Georgia Institute of Technology School of Public Policy PUBP 4600 – Spring 2010 Instructors: Dr. Gordon Kingsley & Dr. Shiri Breznitz Manufacturing Development Strategies: A 2007-2010 National Survey of Policy Tools to Support an Innovative and Sustainable Manufacturing Industry A Report for the Enterprise Innovation Institute of the Georgia Institute of Technology Tiffany Eason Travis Horsley Boris Patlis Liam Rattray Christopher Sherer Table of Contents Researcher Information Executive Summary Research Purpose Literature Review Hypothesis Research Design and Typology Methodology Findings Conclusion Recommendations Reference Appendices 2| Eason, Horsley, Patlis, Rattray, & Sherer 3 4 6 8 13 14 18 28 37 37 49 56 1.0 Researcher Information Research Conducted by: Tiffany Eason, School of Public Policy, Georgia Institute of Technology E-mail: teason3@gatech.edu Travis Horsley, School of Public Policy, Georgia Institute of Technology E-mail: trhorsley@gatech.edu Boris Patlis, School of Public Policy, Georgia Institute of Technology E-mail: boris@gatech.edu Liam Rattray, School of Public Policy, Georgia Institute of Technology E-mail: liamratt@gatech.edu Christopher Sherer, School of Public Policy, Georgia Institute of Technology E-mail: chrisito@gatech.edu Professors: Dr. Gordon Kingsley, School of Public Policy, Georgia Institute of Technology E-mail: gordon.kingsley@pubpolicy.gatech.edu D.M. Smith 005 Dr. Shiri Breznitz, School of Public Policy, Georgia Institute of Technology E-mail: shiri.breznitz@pubpolicy.gatech.edu D.M. Smith 307A Client: Dr. Jan Youtie, Enterprise Innovation Institute, Georgia Institute of Technology E-mail: jy5@mail.gatech.edu Enterprise Innovation Institute, Technology Square 3| Eason, Horsley, Patlis, Rattray, & Sherer 2.0 Executive Summary At the request of Georgia Tech’s Enterprise Innovation Institute (EII), our team analyzed the manufacturing policies of six states in order to determine activity and trends in legislative policy. This was accomplished through exploration of ten manufacturing subsectors that correspond to the Commission for a New Georgia’s strategic target manufacturing industries. The Georgia Tech EII, together with the School of Public Policy, conducts a recurrent statewide Georgia Manufacturing Survey (GMS). The goals of the GMS are to assess the business and technological conditions of Georgia’s Manufacturing sector. The findings of the survey are used to develop the assistance programs and initiatives offered by the EII Manufacturing Extension Partnership program to aid Georgia’s manufacturing industry. In preparation for and in tandem with the 2010 GMS, our team with EII conducted a comparative survey of other state’s manufacturing policies. This survey identifies the policies, incentives, and other programs that states have created since 2007 to support their manufacturing sectors. The results of the cross-state analysis will be delivered to the State Capitol together with the GSM to help formulate future Georgia manufacturing policy directed towards promoting manufacturing in the state of Georgia. All states were evaluated with what the group called an Employment Resilience Index (ERI), which is a measure of employment retention over a period of time. In selecting the states, those with less than 100,000 employees were excluded, and from those remaining the group chose six states with more than four core manufacturing industries outlined by The Commission for a New Georgia: two with high ERI, two with mid-range ERI, and two with low-range ERI. Labor relations and political climate of the state were taken into account, and the previous two legislative sessions for each state were considered. The policies were then collected using the 4| Eason, Horsley, Patlis, Rattray, & Sherer Office of Policy Analysis and Research’s Legislative Landscape, which is a search criterion for finding relevant policies concerning the relevant manufacturing subsectors. The group collected policies based on target areas that are outlined in the Commission for a new Georgia report. The policies were then grouped into wave I, wave II, and wave III legislative strategies. Our research led us to conclusions relating policy wave choice to three variables: ERI; political climate; and union membership rates. States with low-range ERI are less likely to select a wave III economic development strategy. Conversely, states with high ERI were more likely to select wave III strategy as opposed to wave I. With our research data, we were unable to find a relationship between mid-range ERI states and policy wave choice. Our comparison of the states’ political climate led us to find that states with higher percentage of Democrats in the statehouse were more likely to select wave III policies while states with a higher percentage of Republicans were more likely to select wave I policies. Analysis of the union membership rates of each state showed us that states with higher member rates selected more wave III policies and less wave I policies and states with low union member rates selected more wave I policies and less wave III policies. The data between union member rates and wave II policies was not strong enough to show a significant pattern. For future analysis, it is our recommendation that this evaluation be expanded to a wider range of states that maintain core competencies in strategic manufacturing subsectors similar to Georgia. We believe the findings presented in this study will provide EII and the Georgia General Assembly with a foundation for implementing the next wave of manufacturing policy in the state of Georgia. 