Global competition and labor costs are the main reasons that manufacturing employment in Virginia is in decline, concludes a study by the General Assembly’s Joint Legislative Audit and Review Commission. New technology and improved productivity are another important contributor, notes the Associated Press.
“We didn’t find anything that led us to believe that Virginia regulations were the primary factor in the decline,” said Justin Brown, project leader for the study by the General Assembly’s Joint Legislative Audit and Review Commission.
Since 1992, manufacturing employment in Virginia has tumbled 27 percent to about 296,000 workers.
Frankly, the study offers little new — it simply confirms what everyone should know already. Virginia arguably has the general best business climate in the country, as confirmed most recently by Forbes magazine. That’s not to say that we can’t tweak things to improve the climate for manufacturing. One widely cited concern was the machinery and tools tax, which generated $194 million in revenue for local governments in 2005. But even that tax was not regarded as decisive.
“Cutting costs” is largely a dead end. Future growth in Virginia manufacturing will come, if it comes at all, from enhancing the knowledge, productivity and innovation of the companies located in the state. To grow, Virginia-based manufacturers must invent new products, devise process improvements and apply new technologies. We need to move to a new level — embracing a mindset that emphasizes R&D, human capital and the creation of 21st-century institutions for the exchange of ideas.