levied on a business's machinery and equipment. However, the State Tax Court recently overturned this exemption. The State Legislature must reaffirm it. If the exemption is not reaffirmed, manufacturers could get hit with tens of millions of dollars in higher property taxes.

Energy Costs — New Jersey's high energy costs are a particular burden to manufacturers, which pay some of the highest energy rates in the nation. New Jersey can cut these costs dramatically by exempting manufacturers from paying State energy taxes of nearly 10 percent.

State Regulations — New Jersey's environmental compliance costs are among the highest in the nation, primarily because the State has a history of enacting regulations that exceed those of the federal government or other states. To support a large bureaucracy, the NJ Department of Environmental Protection (DEP) also charges some of the nation's highest permit fees, fines and penalties. This is especially burdensome to manufacturers, the State's most highly regulated group. New Jersey should adopt federal standards (used by most states) and reduce fees and fines. The State should also create an environmental quality index to measure progress in pollution reduction. Industry should get credit for achieving pollution-reduction goals.

Labor Costs — New Jersey manufacturers already provide significant employee benefits that employers in most other states do not. New Jersey mandates generous workers' compensation coverage, temporary disability coverage, unemployment insurance coverage, 12 weeks of unpaid family and medical leave, and a host of State-specific programs and laws. Manufacturers cannot afford additional programs that lead to higher costs. New Jersey should not seek to impose costly workplace mandates, like paid family leave, that are not seen in other states.

Availability of Skilled Labor — Machinists, tool-and-die workers, welders and other highly skilled manufacturing workers are in very short supply. The State must help manufacturers by tailoring its workforce training programs to meet the needs of manufacturers.

Educate Government about Manufacturing — Last year the Council worked with NJBIA to coordinate over 40 site visits between legislators and local manufacturers. These tours gave legislators an understanding of the types of manufacturers and highly skilled jobs found within their districts. In the next two years, the Council would like to expand this program to include county and local leaders as well. Providing local leaders with an understanding of the benefits of having manufacturing jobs in their counties and municipalities is a long-term goal of the Council.

Agenda for Manufacturing Renewal in New Jersey

Health Insurance Costs

Background

Employers pay more for health insurance in New Jersey than they do in any other state in the nation. Health insurance costs for New Jersey employers soared above $7,000 per employee for the first time in 2004, climbing by 11 percent to a record $7,307, according to the New Jersey Business & Industry Association's 2005 Health Benefits Survey. The 11 percent increase marked the third consecutive year of double-digit inflation as measured by this survey. Between 2003 and 2005, participants in the NJBIA Health Benefits Survey saw their health plan costs rise by an average of 13 percent annually, more than four times the rate of consumer inflation for the same period.

Fast-rising costs have taken their toll. The percentage of employers providing health coverage declined significantly for the first time in the survey's 12-year history. Ninety percent of survey participants said they provided coverage in 2004, down from 94 percent the year before. The falloff was even more pronounced among smaller employers.

Fast-rising health insurance costs have hit manufacturers hard because they often cannot raise their prices due to intense competition. Forty percent of manufacturers identified the cost of health insurance as their number one problem in NJBIA's 2006 Business Outlook Survey.

Health Insurance Agenda

Reform New Jersey's Small-Employer Health Insurance Program

The current small-group market, in which small employers (2-50 employees) purchase health coverage for their workers, is in crisis. Double-digit premium increases have become the norm. The State regulations governing that marketplace should be reformed to ensure that employers have access to more affordable coverage. Those reforms should include:

Increased Flexibility in Benefit Design: Small companies must be given more flexibility to design the health plans they purchase. Companies should be allowed to purchase only those benefits in which their employees are most interested.

Regulatory Flexibility: The revised regulatory framework for the small-group market should be flexible enough to ensure that frequent legislative changes will not need to be made as the health insurance market evolves.

Review Proposed Health Coverage Mandates Prior to Legislative Action

Policymakers should utilize the State's Mandated Health Benefits Commission to review all proposed mandates to assess their impact on the cost of purchasing health insurance. Legislators should review the Commission's reports carefully before taking legislative action on any proposed mandates.

Review All Existing Health Coverage Mandates

Dozens of health insurance coverage mandates have been enacted in recent years, yet no comprehensive review of their impact has been conducted. Such a review should evaluate the need for these medical-coverage mandates, as well as their impact on health insurance costs.

Provide Employers with Health Coverage Tax Incentives

The State can assist employers in their efforts to provide employee health coverage by giving them tax incentives, such as deductions or credits, to help offset the cost.

