Innovative State Manufacturing Policies in the Great Lakes Region
Even before the onset of the COVID-19 pandemic and the related economic crisis, American manufacturing has been slowly but surely falling behind. While there was a positive outlook for the sector in 2017 and 2018, with over 450 thousand jobs added in those two years, manufacturing job growth slowed in 2019, and in April 2020, fell to the lowest level since 2010—wiping out ten years of steady gains. The 2019 slowdown was national in scope, and has hit especially hard in the Midwest states, providing evidence that big-ticket policy issues like tariffs and taxes can’t alone generate a manufacturing recovery. And now, as we face a much deeper crisis, it is essential to look at effective and innovative policy ideas that, if scaled and expanded, could make a world of difference for the millions of Americans who rely on the sector for their livelihoods, while introducing many more to their ranks.
TCF has been tracking these policies for a few years now, and our research, fleshed out last year into a nine-section report, “9 Steps to Revitalize America’s Manufacturing Communities,” argues that state policies are often overlooked when it comes to retaining and growing a twenty-first century manufacturing base. For this report, we have surveyed and cataloged a host of examples of these model policies as practiced across the seven Great Lakes states—Ohio, Indiana, Pennsylvania, Illinois, Michigan, New York, and Wisconsin. These states make up just 25.5 percent of the total U.S. workforce, but still more than 30 percent of the U.S. manufacturing workforce; it should be no surprise, then, that from these strong industry clusters, there is much to learn. Included in these findings are policies and practices designed to drive equity, justice, and revitalization for communities that rely on the sector, which is crucial not only for justice’s sake, but also for sustaining growth in the sector.
In order to learn from these state-level actions, we surveyed dozens of local practitioners and policymakers in these seven states across the heartland, throughout the summer and fall of 2019. This report—a compilation of results from the survey and other research—compares the nine policies we highlight in our report against state practices, and presents examples from seven of those nine action areas. While it does not provide a comprehensive list of each state’s policies, it does illuminate the ways in which several states are already embarking on best practices.
Many shutdowns and mass layoffs can be averted with sufficient early warning, especially when coupled with a well-organized and expedient business turnaround or buyout effort. States and local workforce development boards should establish layoff aversion programs in good times as well as in hard times because small business owners, managers, and workers need dependable business and jobs retention policies, initiatives, and capacities, not intermittent government actions.
New York has a couple of strong practices in this area. The New York State WARN Act strengthens provisions of the federal WARN Act by requiring employers with fifty or more employees to provide a ninety-day notice in the event of widespread layoffs (twenty-five or more employees, or 33 percent of a company’s employees for smaller employers). The policy also offers financial assistance for turnaround services through New York State SharedWork, which provides partial unemployment insurance benefits so that employees can continue to receive full pay with reduced hours.
Pennsylvania also provides robust layoff aversion programs. The state implements an early-identification system, going beyond federal WARN requirements, that draws on a number of intelligence-gathering tools such as WARN notices, regional economic reports, and community contacts in order to proactively identify companies at-risk of closure or significant layoffs and provide early intervention services.
Pennsylvania also offers technical assistance (e.g. rapid response team) through the Strategic Early Warning Network (SEWN). SEWN provides turnaround services, which include restructuring finances, streamlining operations, transitional ownership, identifying new markets, and improving workplace performance. SEWN also offers early identification services, shared work funds, and funds for external consultants. Pennsylvania sends out rapid response units when the Department of Industry and Labor becomes aware of significant layoffs, either through a filed WARN or via a notice by community contacts. The network offers rapid response services, including funding provided by the Department of Community and Economic Development to better integrate IT skills training into regional rapid response teams. The training is focused on employers who identified IT labor shortages as a factor in not achieving full capacity.
Every day, states spend hard-earned taxpayer dollars on infrastructure. Spending that money on Made-in-America products keeps our money in our own economy, and in the process supports good paying manufacturing jobs and companies that pay local taxes. States should make sure they have strong Buy America rules for infrastructure and then explore preferences for other procured goods.
Ohio, Indiana, Pennsylvania, and New York, all have state-level buy America policies.
Ohio’s Buy Ohio and Buy America for “manufactured goods” is relatively simple: it prioritizes procurement bids from producers located in Ohio or a border state.
Indiana’s “Procurement Requirement—Foundry Products” applies to steel or foundry products in contracts for the construction, reconstruction, alteration, repair, improvement or maintenance of public works. Indiana’s local efforts include the “Made in Indiana Program—Purdue MEP,” which highlights the contributions Indiana manufacturing makes to the state’s economy and raises awareness of the products made in Indiana.This program features a spotlight page on MEP’s website and social media platforms.
Pennsylvania’s Steel Products Procurement Act applies to every contract for the construction, reconstruction, alteration, repair, improvement or maintenance of public works. It mandates that the use of U.S.-made “steel products” be used or supplied in the performance of the contract or any subcontract. “Steel products” means products rolled, formed, shaped, drawn, extruded, forged, cast, fabricated, or otherwise similarly processed, or processed by a combination of two or more of such operations, from steel made in the United States by open hearth, basic oxygen, electric furnace, Bessemer, or other steel making process and includes cast iron products. The requirement is waived if a product is not available domestically or the product is not produced in sufficient quantities to meet the requirements of a contract.
The New York Buy American Act,16 meanwhile, requires the use of domestic iron and domestically melted and poured steel for all construction reconstruction, alteration, repair, maintenance, or improvement of any surface road and bridge projects over $1 million. The use of domestic iron and domestically melted and poured steel is also now required for all contracts over $1 million awarded by the Dormitory Authority, the Metropolitan Transportation Authority, the Bridge Authority, and the Thruway Authority.