House Democratic Policy Committee Testimony

TESTIMONY OF DAVID N. TAYLOR, EXECUTIVE DIRECTOR BEFORE THE HOUSE DEMOCRATIC POLICY COMMITTEE
SEPTEMBER 30, 2014 LYCOMING COLLEGE, WILLIAMSPORT PA

Thanks very much to Chairman Sturla for inviting me to testify today, Rep. Mirabito for hosting, members of the committee for attending, and Executive Director Dawes and his staff for making this event possible.

I‘m David Taylor and I serve as the Executive Director of the Pennsylvania Manufacturers’ Association, the century-old statewide nonprofit trade association representing the people who make things here in our commonwealth. Our mission is to improve Pennsylvania’s economic competitiveness by enacting a pro-growth policy agenda in Harrisburg. PMA is also the official state partner of National Association of Manufacturers, working with Pennsylvania’s congressional delegation on federal issues like trade enforcement. But we are primarily focused on those issues that can only be addressed by state government.

We want to strengthen Pennsylvania’s economic fundamentals, lowering the baseline costs of creating and keeping jobs, thereby making it the smart business decision to invest, hire, and grow in Pennsylvania rather than somewhere else. We want Pennsylvania to experience the earned success of greater private investment, jobs, and growth that will yield more opportunity and more prosperity for all Pennsylvanians.

In today’s politics, both in Harrisburg and in Washington, I would argue that we have too much *exhortation* and not enough *explanation*, so I am especially grateful for the chance to be with you and share some ideas you might not otherwise hear. Let me also say at the outset that we agree that workplace safety, public health, and environmental quality are paramount and must always be protected above any private interest.

One of the biggest challenges in making progress is that competitiveness is a moving target; even when Pennsylvania makes progress relative to where we have been, it doesn’t mean that we have achieved net progress because the world is not standing still. Other states continue to innovate and market conditions are always changing, so we need our state policymakers to always focus on the competitiveness differential that results from the decisions they make.

Manufacturing is the engine that drives Pennsylvania’s economy. It is the sector that adds the most value, has the strongest multiplier effect on jobs, and sustains the quality of life for our families and communities all across the commonwealth. Pennsylvania manufacturers directly employ more than a half-million workers on the plant floor and sustain millions of additional jobs through supply chains, distribution networks, and vendors of industrial services. Manufacturing contributes more than $70,000,000,000.00 (seventy billion) to Pennsylvania’s Gross Domestic Product every year, which is usually the largest sector at 12% or 13% of all economic activity. Moreover, manufacturing jobs are high-value jobs that have average pay and benefits well above those in other sectors.

Last week, I attended the ribbon cutting for PPG Industries’ new North American headquarters in Cranberry Township, where I spoke with Allegheny County Executive Rich Fitzgerald. He didn’t object when I told him I was going to evoke his honorable example of helping to find the common ground and build there. “We are a pragmatic people,” he said.

As some members of the committee may have heard me say at the joint meeting of both House caucus policy committees at the energy summit in Pittsburgh last week, I want to live in a world where the hard-hat Democrats and pro-business Republicans work together for a pro-production agenda for Pennsylvania. More units moved means more earnings for the businessman and more opportunity for the working man. This is how we all win together.

Several recent examples give me hope that we can do more of this here in Pennsylvania: establishing a manufacturing resource tax credit to help bring the multibillion-dollar ethane “cracker” plant to Beaver County; enacting a long-term solution to funding transportation infrastructure; dredging the Delaware River to deepen the port of Philadelphia, readying it for the larger cargo ships coming through the expanded Panama Canal; working together to save the three Philadelphia-area refineries; making the critical investment in early 2011 to save Aker Philadelphia Shipyard, which is now booming with private shipbuilding contracts. I was particularly pleased when your colleague Rep. Brendan Boyle wrote to me after the meeting, voicing his support for these shared priorities.

So what do manufacturers need from state policymakers to compete well against other states? We need a predictable and competitive tax environment and the spending discipline by state government to sustain it. We need a regulatory regimen where state government is a partner in compliance and where regulations are based on sound science and are only put into place after being subjected to a rigorous cost/benefit analysis. We need meaningful limits on lawsuit abuse to restore balance to our legal system and redirect more private resources to productive purposes. We need a less-hostile labor climate so employers can manage the workforce effectively in order to respond to changing market conditions and customer needs.

In a larger sense, we need state government to recognize, accept, and respect the leading role of the private sector in creating economic growth and the jobs that come with it. We need state government to refrain from interfering in the marketplace more than absolutely necessary. Stop trying to take credit for specific economic outcomes by picking winners and losers, like the bipartisan $600,000,000.00 (six hundred million) “Green Energy Fund” during the Rendell Administration, which looks especially wasteful and absurd in the wake of the natural gas revolution that emerged almost immediately after its enactment.

The market function is like a kidney function; it’s how we separate what we need from what we don’t need. The acid test the marketplace applies is this: Is this worth me spending my own money on it?

While business efficiencies can be applied to the operation of government, government can never truly function like a business both because of its public responsibilities and because government can never incur market risk. The saying goes, “nothing focuses the mind like the prospect of being hanged at dawn.” In much the same way, the prospect of losing your own money – or being fired because you lost your employer’s money – is a prime motivator for making good decisions. Make no mistake: people still fail and business ventures still go under. It happens every day. But the net result of all the decisions yielded by the marketplace will bring forth the real and enduring economic growth that we all want for our commonwealth.

Let me please close with three specific examples of state policy initiatives that can help Pennsylvania manufacturers right now:
MAXIMIZE DOMESTIC ENERGY PRODUCTION. No matter what your business is making, energy is a primary cost input for manufacturers. We need to commit to a bipartisan pro-development agenda like Governor Strickland helped bring about in Ohio. Pennsylvania needs to show the world that we are going all the way to make America an energy superpower. And rather than trying to bleed what is seen as a captive industry, state policymakers need to keep in mind the total cost of doing business in Pennsylvania as opposed to whether we have one kind of tax as opposed to another kind of tax. If we want state government to collect the maximum amount of tax revenue out of this industry, let it grow.

SET A LIMIT ON THE USEFUL LIFE OF PRODUCTS. Nothing made by human beings lasts forever. Other states recognize a time limit on the useful life of products; North Carolina, for example, has a seven year limit. Others have limits of ten or twelve or fifteen years. In Pennsylvania you can get sued FOREVER. Setting a comparable limit on the useful life of products would help protect manufacturers from frivolous lawsuits and give employers another positive reason to locate manufacturing production in Pennsylvania.

ELIMINATE THE UNION CARVEOUT FOR STALKING, HARASSMENT, AND MAKING DEADLY THREATS. It should shock the conscience of every Pennsylvanian that the General Assembly made exemptions to our laws against stalking, harassment, and threatening to use weapons of mass destruction, like fire, explosives, and poison. As exemplified by the thug tactics of Ironworkers Local 401 in Philadelphia, these extortionary activities allow for a culture of intimidation that leads to escalation. If lawmakers cannot bring themselves to curb these most egregious abuses, Pennsylvania will have an even weaker argument to make to potential investors who are also considering competitor states like Indiana and Virginia.

The good news is that Pennsylvania manufacturing is well-positioned to make the most of the energy revolution that has restored Williamsport to the glory of its long-ago days as a timbering town. We want the growth, we want the jobs, and we want the “Millionaires”, as the local sports team is known. If we work together in Harrisburg to enact a pro-growth agenda for Pennsylvania, there’s no limit to how far we can go.

Thanks again for the opportunity to testify and I will do my best to answer your questions.