resist the temptation
to use CAFTA to score political points and instead
take steps to protect our existing manufacturing
jobs by preparing for the increased competition
that CAFTA will bring.
CAFTA will eliminate tariffs (essentially taxes
on foreign goods) and open up trade between the
United States and Costa Rica, El Salvador, Guatemala,
Honduras, Nicaragua and the Dominican Republic.
Debate over the controversial treaty (it passed
the House by only two votes) turned into an ideological
screaming match between special interest groups.
To be sure, manufacturers in the United States
as a whole will face a new level of competition
from producers who pay a fraction of U.S. wages
and have dramatically lower business costs. This
will force some U.S. manufacturers to trim their
operating expenses to keep their own costs down.
But in New Jersey, this is nothing new. Even
within our own national borders, New Jersey manufacturers
have had to contend with some of the highest costs
of doing business anywhere. Our salaries, real
estate costs, taxes, health insurance premiums
and energy costs are higher than those in most
other states, let alone Central America.
Manufacturers here have learned to cope with
New Jersey's high cost of doing business by utilizing
New Jersey's skilled workforce and increasing
productivity. Our manufacturers have developed
sophisticated, highly specialized niche operations.
They offer valuable services, such as in-house
custom design where they can create a product
to meet an individual customer's needs and then
manufacture it themselves. In New Jersey, manufacturing
is more than just cranking out a product as quickly
and as inexpensively as possible. This gives us
a real edge in international trade.
But cost is the driving force behind manufacturing
success. In this world of expanding global competition,
it's no longer enough to make a better product.
Today's manufacturers have to make a high quality
product and make it for less. That's where our
state Legislature comes in. Lawmakers have the
ability to lower the cost of doing business in
New Jersey and help protect the 340,000 manufacturing
jobs that remain in this state. Here's how:
Reduce energy costs. According
to the US Department of Energy, New Jersey's industrial
customers paid rates in 2003 that were 44 percent
more than the national average. Manufacturing
operations by their very nature are energy intensive,
making energy costs one of the biggest single
expenses for any given manufacturer. Yet while
the purchase of electricity and gas has long been
open to competition, 40 percent of large users
remain with their traditional utility and have
not yet shopped with a third party supplier. Not
only are they missing out on potential savings,
they are also paying a surcharge to the BPU for
failing to shop around. The Legislature has already
given final legislative approval to creation of
a business ombudsman within the Board of Public
Utilities who would help manufacturers navigate
the deregulated energy market to save money.
Eliminate gross receipts tax.
New Jersey is the only state in the nation that
taxes a company's gross receipts under the alternative
minimum tax-that is, the tax does not allow deductions
for legitimate business expenses like wages, health
benefits, or new equipment. It's like taking away
all the deductions from your personal income tax.
The gross receipts tax is set to expire in 2006.
Competing against low Central American salaries
will be a lot easier for companies if they can
at least deduct the wages they pay.
Enact health insurance reform.
CAFTA critics like to point out that few companies
in Central America provide health insurance, putting
many U.S. companies at a cost disadvantage. Controlling
the ever-increasing cost of health insurance would
do much to help keep jobs here in New Jersey.
Legislators should make sure that insurance markets
for companies with one to 50 employees offer a
greater variety of health plans. They should also
change New Jersey laws so people can use federal
Health Savings Accounts. Fast-rising health insurance
costs are by far the biggest problem facing New
Jersey employers.
Whichever side of the fence you are on, CAFTA
is a reality. For the record, NJBIA supported
the treaty. New Jersey is an export state, so
increased trade is good for the state economy
as a whole. But NJBIA has no illusions. While
many companies will benefit from selling products
to Central America, others will struggle from
the low cost competition. Now that CAFTA is law,
let's work together to make New Jersey more competitive.
Certainly we can agree that keeping high-paying
manufacturing jobs here benefits everybody. |