5| Eason, Horsley, Patlis, Rattray, & Sherer 3.0 Research Purpose The manufacturing industry in the USA has undergone tremendous shifts due to global trends in recent years, and the state of Georgia has been particularly hard-hit by these changes. In particular, the state has lost a tremendous number of manufacturing jobs from 1999-2007. During this period the state lost over 128,000 jobs in the manufacturing supersector, NAICS 30, a 23% decline, higher than the national average of 21% during the same time (BLS 2009). This accounts for roughly 88%, or 8/9ths of all jobs lost in Georgia during this time period. These job losses are structural in nature, and unlikely to be recouped if trends continue (Moody 2008). In addition to jobs losses, the average manufacturing sector yearly wage was 15% lower in Georgia than the national average in 2007. Again, and even more troubling, this is a decline relative to the national average from 14% lower in 2001. Georgia has been losing manufacturing jobs at a faster pace than the nation, and those jobs that remain are getting less attractive. The manufacturing industry in Georgia, despite its hardships, remains a vital business to the Georgia economy, employing over 10.1 percent of the Georgia workforce. The real cost of such a substantive decline in jobs and plant closures may be difficult to quantify, as will the human cost, but it is certainly a heavy burden on society. While the manufacturing sector is suffering in many states, it is faring far worse than average in Georgia, and thus a successful policy intervention is more imperative in our state. There are many stakeholders who have much to gain from a policy solution to the problems that the manufacturing industry faces in Georgia. Foremost are those manufacturing workers who are unemployed, who would find work more easily in a more thriving and sustainable manufacturing sector. Currently employed manufacturing workers could see a raise 6| Eason, Horsley, Patlis, Rattray, & Sherer in working conditions and wages as well as labor demand increases. Business owners and entrepreneurs would benefit from the many economic opportunities that a revitalized manufacturing sector would present. Consumers would see more new, innovative, and useful products make it to the market for their purchase. Finally, the residents of the state would benefit from an increase in state revenue and a decrease in unemployment. The Georgia Tech Enterprise Innovation Institute, together with the School of Public Policy, conducts a recurrent statewide Georgia Manufacturing Survey (GMS). The goals of the GMS are to assess the business and technological conditions of Georgia's Manufacturing sector. The findings of the survey are used to develop the assistance programs and initiatives offered by the EII Manufacturing Extension Partnership program to aid Georgia's manufacturing industry. In preparation for and in tandem with the 2010 GMS, out team with EII conducted comparative analysis of six state's manufacturing policies. This survey identifies the policies, incentives, and other programs that states have created since 2007 to support their manufacturing sectors. The results of the cross-state analysis will be delivered to the State Capitol together with the GSM to help formulate future Georgia manufacturing policy directed towards promoting manufacturing in the state of Georgia. This survey offers an opportunity to conduct social science research into the policy process cycle. From the outset our research aims to both provide a survey of manufacturing policy and provide a better understanding of how manufacturing policy is selected by statehouses. Our research question asks, how do state legislatures select an economic development strategy? In particular, we try to correlate employment retention in manufacturing industry to economic development strategies as understood by the wave theory of economic 7| Eason, Horsley, Patlis, Rattray, & Sherer development while controlling for the political climate of the statehouse and the unionization of labor in the state. 4.0 Literature Review Our research attempts to better understand the determinants of economic development strategy selection by statehouses. Why is one form of state economic development strategy adopted over another? This literature review provides background information on theoretical framework that underlies our research question, the thinking behind the state selection for our analysis, and our methods of analysis. Unlike Japan, Britain and France, the United States is not known to have strong national industrial policy (Zysman 1983, Krasner 1978). Instead, industrial policy is more commonly adopted on the state level. Our research looks specifically at state level economic development policy interventions in the manufacturing industry. The goal of policy intervention in manufacturing is improve economic success. However, the definition and operationalization of economic success and paths to attain it are particularly difficult and much debated. The most widely agreed upon definition in the literature is economic growth. Economic growth is modeled by several theories which allow for different measures of economic success. These include analysis of multiplier effects, economic base models, inputoutput analysis and econometric models (Malecki 1991). Each one of these approaches attempts to predict the growth of a particular economy or industry. In our research we do not attempt to predict growth in an economy, only to measure the current state of growth, or economic success, 8| Eason, Horsley, Patlis, Rattray, & Sherer in