Harford County Executive David R.

Craig on Maryland Manufacturing

Challenges:
Marylands manufacturing sector is in long-term decline Employment (thousands) 1990 198.1 2013 106.8
Source: Bureau of Labor Statistics

Maryland has lost more manufacturing jobs than other states in the region Marylands manufacturing employment dropped from 133,000 in 2007 to 107,000 in 2013, a loss of over 26,000 jobs and a 20% decline. Pennsylvanias manufacturing employment declined 15% during the same period. West Virginias manufacturing employment declined 18% during the same period.
Source: Bureau of Labor Statistics

Manufacturing share of gross state product is the lowest in the region and well below the national average of 11.9% of GDP

MANUFACTURING SHARE OF GROSS STATE PRODUCT

12.3 9.1 9.1 6.5

MD

PA

VA

WV

6.8
DE
Source: Moodys

Source: National Association of Manufacturers nam.org/statedata

Moodys Analytics cites the following as weaknesses in Maryland s economy Exposure to federal government cost-cutting Relatively high business costs Below-average share of durable goods production

Authority: Friends of David R. Craig, Franklin Hajek, CPA., Treasurer

Boston Consulting Group predicts a surge in U.S. exports, partly helped by lower energy costs. The U.S. is steadily becoming one of the lowest-cost countries for manufacturing in the developed world, due to the fracking boom and resulting supply of natural gas.

Solutions:
1. Maryland Must Take Part in the Energy Boom Shale formations are found in Allegany and Garrett counties. A final report will be issued by August 1, 2014, capping three years of study by a state task force. Meanwhile, California Gov. Jerry Brown and Illinois Gov. Pat Quinn have signed their states first fracking bill into law last month. It is time to stop studying this. Dominion Resources Inc. won U.S. Energy Department approval to export liquefied natural gas from the Cove Point terminal. Dominion still requires approval from the Federal Energy Regulatory Commission to start construction at the facility at Cove Point. The Governor needs to make it clear that he supports such approval. This is the fourth project with conditional or final approval, however there are 18 other applications pending across the country. 2. Maryland must re-align its tax code to compete with surrounding states. Since 2003, Maryland manufacturing exports have risen nearly three times as fast as the states overall economy, according to the National Association of Manufacturers. Small businesses comprise 87% of Marylands exporters; and manufacturing at large accounts for 90% of exports statewide. Many small businesses are organized as partnerships, sole-proprietorships or S-Corporations and pay taxes as pass-through income. We must lower this tax to enable more start-ups in manufacturing. Maryland is 45th in the nation in terms of individual income tax burden, according to the Tax Foundation. 3. Maryland must improve the regulatory process The first regulations that will be targeted are those that are duplicative and/or conflicting among federal, state or local levels of government which must be fast-tracked for review and possible repeal. State department and agencies will be required to identify regulations that exceed federal standards. State and county regulations that are inconsistent or require permission from both levels of government will likewise be targeted. Legislative remedies will include introduction of a Maryland Regulatory Responsibility Act to ensure an orderly division of governmental responsibilities between the federal government and the state. Executive orders will be issued where appropriate to improve the regulatory process.

For more information visit: www.DavidCraig.com

Authority: Friends of David R. Craig, Franklin Hajek, CPA., Treasurer