Business Taxes & Property Taxes

Background

New Jersey is frequently cited as having some of the highest business and property taxes in the nation. A 2004 survey of the nation's chief financial officers concluded that New Jersey had the most unfair tax environment in the country. An analysis by the accounting firm of Ernst and Young found that New Jersey employers absorbed the third highest overall business tax increase between 2000 and 2003. Most recently, the Tax Foundation, in its 2006 rankings, found New Jersey to have the nation's worst business-tax climate. Additionally, New Jersey has the highest property taxes in the country, which also impacts businesses, and especially, manufacturers.

In NJBIA's annual Business Outlook Survey, manufacturers rank local property taxes and State business taxes as being among their most troublesome problems.

Business Taxes & Property Taxes Agenda

Let the Alternative Minimum Assessment on C Corporations Expire

Because many manufacturing businesses were formed prior to the advent of S corporations and other pass-through entities, manufacturers disproportionately pay the New Jersey Corporation Business Tax (CBT). The alternative minimum assessment (AMA), enacted in 2002 as part of the $1.5 billion business tax hike, is the most unfair aspect of the CBT and should be eliminated. Taxes are paid on gross receipts, rather than on net operating revenues. Legitimate expenses like salaries and health insurance cannot be deducted. The AMA is particularly harmful to cyclical businesses like manufacturing.

Continue to Permit Net Operating Losses to be Fully Deducted

The ability to deduct net operating losses (NOL) is important to struggling businesses. NOL deductions allow qualified employers to spread out economic losses from lean years over several future tax years. In 2002, the State suspended NOL deductions for two years. Legislators should reject any effort to suspend NOLs in the future.

Permit Accelerated Depreciation

New Jersey businesses should be allowed to take a State-business-tax deduction for accelerated depreciation of investments in new equipment. Under new federal depreciation rules, companies can depreciate up to 50 percent of the value of new equipment in the first year. New Jersey should permit the same deduction and allow companies to take this deduction on their State tax returns.

Create a Manufacturing Retention Investment Tax Credit

This capital investment tax credit would be available to any manufacturer that invests in capital equipment, plant renovation, modernization or expansion in New Jersey. The credit would equal 20 percent of total investment costs and would not be subject to the general limitation on the use of business tax credits. The credit would have neither minimum investment amounts nor new employment requirements. To remain competitive, New Jersey manufacturers must produce goods using fewer employees than their competitors. To promote efficiency and cost-effectiveness, the State should encourage manufacturers to modernize equipment and facilities.

Affirm Exemption of Machinery and Equipment from Property Taxes

The State Legislature must reaffirm the exemption of “business personal property” from property taxes, an exemption clarified under the State's Business Retention Act. Manufacturers have large investments in business personal property, defined as equipment, machinery, conveyor belts, etc. Such personal property is not considered part and parcel of the permanent building. But the NJ Tax Court has issued a decision redefining personal property so that only equipment, machinery, conveyor belts, etc. that have actually been moved qualify for the exemption. If allowed to stand, this ruling would increase property taxes for New Jersey manufacturers by tens of millions of dollars.

Adopt a Single Sales Factor for Corporation Business Taxes

NJBIA supports the adoption of the single sales factor tax model for the State's Corporation Business Tax (CBT) structure. Under the current system, CBT levies are based on a business's in-State sales, business property, and in-state payroll. Out-of-state companies are taxed at a lower rate because they have no New Jersey payroll and no property. Adopting a single sales factor would only tax in-state sales and put New Jersey companies on equal tax footing with competitors in other states. It would also stop penalizing companies that invest in New Jersey and create jobs here.

Retain New Jersey 's Uniformity Clause for Property Taxes

Businesses pay property taxes just like everyone else. In fact, businesses pay 25 percent of local property taxes in New Jersey, but do not receive the same relief that homeowners receive from State rebate programs. Our State Constitution contains a “uniformity clause” which requires local governments to tax business and residential properties at the same rates. This language effectively protects business property owners from being taxed at higher levels than residential property owners. The uniformity clause must be maintained. Removing this protection for business property owners would lead to higher property taxes, making it more difficult for manufacturers to remain in the State.

Energy Costs

Background

Like health insurance costs, energy costs are exploding. New Jersey manufacturers pay more for energy than their competitors in other states. According to the US Department of Energy, New Jersey 's industrial customers paid rates in 2003 that were 44 percent more than the national average. Manufacturing operations by their very nature are energy intensive, making energy costs one of the biggest single expenses for any given manufacturer. It is essential that New Jersey provide manufacturers with some relief from high energy costs.