a manufacturing industry. Many measures are available to indicate growth in an economy, these include manufacturing’s share of real gross state product, exports of manufactured goods, and manufacturing worker productivity. Employment is one measure that all of the aforementioned economic models have in common. Bahamani-Oskookee and Chakrabarti (2003) find that employment in overall US manufacturing is an indicator of long-term import competitiveness. Further, employment has significant local and state economic impact in the form of public revenues. In this regard it not only impacts the actors outside of the statehouse, but also directly influences the actors within the statehouse. Moreover, in the event of economic recession, such as the one faced between 2007 and 2010, employers face pressure to reduce wages or otherwise cut payroll costs. This may prove disastrous in the long run. Wage reduction in the short-term may cause severe, disproportional, and permanent worker productivity reductions that remain in place after wages are restored (Lin & Yang, 2008). If employees are released instead, then significant longer-term wage reductions can be expected within several quarters (Jacobson et al, 1998) -- again bringing back the issue of productivity loss. There is a strong incentive to maintain both wages and employment rates if productivity and competitiveness are to be preserved and increased. States which can best protect these vulnerabilities to employment retention through appropriate policy may prove to be the most competitive and successful in the long term. Our research, therefore, takes employment retention as its independent variable and tries to identify whether the economic development strategies adopted by state legislatures respond to employment retention in their target industry. A commonly used theory of economic development strategy used to classify and understand the kinds of industrial policy passed by state legislatures is the “wave theory” of 9| Eason, Horsley, Patlis, Rattray, & Sherer economic development. Leicht and Jenkins (1994) identify and describe three coherent state economic development strategies that each use a common set of policy tools and targets. They used factor analysis to find evidence of three distinct strategies: an "entrepreneurial strategy" that utilizes demand-side policies to stimulate firm and technology development; an "industrial recruitment strategy" that uses supply-side financial incentive policies to attract firms or increase the size of existing firms; and a "deregulatory strategy", or race-to-the-bottom strategy, that aim to improve supply-side factors by reducing government involvement in business-labor and business-environment relations. Their paper provides empirical evidence for the existence of "wave-type" economic development strategies conceptualized by the Corporation for Enterprise Development (CfED) using identified policies from previous research compiling state economic development programming from around the nation. The first economic development strategy, Wave I, is comprised of industrial recruitment policy, which was popular from the 1950s-1970s. Contemporary economic development literature criticizes traditional incentive packages that try to attract manufacturing business to local regions with cash and tax relief incentives (de Bartolome, 1997; Buss, 2001; Reese, 2001; Sullivan, 2002; Bartik, 2005). These supply-side policies do not promote a sustainable and innovative manufacturing industry. Foreign owned facilities and businesses are constantly at risk of moving to other regions with cheaper factors of production and are at risk of closing down due to changes in consumer preferences and demand. As developers realize American factor costs are increasingly undercut by foreign regions Wave I strategy gives way to a more liberal wave II demand-side industrial policy. Wave II strategy attempted to improve the productive inputs of industry by providing for labor training and managerial and technology assistance among other approaches (Mattoon 1993). Wave III seeks to shift focus on local development by creating the 10 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r context for economic growth through “networks that leverage capital and human resources to increase the global competitiveness of a group of strategically linked firms." (Strother, 2004) Both Wave II and Wave III policies fit into national and regional innovation systems theory which promotes the creation of networks of knowledgeable institutions, actors and firms with strong core intellectual competences that compete in a knowledge-based economy (Maskell, 1999; Carlsson, 2002; Freeman, 2002). These innovation networks are integrated and can respond to changes in markets and innovate new "constructed advantages" (Cooke & Leydesdorff 2005). A review of policy selection theory is necessary in order to analyze the causal relationship between the economic base of an industry and the ultimate policies signed into law by the state legislatures to support an industry. The foundational model of policy selection theory is the iron triangle model. It postulates that the policy process is run by the tight connections of congressional committees, career bureaucrats, and interest groups. Adams (1982) describes how this process works in the defense contracting industry and explains that overtime the three corners of the triangle become intertwined which makes participation from other actors outside of the triangle difficult. In contradiction to this simplistic model is the garbage can model which illustrates the process