‘Don’t Raise Our Costs. Please’ — NJ Manufacturers Make Case to Lawmakers

Manufacturing has been growing recently in the state, but industry leaders say they’re struggling with high taxes, high costs, a shortage of skilled workers, and they fear a wage hike

The New Jersey manufacturing industry cannot find enough skilled labor to fill jobs — which is ironic since the state’s unemployment rate continues to lag the national jobless average. That problem has drawn the attention of state lawmakers, and they’ve formed a bipartisan working group to come up with policies that could help bridge the gap.

The leaders of the New Jersey manufacturing companies testified to the group yesterday; their companies make everything from basic nuts and bolts to more sophisticated metal components used by medical and aerospace industries. The lawmakers heard concerns ranging from gaps in current workforce-development programs to insufficient marketing of the state’s manufacturing industry as a good career opportunity for high-school graduates.

Some of the executives also cautioned lawmakers about Gov. Phil Murphy’s plan to raise the hourly minimum wage to $15, warning it could lead them to adopt automation that in turn would reduce the industry’s current demand for labor. And they said taxes and the general cost of doing business in New Jersey remains a top issue as they try to compete against manufacturing companies in other states where taxes are lower and regulations are not as strict.

Testifying in Trenton yesterday, L to R: Gail Friedberg Rottenstrich, Zago Manufacturing; Bob Staudinger, National Manufacturing; and Brian Neuwirth, Unex Manufacturing
“First thing to say — and it’s been said before — don’t raise our costs. Please,” said Bob Staudinger, president of Chatham-based National Manufacturing, which makes metal components for medical and aerospace products.

Still a $40B industry

At one time during the past century, half of New Jersey’s jobs were in manufacturing, as industries like textiles and telecommunications boomed. And though there’s been a decline since then, manufacturing is still a $40 billion industry in New Jersey, with more than 10,000 companies employing an estimated 360,000 people.

Productivity in manufacturing in New Jersey has also grown by nearly 4 percent annually in recent years, about 2.5 percentage points higher than nonmanufacturing growth, and more than 70 percent of the state’s manufacturers said in a recent survey that they are on the hunt for new employees, according to information compiled by the New Jersey Business & Industry Association.

Last year, lawmakers set up a legislative manufacturing caucus to look more closely at the sector, and the group has been holding hearings to review issues related to ongoing changes in the industry, including an increasing reliance on technology and skilled labor. In fact, one of the issues that’s come out of earlier hearings has been the lack of available classroom space for students who want to pursue a career-oriented education at a county vocational-technical high school. Lawmakers are now considering a new bond issue that would raise money for new vo-tech facilities.

But the caucus members also wanted to hear directly from the leaders of the state’s manufacturing companies about what their top concerns are — and what state policymakers may be able to do to address them.

Look at Massachusetts

Like Staudinger, Brian Neuwirth, president of Lakewood-based Unex Manufacturing, which makes handling and conveyor equipment, raised the issue of taxes and New Jersey’s high cost of doing business. He suggested New Jersey could look to what Massachusetts has done to get past similar challenges and become a magnet for manufacturers. “They found a way to do it,” Neuwirth said. “It can be done.”

Dennis Hart, executive director of the Chemistry Council of New Jersey, which represents companies that employ nearly 50,000 people across the state, also raised the issue of taxes, and he cited ongoing discussions about legislation that would hike energy bills to help subsidize the state’s nuclear power plants as a key concern. The proposal could end up sticking smaller manufacturing companies with a huge increase in energy costs. “Those are large costs to overcome,” Hart said.

Beyond the tax issue, Casey Muench-Bickhardt, president of Middlesex-based General Machine, which makes industrial blenders, mixers, and dryers, suggested there is a need for better marketing and branding of the state’s manufacturing industry as it has modernized and become far more technology-based than the factories of prior generations.

“We need to look at manufacturing and put it into a new light,” Muench-Bickhardt said. “If we want to revitalize New Jersey manufacturing then it needs to be the focus, the attention grabber.”

Some say they can’t find people to fill jobs

That was also an issue raised by Gail Friedberg Rottenstrich, vice president of Newark-based Zago Manufacturing, which makes specialty hardware supplies, including sealing screws and nuts. “What I’m interested in is marketing to the next generation,” Rottenstrich said.

She also emphasized the need for improved workforce-development programs and job training. “Our problem is not that we don’t have jobs, or that we’re not making jobs,” she said. “We need people to fill these jobs.”

Speaking about Murphy’s minimum-wage proposal, Rottenstrich said she hopes it could be phased in to make it easier for companies to adapt to it. But Mitch Cahn, president of Newark-based Unionwear, which makes specialty clothing and fabrics, warned lawmakers that, at some point, it will simply become cheaper to buy machines to make the items that are currently being sewed together by human employees.

“We will have to eliminate possibly 72 jobs to do this,” Cahn said.

That testimony and other discussions about the proposed minimum-wage hike drew a quick reaction from Republicans who serve on the panel, including BettyLou DeCroce (R-Morris).

$15 minimum wage

“We have to be mindful of the balance between wages and the cost of goods and services as we work to keep prices affordable,” she said.

After the hearing, Sen. Robert Gordon (D-Bergen) suggested the $15 minimum-wage proposal may need to include some exemptions and appropriate phase-in schedule.

“Frankly, I’m not sure we’re going to be able to change the course of the minimum wage legislation, but we could carve out certain types of organizations, phase it in, think about particular incentives for industries we want to see grow,” said Gordon, the chair of the caucus. “These are things we all have to take a look at.”

Gordon also said the hearing brought out several “good ideas” related to taxes and regulations, as well as suggestions to address the “mismatch” between the companies’ employment needs and what’s available in the current labor market. For example, students could be offered the opportunity to enroll in job-training programs, possibly funded by the manufacturing companies themselves, and come out of the programs as “hot commodities” in the job market, he said.

“I think we all know there are kids who are going to college that really might be better served in some kind of a technical training program,” Gordon said.