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A landmark study was released today showing that although manufacturing has faced challenges in recent years, it’s still Pennsylvania’s number one economic engine in terms of gross state product (GSP).  It’s also the fourth largest provider of jobs – with a family-sustaining average yearly salary of $52,204.

Pennsylvania’s Industrial Resource Centers (IRCs), the study’s lead researcher Dr. Edward Hill, and manufacturers spoke at the state Capitol to reveal major findings and conclusions.  Speakers called on lawmakers to help the industry grow through policy changes and programming including: reducing the Corporate Net Income (CNI) Tax, and strategic state investment in areas such as improved management practices, new product development, and workforce training.

 “While Pennsylvania’s tax structure is very important, improving it won’t get rid of all the weeds stifling growth for manufacturers,” said Dr. Hill, Dean of the Levin College of Urban Affairs at Cleveland State University.  “The state should continue to invest in strategic economic development programs to assist companies in areas such as technical support, managerial adjustments, and streamlining processes.”

The study, “Pennsylvania’s True Commonwealth: The State of Manufacturing – Challenges and Opportunities,” was commissioned by the IRCs – a network of seven non-profits dedicated to assisting small and mid-sized manufacturers with growth projects.  Dr. Hill and his research team compiled and analyzed extensive quantitative data, as well as results from focus groups with 70 manufacturing CEOs in order to pinpoint best management practices and ways the state can help increase competitiveness.

Ron Bracalante, President of Bucks County-based Bracalante Manufacturing Group (BMG), explained that his company, through innovation and transformation, has grown despite the challenges of the past seven years.  With assistance from its regional IRC, BMG changed to a bottom-up management culture, streamlined production to adapt a “lean manufacturing” philosophy, and changed its market focus to higher tech products.

A third generation family-owned company, BMG now employs the majority of its 175 skilled metal workers in PA – making parts for companies such as Harley Davidson.  Bracalante agreed with the study’s policy recommendations, saying that reducing taxes and removing excessive regulations will help companies like his grow, but that continued economic development programming is also crucial.

“Manufacturers are so busy with their day-to-day functions that they often need the extra assistance offered from public/private partnerships in areas like on-the-job training, technical support, and marketing strategies,” said Bracalante.

Dr. Hill explained that manufacturers in the past decade have faced the Great Recession, an increasingly global economy, and a massively undervalued Chinese currency.   In response to the changing markets, companies that adapted and invested in employee engagement and workforce training have shown an incredible resilience. 
Challenges have hit manufacturers differently based on the size of their workforce.  Between 2006 and 2008, the largest firms shed more than 16 percent of their jobs.  But the small (less than 100 employees) were able to stay relatively the same, and mid-sized firms (between 250 – 499 employees) actually added jobs.

IRC Network president Barry Miller, of Philadelphia, announced that manufacturing has the highest multipliers of any industry in the state; in terms of jobs, income and value added.  “As manufacturing grows, many other industries – like tech, retail and service – also get a boost,” said Miller.  “This means policymakers should look toward expanding our manufacturing base as one of the quickest ways to jumpstart the economy.”

One of the study’s focus group participants-- Martha Husser, operations manager for Henry Molded Products of Lebanon, PA -- explained how innovative energy solutions helped her company reduce rising costs to continue making completely recyclable molded packaging products. 

“We found an answer [to rising costs] through engineering projects to recycle our energy in the form of recapturing our waste heat,” said Husser.  “Since November, we also produce electricity through 960 solar panels mounted on the roof of our energy efficient warehouse.” 

Other key “State of Manufacturing” key findings outlined today include:

• Manufacturing has an impact on the entire state, but has more of an effect on economies in rural counties: accounting for 23 percent of GSP and 16 percent of all employment in 2008.
• Productivity (gross state product per employee) in 2008 was $27,000 higher for Pennsylvania manufacturers than for non-manufacturers. 
  o The gap may be explained by improved capital and management practices among manufacturing companies
• More than 60 percent of the patents issued from 2001 through 2010 to Pennsylvania companies and universities went to manufacturing companies.

For more information or to view the study, please visit www.pamade.org

About the Industrial Resource Centers (IRCs):
The IRCs are a network of seven non-profit organizations located throughout the state – dedicated to assisting small and medium-sized manufacturers with projects to help them grow, develop new products, and increase profitability.

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