Gov. Barbour’s veto of tax-credit legislation aimed at retaining cut-and-sew jobs in Northeast Mississippi’s upholstered furniture manufacturing sector disappointed many executives – and employees – in the industry, but Barbour left a door open for reconsidering the general idea.
The vetoed bill would have created a $2,000 tax credit for every full-time cut-and-sew job in the Mississippi furniture industry, a number pegged at about 4,500 people. Manufacturers sought the credit to offset costs of tariffs on fabrics and the undeniable attractiveness of less-expensive labor for the same jobs in foreign markets. Such moves are usually characterized as sending jobs to China. Often, that has been the case, but economic survival of the companies has been on the line, and business people usually do what’s in their companies’ ultimate best interests.
Barbour’s veto message said he favors seeking tariff exemptions under the U.S. Foreign-Trade Zones Board, which in December 2008 granted authority for Lane, H.M. Richards, and Bauhaus USA, all of which are located within the Greater Mississippi Foreign-Trade Zone 158, and inside Lee County, to import duty free upholstery material in rolled form, instead of paying federal tariffs from 7.2 percent to 17.2 percent.
The three companies receiving the exemptions said 1,500 jobs could be saved.
Other firms could have joined in the application, but the cost would be $150,000 to $200,000, a sum some smaller manufacturers say is too costly and too big a risk for their budgets.
As food for thought, perhaps there’s room for negotiation on how the application fee, so to speak, is paid, with the state providing a no-interest or low-interest loan to fully finance over time what have been the manufacturers’ half-share of costs.
Some of the companies which probably could qualify under the trade zone exemption are strong and profitable, and they want to keep existing cut-and-sew jobs in Mississippi. On the other hand, if it is not affordable to do that, the jobs likely will move offshore to save the larger operations.
Sen. Alan Nunnelee, R-Tupelo, the legislation’s sponsor, said he does not believe the veto can be overriden in the Senate, where the process must start. Nunnelee said some see the bill as helping only one state region, mainly Northeast Mississippi.
We believe it’s worth the effort of going back to the table with the governor and the manufacturers to see what can be worked out. There are no long-term guarantees, but almost any job now is better than none.