Archive for January, 2016

STATE REVENUE COLLECTIONS UP

Collections reported by the N.C. Department of Revenue were up 6 percent over budget estimates. New revenue measures approved in the last session of the General Assembly are help fill the state coffers. Most of the money will go to raises for teachers and expanding the Medicaid rolls. Most of the money is generated by expansion of sales tax assessments to services and new fees assessed by the Department of Motor Vehicles.

TWO SIDES OF GLOBALIZATION … DEBATE CONTINUES

Wall Street economist Steve Rattner in a recent speech to the Peterson Institute in Princeton tried to discuss the “morality” of globalization. He was referring to the losers in America—the thousands who lost their jobs. Rattner noted that in 2015, the U.S. Added 2.7 million to the workforce. But only 30,000 were in manufacturing jobs. Since 2000, 70 percent of textile manufacturing jobs and 73 percent of apparel manufacturing jobs have vanished. Machinery manufacturers in the U.S. Gave up 24 percent of the workforce.

Rattner’s comments were not well received by the Peterson audience. Those jobs were eliminated by technology, leaders asserted. Rattner reasoned that if technology is behind the shift, then productivity would have risen sharply. It didn’t. The millions who lost their jobs are invisible to the winners of free trade. Ross Perrot had a point in 1992, Rattner concluded.

ALL QUIET ON THE POLITICAL FRONT, EXCEPT …

Fund-raising. With the primary in North Carolina less than seven weeks away, state candidates are scrambling for money. The stakes are big and so are the totals being collected. Attorney General Roy Cooper, the Democrats’ best hope for the governor’s office, reported this week raising $2.9 million last quarter. Incumbent Gov. Pat McCrory was slightly behind, raising $2.6 million. If Cooper is successful, he is almost certain to face a Republican Legislature. Gerrymandering and lack of Democratic candidates in many districts give overwhelming odds to the GOP control. Two branches of government with leaders espousing two different visions.

Ross and Burr

Former legislator Deborah Ross has surprised some observers in her bid to unseat U.S. Senator Richard Burr. Ross has been endorsed by the U.S. Senate Democratic Caucus which means she will be getting significant funds. She also is supported by Emily’s List, a national organization that supports women candidates. Ross is a former director of the ACLU in North Carolina which she knows will be an obstacle in a conservative state. Incumbent U.S. Senator Richard Burr was an early supporter of NAFTA and CAFTA, both of which resulted in the demise of many manufacturing companies. This race could have significant implications for hosiery and textiles manufacturing.

IT’S MAY 11…MAY 11…MAY 11.

The Legislative Day for our annual visit to the North Carolina Legislature is Wednesday, May 11. The later day was in error. Please make changes on your calendar. Sam Buff and Dan St. Louis are working on a legislative agenda. The focus will include expansion of capabilities for training of skilled personnel. They will need your support.

THE COMPLEX JOBS PICTURE

Since 2000, the urban areas of North Carolina have gained 252,818 jobs. For the rural areas, 98,980 jobs have disappeared (graph 1). In urban areas, 39 percent of manufacturing jobs are gone; in rural areas 43 percent. More efficient operations and gains in technology are responsible (graph 2). Thanks to the Manufacturing Solutions Center and Textile Technology Center, traditional manufacturing, including hosiery and textiles, are gaining traction. The availability of skilled labor is a key component to expansion, the report emphasizes.

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SHARE-THE-WEALTH TAXATION AHEAD?

Last year legislators roiled over a proposal from Sen. Harry Brown of Jacksonville. He wanted to revamp the sales tax laws to put more money into low-wealth struggling counties. People in these counties, he reasoned, shop in more prosperous urban counties and therefore some of their taxes should come back. Legislators from urban areas opposed the concept as Wake, Mecklenburg, and Piedmont Triad counties would lose millions of dollars. The compromise was to expand the sales tax base and use this revenue to help rural counties in the east and west.

Last week legislators a study commission session on economic growth and global competitiveness received a mind-altering report. It clearly showed two North Carolinas: one experiencing rapid growth and prosperity; the other stagnant or losing population and tax base (graph 1). The counties around Charlotte, the Research Triangle, the Piedmont Triad, Fayetteville and Asheville represent 85 percent of the Gross State Product (graph 2). Only six counties report an average income of $44,959 or more (the state average). In other counties the average pay was up to 25 percent lower or more (graph3). Some counties are losing population. Jobs are disappearing in counties outside the large metro areas.

The data for this 45-page report will prompt serious deliberations in the upcoming session of the General Assembly. Already lawmakers are looking at lowering the state income tax and broadening the base for sales taxes. In March, home services, plumbing, personal services (i.e. haircuts, etc.) will be subject to the sales tax. Some leaders are predicting that professional services—legal, accounting, consulting—will be added to the base. Reportedly, the goal is raise $500 to $600 million.

A picture of the two North Carolinas is highlighted by the concentration of it population centers. Of the 535 municipalities in the state, over 200 have populations of less than 1,000. Only 38 have populations of 25,000 or more.

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LOOKING AHEAD

Nine senators and 41 House members already are thinking about 2017. They have no opposition in the March 15 primary or the general election in November. Among retiring senators are some of the most influential: Tom Apodaco, Stan Bingham, Bob Rucho, and Fletcher Hartsell. Leo Daughtry is leaving the House after 14 terms and Speaker Pro-Tem Paul Stam are those departing. Most of the top leaders in the House and Senate will serve another term.

May 18: Hosiery and Textiles Day in Legislature

WE’RE NOT IN KANSAS, TOTO

It is 2016 and we are now a state with 10 million people. We outgrew Michigan to become the nation’s ninth largest state. Forty years ago, when North Carolina had 5 million inhabitants, hosiery and textiles manufacturing dominated the state’s workforce. Since the beginning of the 21st century, our payrolls have declined from over 200,000 employees to just under 81,000. In 1996 when globalization became an ominous word, there were 2,153 textiles and apparel plants. Today there are 1,282.

Yet, thanks to innovations in technology and manufacturing processes, our output is growing. Hosiery, textiles, and supply chain services are more sophisticated in response to a changing world for U.S. manufacturers. Give credit to the Manufacturing Solutions Center and the Textile Technology Center for support and leadership and valuable services.

North Carolina’s growth has presented serious challenges to our mills. Most of the growth has taken place in large urban areas, most notably Raleigh-Durham and Charlotte. Smaller communities where mills are located actually are losing population. Recruiting competent, motivated employees is a challenge. Demand for training is accelerating. The changing profile of North Carolina is pushing companies into a new world of technology and performance products.

North Carolina adds 281 people a day. Most are from other states. Today only 58 percent of North Carolinians are natives; 33.1 per cent were born in other states and the rest in other countries, mainly Mexico and other Latin America. Just under 70 percent of our residents are white; 21.5 percent black; 8.4 percent Latino; 2.2 percent Asian.

May 18: Hosiery and Textiles Day in Legislature

POLITICAL IMPLICATIONS

Two counties—Wake and Mecklenburg—send 21 percent of the legislators to Raleigh. After redistricting in 2020, that number will increase. Durham, Greensboro, and the Wilmington metro also will gain legislative seats. Legislators from these centers will have a different agenda, compared to those from smaller communities. Maintaining visibility in the General Assembly will become more important for traditional manufacturers.

May 18: Hosiery and Textiles Day in Legislature