The LABI Report: A question of spin versus substance

Published 12:00 am Sunday, June 30, 2002


The Mississippi Legislature recently went into Special Session at the request of the governor, Ronnie Musgrove.

The sole purpose of the session is to address steps needed to accommodate an expansion of an automobile manufacturing plant that has not even gone into production yet. Nissan Corporation is wrapping up construction of an SUV and light-truck plant near Jackson.

The company was scheduled to hire 4,000 highly paid workers at the plant, with three times that many likely to be employed by the other manufacturers who will supply the main plant.

If the Mississippi Legislature goes along with the governor’s request for $50-$75 million in additional training funds, Nissan plans to increase production at the plant immediately and hire an additional 1,000-1,200 factory workers. The appropriation will be in addition to the $200 million plus initial investment the State of Mississippi made to lure Nissan to the Magnolia State.

It seems as if Mississippi will soon be flooded with thousands of new high-paying manufacturing jobs. Ditto for Alabama, which recently secured its fourth automobile manufacturing facility with the location of Hyundai near Mobile.

Meanwhile, back in the Bayou State, we have little to show for our state government’s efforts in two recent sessions where the opportunities existed to make Louisiana something more than an also-ran in the economic development wars.

Put in a nutshell, what is the difference between Louisiana’s approach to economic development and those of Mississippi and Alabama?

First and foremost, Mississippi and Alabama have activist governors who go the extra mile to sell their states to industry and do whatever it takes to secure high-paying jobs for their workers. Economic development starts at the top in those states, and the governor, by his emphasis and action, sets the tone for how the rest of the executive branch and the Legislature approach job creation.

Louisiana’s governor is not an activist in economic development.

He has stated on occasion that he believes that industrial trips abroad are party-time “junkets” that do no good.

Tell that to Nissan and Hyundai.

The “economic development” special session called by Gov. Mike Foster earlier this year was primarily window dressing to sell a plan for giving subsidies to two sports franchises. Struggling industries in Louisiana were basically ignored in that session.

Second, Mississippi and Alabama do not allow major tax disincentives to scare away potential prospects. Unlike in Louisiana, the debt that manufacturers float to finance construction and equipment is not taxed in Mississippi and Alabama.

In Alabama, there is no sales tax charged on the extremely costly manufacturing equipment that goes into these plants. In Mississippi, the sales tax is only 1.5 percent, compared to, on average, 8.5 percent in Louisiana.

Bottom line?

Mississippi and Alabama have no problem structuring incentives to draw value-added manufacturing to their states. They also are not burdened with the black eye of taxing corporate debt and equipment and machinery used in manufacturing.

Louisiana blew its chances in the recent legislative sessions to at least begin making inroads into becoming more competitive in the quest for jobs. Foster is now rationalizing the lack of solid accomplishments in the economic development arena this year.

He tries to shrug off the demise of bills to phase debt out of our franchise tax base and cut in half the state sales tax on business machinery and equipment by saying Louisiana Association of Business and Industry officials would not “talk to him.”

LABI officials did attempt to “talk” to him at a luncheon at the governor’s mansion several weeks before the session ended, but they were not asked to “talk,” only to listen.

Unfortunately, the development of solid incentives and the removal of major disincentives needed to attract major industries will likely have to await the arrival of a new governor. Hopefully, that individual will understand that economic development is about substance, not “spin.”

DAN JUNEAU is the president of the Louisiana Association of Business and Industry.