Wednesday, August 9, 2017

Who’s Courting You?

An article by Tom Hardiman, Executive Director of MHBA

With all the political chatter about building a wall or imposing travel bans to keep certain people out of America, there is no such conversation about keeping foreign investment out.  In fact, most public officials in the economic development arena are actively recruiting foreign companies to open facilities on U.S. soil, often offering generous incentives to do so.  And I’m not suggesting that is a bad thing.


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Reuters analysis of federal jobs data shows that out of 656,000 new manufacturing jobs created between 2010 and 2014, two thirds can be attributed to foreign direct investment. More recent jobs numbers are not yet available, but over $700 billion in foreign capital has poured in over the last two years bringing total foreign investment to $3.7 trillion at the end of 2016, a world record.

For example, German carmaker BMW has invested $8 billion in a 1.2 million square foot assembly plant in Spartanburg, South Carolina, which has become the largest single exporter of cars by value from the United States.  (source: Fortune Magazine June 30, 2017).

And again, I’m not suggesting this is a bad thing, because it does bring much needed jobs.  

In my last article about the 20,000 modular home development in Chicago, I admitted that maybe I was naïve or even jealous.  That was wrong. The appropriate emotion I’m feeling is frustration!

I’m wondering if anyone reading this has ever built a home or modular building in Chicago.  If so, I’d love to hear your story about how the city leaders greeted you with open arms, with reporters on hand to take pictures, and the tax incentives and training grants that economic development officials no doubt showered on you.
 
Didn’t happen like that? How about this – you felt as if you were being prosecuted for crimes you hadn’t yet committed while city officials had their eyes on you.  They buried you in a mountain of paperwork, permits, and approvals.  You were questioned about the quality of your work and your workers’ union status.

My point is simply this – while it's all well and good for elected officials to go after new employers, who’s taking care of the existing ones?  Who is making sure that the company that has already been employing local people and paying taxes is healthy?   

Because our industry is made up of a lot of smaller companies, we don’t often make the splashy headlines or land the mega deals – or gain the attention of our elected officials.

There are over 150 commercial and modular home builders in North America (excluding HUD code builders) each employing an average of 65 people in their plants.  That’s 10,000 factory workers, not including all the builders, subcontractors, suppliers, and others supporting the industry.  

Now there have been some deals made to existing U.S. manufacturers recently. President Trump was quick to the podium to pat himself on the back for saving 1,000 jobs at the Carrier HVAC plant in Indiana. And t it seemed like State officials opened the coffers and worked overtime to make that happen.

So yes, its frustration I’m feeling.  It’s fine that foreign companies and being asked to the prom, and great that some of the larger U.S. manufacturers have been shown some interests as well. But who’s courting the existing modular manufacturers?

While foreign companies and large manufacturers are being showered with incentives, existing companies are being showered with regulations, taxes, fees, and tough labor laws.

I’m not feeling the love; are you?

In my next article on this subject, I’ll focus on what our industry can and should be doing to better position ourselves for industry growth (I’ve been getting A LOT of input on this lately).

Tom Hardiman is the Executive Director of both the Modular Building Institute (MBI) and the Modular Home Builders Association (MHBA). MBI is the international trade association representing three hundred companies engaged in commercial modular construction.


MHBA is the national trade association serving over one hundred companies in the residential modular industry.  If you would like to share your thoughts on this, Tom can be reached at tom@modular.org

4 comments:

Carl Nolan said...

I am confused regarding which side of the fence he is on. First he denounces foreign companies for taking work from US modular factories while at the same time he is the top guy at the MBI which represents over 300 foreign modular companies.
Members in both organizations should be angry at him for this article.
However I do agree with him that US factories and developers should have had a seat at Rahm Emanuel's table in Chicago and if they couldn't do it, then approach outside companies.

Tom Hardiman said...

Hang on Carl, let’s get some facts straight. Yes, MBI is an international organization serving 300 total companies – 90% of which are North American. The Modular Home Builders Association is a national organization representing about 100 companies in the single-family sector. So together, 370/400 of my members are on this side of the pond. Yes, MBI is looking to grow its international presence as I think there are legitimate business opportunities and best practices to be shared.

I knew this story would take serval articles to be fully told – and it’s not fully told yet. In my first article, I vented about political leaders and the possibility of modules being imported from other countries when we have so many good modular companies here (a position you shared in a comment on an earlier Modcoach article).

Given that this deal is supposed to include the foreign company opening a factory in Chicago, I shifted my focus to address excessive regulations on existing manufacturers. I do think our leaders enjoy the limelight of attracting new companies more so than helping the existing ones. And I did say twice in this article that there is nothing wrong with foreign investment in the U.S. as it does create jobs.

My next article will be more internally focused on our industry and what we can be doing to better position ourselves to take advantage of such opportunities. But, I’m not sure why you think my members should be angry with me for sharing my thoughts on what I believe to be excessive regulations.

Part of my job is to identify threats, opportunities, and trends, and share those with my respective boards and members to get their ideas and direction on these matters. I’m trying to start a dialogue and get more people engaged in a topic where I think we share a great deal of shared frustration (and believe me, people have been sharing their thoughts on this).

Look, if people don’t like my thoughts on this, I welcome their input. That’s why I added my direct email to the story. I don’t have all the answers and NEED the industry to speak up!

Harris Woodward said...

Tom, I'm not angry with you. I'll take my anger out on the growing backlog we're dealing with. Maybe if rule/regs were reduced it would be easier for factories to put on more shifts and grow? Me thinks this is the basis of this article...

Josh Margulies said...

Fascinating! It is nothing that surprises me however. It's Chicago and the local city government has long since regarded domestic business interests as essentially corrupt and domestic business leaders are also fairly certain of the city's corruption. Both are probably correct.

Watch old Rahm Bam broker a deal with Kenya ����. Just watch. I'm seeing a Kenyan golf course and all the related amenities. Man! What a commission! I move to Jerusalem and retire a rich man.