Manufacturing Alliance to Focus on Workforce and Taxes this Legislative Session
The New York State Manufacturing Alliance, of which the Council of Industry is a founding partner, is focusing on two issues of vital importance to manufacturing businesses across the Hudson Valley and the State – Workforce Development and Taxes.
On the Workforce development front, we are advocating for continued support of the P-TECH program, Career and Technical Education programs, and community colleges. Of particular importance to the Alliance is the expansion of the hugely successful Manufacturers Intermediary Apprenticeship Program (MIAP).
Manufacturers Intermediary Apprenticeship Program
In 2016, New York State provided funding for MIAP program in Central New York. This program was met with great interest by both manufacturers and their employees. Since 2016, this program has grown from Central New York where there are over 30 companies formally participating in Registered Apprenticeship and 115 apprentices in seven unique occupations plus another 50 anticipated in 2019.
In 2017, the program rolled out to the Hudson Valley (Council of Industry) and the Rochester Region (through Rochester Tooling & Machine Association). In these 2 regions there are now more than, 75 apprentices at 30 companies, in 10 different trades.
Manufacturers in the Western Southern Tier are now also beginning to participate in the program, and in the Albany region manufacturers are working with the Center for Economic Growth (CEG). This momentum has motivated the New York City and Long Island areas to also request help in establishing themselves as intermediaries, proving the model is not only effective but expanding, therefore positively impacting the sector and our state’s business and workforce development as a whole. In fact, we recently enrolled the first company on Long Island, Estee Lauder.
This model with its use of trusted associations as “intermediaries” and its collaborative partnering is a unique model of apprenticeship and is working for small and mid-sized manufacturers. In traditional training programs, students are trained and seek employment when they are done – in an apprenticeship, a job comes first and training is supplied by an employer. Industry participants see an increase in productivity, reduced turnover, and increased employee retention. Ultimately, we see it as a technique for improved recruitment and candidate selection. As employers struggle to fill open positions, apprenticeships are an important tool in addressing workforce development needs. MIAP helps manufacturers build effective apprentice programs.
Given the tremendous success to date, we feel MIAP is a critical tool for continuing to build a skilled workforce throughout New York State. This program is an essential component of a workforce development strategy to grow a stronger New York State economy through advanced manufacturing.
We are seeking $1.25 million to expand the program across the state.
A 0% Income Tax Rate for All New York Manufactures
The Manufacturers Alliance has also put forward and is seeking support for a 0% income tax rate for all manufacturers to be included in the 2019-2020 State Budget.
In 2014, we were successful in getting included in the final State Budget a reduction in the tax rate for manufacturers incorporated as C-corps. This single action propelled New York from the bottom ten to the top 10 states for manufacturing and sent a message to large manufacturers, that New York was the place to invest. It was a proven and effective tool to retain and grow manufacturing jobs across New York State.
However, the vast majority of manufacturers in the Hudson Valley and across New York State are small to medium-sized manufacturers organized as S corps, proprietorships, LLCs and partnerships (pass-through entities). These small to medium size manufacturers do not currently benefit from the existing zero percent rate and actually pay the 2nd highest income tax rate in the United States. They are constantly being enticed by other states with friendlier tax climates to move operations and invest there. These manufacturers are looking to their home state, New York, to demonstrate that they should stay in New York and continue to grow and invest here.
In response to the pleas from our small to medium-size manufacturers, the Manufacturing Research Institute of New York State, commissioned a study to analyze the impact of extending the zero percent corporate franchise tax rate to these small and medium manufacturers. According to a study by the Beacon Institute in September 2018, “the elimination of the PIT for pass-through manufacturers would increase private sector jobs by 4,660 in the first full-year and by 5,850 in 2023. It would cause investment to rise by $118 million in 2019 and by $147 million in 2023. The increase in employment and investment would boost real disposable income by $345 million in 2019 and $503 million in 2022”.
Extending a 0% tax rate to small and medium-sized manufacturers would send a strong signal to manufacturers that New York State is not only open for business but making a solid investment in their economic future.
We are working hard, meeting with legislators and administration officials, to get this change included in the 2019-20 State Budget.