Energy Agenda

Exempt Manufacturers from Energy Taxes

Manufacturers are among the biggest users of electricity and natural gas. Manufacturing facilities statewide should be exempted from paying the approximately 10 percent in taxes assessed against their energy use.

Provide Exemption from Sales Tax for All Manufacturers in Urban Enterprise Zones (UEZ)

One of the Manufacturing Council's agenda items from the 2004-2005 legislative session was the enactment of P.L. 2005, c. 374. This law exempts manufacturers with 250 or more employees located in Urban Enterprise Zones (UEZ), or those with 50 or more in Salem County, from the 6 percent sales tax on natural gas and electricity. While this law is a step in the right direction, it is essential that this exemption be extended to all manufacturers with 50 or more employees in a UEZ. Smaller manufacturers located in UEZ's must be allowed the same benefits as larger employers.

Provide for Greater Participation and Openness at NJ Board of Public Utilities Hearings

The NJ Board of Public Utilities (BPU) meets twice a month, yet many companies are unaware of the actions of the BPU. The BPU should modify its Web site to be more business friendly, post notices of working groups and their meetings, utilize the public comment process for board orders (as is usually done with other rule-making), and shift to a transparent process.

Eliminate the Commercial Industrial Electric Price (CIEP) Retail-Margin-Adder Tax

New Jersey has assessed an additional tax on commercial and industrial customers who have remained with their traditional electric utilities. The fund currently has over $45 million, which should be returned to these ratepayers. The tax should be allowed to expire as planned in May 2006.

Reduce the Societal Benefits Surcharge

The BPU collects millions of dollars of ratepayer surcharges and decides the rate tariffs for all customers, including business. These societal benefits surcharges cover six areas: 1) cost of social programs; 2) nuclear plant decommissioning costs; 3) cost of demand-side management and energy efficiency, as well as renewable power such as wind, solar, and fuel cells; 4) manufactured-gas plant remediation costs; 5) cost of consumer education; and 6) the Universal Service Fund, which provides for social programs such as the Lifeline Credit Program and Low Income Home Energy Assistance Program. Ratepayers deserve to know where their money is going and to be part of the decision-making process. Businesses subsidize many of these programs, yet they are not eligible to participate in them or their funding levels are capped. This must change.

State Regulations

Background

New Jersey's environmental compliance costs are among the highest in the nation. Two examples are New Jersey's air permit fees, which are documented to be the nation's highest, and mandatory penalties for violations of the Clean Water Act. A benchmark study by the NJ Institute of Technology found that New Jersey had excessively high environmental fees and fines compared to other states and that this was likely to push manufacturing out of the State if left unchanged. Due to the processes employed at manufacturing facilities, manufacturers face greater pressures for regulatory compliance than other businesses.

State Regulations Agenda

Use Federal Standards

New Jersey has a tradition of enacting environmental laws and regulations that far exceed federal standards, subjecting its regulated community to excessive fees, fines, and punitive measures. The State should stop inventing new and different standards for New Jersey businesses. It should adopt national standards unless there is a compelling reason to do otherwise.

Reduce Excessive DEP Fees and Penalties

New Jersey has the highest air pollution control fees in the nation. The NJ Department of Environmental Protection (DEP) should improve the efficiency and effectiveness of its air pollution control program by issuing general permits, consolidating inspection/plan review functions for major facilities, and focusing inspections on the greatest problem areas.

The State should also provide appropriate penalty discretion to the DEP commissioner for clean-water-enforcement violations. These penalties are now mandatory. This would make this program consistent with other regulatory programs.

Ease the DEP Permit Burden on Manufacturers

The DEP should ease the regulatory burden on small manufacturers by reducing the number of permits and by rewriting the rules to make them understandable and accessible online.

Expand Good Actor Policies

The State should not treat permit holders like polluters and potential felons. It should expand good-actor programs to reward companies that develop and utilize first-class environmental management programs. Such companies should be given incentives like accelerated permitting, less paperwork, and cooperative compliance inspections. The State should remove the legislative, regulatory or policy constraints that prevent the effective use of environmental audits.

Labor Costs

Background

New Jersey manufacturers already provide significant employee benefits that employers in most other states do not. New Jersey mandates generous coverage for workers' compensation, temporary disability, unemployment insurance, unpaid family and medical leave (12 weeks), and a host of State-specific programs and laws. Manufacturers cannot afford even higher labor costs related to these and similar programs. New Jersey should not seek to impose costly workplace mandates, like paid family leave, that are not seen in other states.

