Return on investment

by The City Wire staff ([email protected]) 39 views 

• The Senate Report : Week 5 review
Let’s start with a simple premise. Money is finite. It can go anywhere. It is like water in that it will go where there is the least resistance. So it is with business and a business climate.

How do we best promote new and existing business and what must we do to get it here?  What is the best return on our investment (tax dollars)?

Last week, I wrote about jobs, capital, and starting to move the conversation to action. I got a tremendous response from local folks excited that we in Little Rock were both interested in the topic and (hopefully) going to do something about it.

In our Region, manufacturing plays a large role in jobs, production, and our future.  People can write and talk about high tech and white collar jobs all they want, and no one will ever hear me argue against it, but we have a trained, capable workforce here that is ready to be producers, make things, and fill orders. What can we do to put people to work here and across the state in a global market that doesn’t always play on a level field?

For starters, we can facilitate an environment where the companies we have are excited about investing in our plants and people. Interestingly, doing these things also entice and attract new companies at the same time. It is definitely a win-win.

The first step to a plant closure doesn’t come with an announcement about lay-offs or the HR department visiting with employees. It comes many years before that. It happens when someone somewhere makes the decision to quit investing in the physical plant of a local company here or anywhere.

They start sending the money to a more profitable, more efficient branch of the company. Again, money is finite. What doesn’t come here goes somewhere else. When a corporate decision maker installs new tooling or buys a slick new piece of technology and it doesn’t come here, it goes somewhere else. It broadens the gap of competitive disadvantage – more quickly.

The next step is a reduction of production. You see, that “other” sister plant is now more efficient and more advanced and can produce the widget a bit cheaper. Therefore, they should produce more of them. After all, why wouldn’t you build it where it is most economical?

Employees see it before now, but then it hits the local water cooler talk and starts becoming fodder. The plant is going to close not so much if, but when.

It limps along for a few months or years, but eventually the end is the same. Loss of jobs, loss of production. Dominos falling throughout the community.

You can start naming the plants that have followed the steps. You may not have known all the steps at the time, but you know the result.

Now, let’s go back to the beginning.

What if, instead of being the loser in those deals, we were the winners? The Arkansas plants were the ones getting the new capital for parts, new technology, and new investment instead of that plant in Alabama, Tennessee, or even Mexico.

What if instead of taking steps backwards we were able to expand capacity and add an extra shift to keep up with demand?

What would it take to get there?

We are geographically central, so we should be able ship economically with the proximity to river, rail, and highway. We have a great proven workforce with the attitude to get it done.

What we need is a tax system that rewards investment of capital like many other states do.

Two key components in this equation are the reduction of tax on utilities for manufacturers and the tax exemption of sales tax on repair and replacement parts. I am a supporter of the former and the lead sponsor of a bill to do the latter. It is not just important, it is critical to our livelihood, and if you don’t believe me, then take a strong dose of reality.

I am pushing these ideas not because I am trying to pick winners and losers, but because we have too many great reasons to locate here. To let a lopsided, disadvantaged tax structure exist in these two particular areas doesn’t need to be a reason for someone to go somewhere else any longer.

Think of that falling domino string going the other direction – positive momentum. We could grow our local companies, who in turn produce more goods, that in turn employ more people, that as a result spend more, buy more, and bring more to the local economy.

Our university system grows with new students who are local products and also see the positive force being created in the community. Growth begets more growth. It is a funny thing. You can almost feel the vibe in a community where it is going on. And it is exciting.

Back to that premise again from the beginning: It is time to give people a reason to invest both in our Region and our great state. We all have a role to play.

When I ran for this seat, I said it was time for relevance for our Region. I am very optimistic about the chances for these bills to pass and become law, and I intend to be a leader in making that happen. I will have a seat at the table during these vitally important discussions.

There are many more battles to fight but few as important as continuing to do all that we can to make Arkansas a friendly climate for business.

It is not a campaign talking point. It is an action item that means real things to real people and needs to get done. I hope you will join me with your support.

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