Use tax incentives to attract manufacturing jobs
In Ohio, we know manufacturing can create a path to the middle class. But during the Great Recession, that path became turbulent as plants across the country shuttered their doors and devastated local communities that depended on their jobs.
But today, due to smart investments and a renewed effort in manufacturing, we are adding jobs in that sector for the first time since the 1990s. Since December 2009, the manufacturing sector has added more than 300,000 jobs to the economy. This is particularly important for Ohio, which is the third largest manufacturing state in the country.
However, there still is work to be done, as too many manufacturing communities are struggling with the effects of those shuttered plants and devastating job loss. We need to do everything we can to help get these communities working again; to get businesses moving back in and creating jobs.
The good news is, we know what works. We don’t have to reinvent the wheel, just target our efforts and make smart investments. One example of this is the New Markets Tax Credit program. The program was created in 2000 to provide a tax incentive to investors for projects in low-income communities.
And the program is incredibly successful. Between 2003 and 2012, the program was used to generate $60 billion in private investment, and created more than 550,000 jobs across the country and 30,000 jobs in Ohio. For every tax credit dollar, these projects leveraged more than $2.50 in private sector investment.
A few years ago, I attended a ribbon cutting at Alcoa in Barberton for a new piece of energy-saving technology. The new equipment allowed the company to install new technology to produce billet from remelted scrap aluminum.
This billet then is used to make new wheels, increasing the efficiency and sustainability of Alcoa’s manufacturing process. The New Markets Tax Credit was one tool the community used to help Alcoa make the investment in Barberton, instead of at one of its facilities outside of the United States.
We can build on this success with the Manufacturing Communities Investment Act.
My legislation would reauthorize the New Markets Tax Credit and create a new Manufacturing Communities Tax Credit. Communities that have experienced significant job loss then would be eligible for the credit to create new manufacturing jobs. The new credit would attract new private investment to places such as Wilmington, where 7,000 DHL jobs were lost; or Warren, where RG Steel cut 1,000 jobs.
This legislation is a first of its kind effort that specifically targets manufacturing communities hit hard by the changing economy. It provides private investors with a significant incentive to invest in manufacturing communities and companies that will create high skill, high pay and secure jobs in the manufacturing sector. And it is a great example of how government can work with the private sector to revitalize hard-hit communities.