Labor Agenda

Maintain New Jersey 's Model Workers' Compensation System

Legislation has been proposed that would dramatically increase the cost of workers' compensation insurance for New Jersey businesses. Under current law, New Jersey employers choose the medical providers who treat employees for employment-related injuries. The proposed legislation would change New Jersey 's workers' compensation system from “employer choice” to “employee choice.” Employers would pay for medical treatment, but would not have a say in the administration of the care. Such a massive change to New Jersey's system would substantially increase the cost of workers' compensation insurance.

A 2005 joint study conducted by the Workers' Compensation Research Institute and the Public Policy Institute of California found that when workers chose their medical providers, “costs were higher, recovery of health outcomes were not better and return to work outcomes were often worse than when the employer selected the provider.” The study found medical costs to be 10-21 percent higher and time out of work 23-32 percent longer when employees chose the provider.

New Jersey's workers' compensation system is admired nationwide for its success in delivering quality care to injured workers while controlling employers' costs. The State legislature must resist major changes that would undermine this system and sharply increase the cost of workers' compensation insurance.

Dedicate Unemployment Insurance Taxes

Since 1992, $4.7 billion in tax contributions to the New Jersey Unemployment Insurance (UI) Trust Fund has been diverted to pay for hospital charity care, dramatically lowering the fund balance. Continued diversions will trigger higher UI taxes on employers to rebuild the fund balance. The State can help manufacturers and other employers by dedicating UI taxes to their original, intended purpose: to provide jobless benefits and training to employees who lose their jobs through no fault of their own.

Avoid Costly “ New Jersey Only” Workplace Mandates

Efforts to enact new State workplace policies or mandates that differ from those provided for in other states puts New Jersey manufacturers at a disadvantage with their competitors. While these policies might be well intentioned, by raising the costs of doing business here, they have a negative impact on the continuing ability of manufacturers to operate in New Jersey.

Availability of Skilled Labor

Background

Machinists, tool-and-die workers, welders and other highly skilled manufacturing workers are in very short supply. The State must help manufacturers by tailoring its workforce training programs to meet the needs of manufacturers. Additionally, the State should bolster its apprenticeship programs and expand its school internship programs to promote manufacturing.

Skilled Labor Agenda

Fully Fund Programs Designed to Support Manufacturers

Manufacturers can benefit from the State's customized training program, which should be fully funded by the State. Employers in the program receive State training grants to upgrade the skills of their employees. Much of the training itself is done in partnership with local community colleges. Additionally, other programs and services utilize State funding to assist manufacturers with technology, energy and efficiency needs. New Jersey must continue to support programs such as the New Jersey Manufacturing Extension Program (NJMEP), New Jersey Program for Manufacturing Excellence (NJME) and workforce training programs.

Expand Incentive Apprenticeship Program for Manufacturers

The State should dedicate more resources to promoting its New Jersey Registered Apprenticeship Incentive Program, which offers a one-time financial incentive to manufacturers of up to $5,000 for each new or current employee sponsored as a registered apprentice. The employer may use the incentive to offset the cost of on-the-job-training, classroom instruction, basic skills remediation or supervision by a journeyman.

Expand School Internships and Strengthen Career Guidance

Internships allow students to see how their classroom work is connected to potential careers and the real world of work. All students should be given the opportunity to participate in internships with local companies for high school and college credit. In New Jersey's high schools, more emphasis needs to be put on career guidance, with skilled trades and manufacturing presented as an option. One-third of college students leave within three academic years without a degree or credential.

Manufacturing Council Members

About the New Jersey Business & Industry Association

The New Jersey Business & Industry Association is the nation's largest state-level employer association, with more than 23,000 member companies, of which 3,700 are in manufacturing. NJBIA represents the business community before the State Legislature and State agencies. The Association also keeps its members informed about State and federal regulations and provides detailed information on relevant business topics through regular seminars and conferences.

Members receive a wealth of free information from NJBIA newsletters and the Association's flagship publication, NEW JERSEY BUSINESS MAGAZINE. Members also enjoy discount prices for NJBIA seminars, special publications and other services. For more information about the Association, call NJBIA's Member Services Department at 609-393-7707, ext. 238, or visit www.njbia.org.

Back to Manufacturing Counts Home Page

Back to NJBIA Home Page