MARCH 2005
On the Rebound (cover)
All Eyes East to China
Recovery, Not Growth;
SIDEBAR: Localized Dis-Incentives Driving Michigan Tool-and-Die Location Decisions
Incentives + Growth = Southern Migration?
More Foreign Investment in U.S.
Steel Price Increases Burden Heavy Equipment
Future Location Decisions Driven by Cost — and Workers
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Recovery, Not Growth
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Michigan, in particular, is feeling the effects of the consolidating tool-and-die industry. The ranks have been decimated by years of bad news. According to estimates from the Michigan Manufacturing Association, the industry has lost 38,000 jobs and 30 percent of Michigan tool-and-die firms. To stem the tide of losses — and to keep surviving companies from shopping for new locations in other states — the Michigan legislature created so-called "Tool-and-Die Recovery Zones" in 2003, permitting a 15-year tax holiday for companies that qualified. But the plan is not without snags. Qualifying firms are required to form coalitions and demonstrate a level of collaboration among the companies in the group. The new law also calls for local governments to sign off on applications. Some localities, though, have balked at the prospect of giving up tax income that supports public services and infrastructure improvements. And here's where the controversy begins, catching some firms, like Schmald Tool-and-Die, in the cross-hairs of a power struggle between a state government that wants to keep the industry and local authorities concerned about the loss of local tax revenue. This puts company president Laurie Moncrieff in a fix. "My city would not sign the resolution, so I will not get the tax relief I need to compete," she says. "The fact that other companies — direct competitors of mine — are getting the tax abatements makes the playing field even less level than it was before." Even though the company has been in Burton, Mich., for close to 50 years, she is thinking about pulling up stakes. Now, the company is in the midst of a site search. "I can't afford to sit back and not get the tax abatement, so I am talking to other communities willing to sign the recovery zone resolution," Moncrieff says. She adds that the estimated annual $80,000 tax savings for the next fourteen years will pay for a new, modernized and more efficient factory. Like other tool-and-die makers, Shmald is eyeing the Southeast, as well, where the company has a growing customer base. -Ann Moline
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