as fluid participants acting on uneven agendas with undetermined technology in the organizational world. (Cohen, March, Olsen, 1972) Significant variables of interest in these theories of the policy selection process include specific actors. In our industry of interest, manufacturing, unions are significant actors in the policy process and comprise a very strong interest group in the iron triangle. Volgy et al (1996) show that in countries with high labor power through higher unionization levels, employee compensation positively correlates with higher productivity and 11 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r wages are more able to resist unemployment pressure than in low-unionization countries. Furthermore, those countries with high unionization were better able to compete against cheap foreign labor. Waddoups (2001) corroborates these international findings in the United States with an intra-state analysis of the gambling and service industries of Nevada. His findings show that worker compensation is significantly higher for union jobs in booming Las Vegas compared to Reno, whereas compensation for non-union jobs is comparable in both cities. Finally, Zavodny (1999) shows that unionized industry jobs in the USA have much better correlation of worker productivity to worker compensation than do non-union industry jobs. These older theories of the policy process do not include many important aspects of the policy process, because they focus on a single entity at a specific period of time. What is needed is a look at the process over time and from many different perspectives, in order to understand how the process works in our complex world. Burstein (1991) offers a look at what he calls "policy domains". There are many different phrasing for the same term, but simply a domain is an issue-specific policy area that attracts lobbyists, concerned citizens, and special interest groups. These domains are seen by Burstein to be socially constructed and framed by the actors. Sector policies seem to be dominated by the actors in these policy domains. For our research, the policy domain is economic development which incorporates many actors including state economic development offices, economic developers, businesses, business associations, entrepreneurs, financing institutions, employees, and the unemployed. All of these actors presumably influence the economic development strategy adopted by the statehouse. We argue that the employment retention of an industry strongly influences the actors within the policy domain of economic 12 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r development, unions for example and, in turn, influences the economic development strategy adopted by the statehouse. Political climates in the statehouse should also strongly affect economic development strategy selection. Saiz (2001) takes a behavioral approach and explains that legislators that make policy selection choices do so with cognitive and information limits which dispose them towards a schema of policies articulated in the dominant ideology of a state’s politicians and voters. Research on the party affiliation of governors and their industrial policy selection found that Republicans tend to favor supply-side, or “wave I” approaches to economic development that create lower factor costs to attract business to the state, whereas Democrats tend to favor demand-side, or “wave II” approaches to state economic development that emphasize the development of export markets, economic cooperation between state and public sectors and entrepreneurial strategies targeting particular economic sectors (Boeckelman 1996). This is in keeping with the economic ideologies of fiscal conservatism underlying the Republican Party and the economic interventionism of the Democratic Party. 5.0 Hypothesis We hypothesize that the employment retention in the manufacturing industry is correlated to the state economic development strategy selected by the statehouse. According to the wave theory of economic development the economic development strategy is dependent on the material conditions of the industry. For example, states with high levels of employment retention in the manufacturing industry are unlikely to need to recruit new enterprise and would focus instead on a different economic development strategy. Our readings also lead us to hypothesize that Democrat-controlled states will pass more legislation and of “later” Wave than will 13 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Republican states and that higher union membership will correlate with higher ERI. Our null hypotheses are that there exist no correlations between employment retention and economic development strategy, between political climate and economic development strategy, and between union membership and ERI. 6.0 Research Design and Typology The basic independent variable of our research is a rigorous measure of employment retention in the manufacturing industry. The dependent variable is the economic development strategy selected by the statehouse which is defined and operationalized using a policy typology utilizing concepts from wave theory. The unit of analysis for our research is the state. Six states were selected for use in this analysis on the basis of their competency in more than four of the ten manufacturing industries of interest to our client. Figure 1 Research Framework 14 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r We believe employment retention to be a variable of interest in economic development strategy selection because it is a common proxy variable for economic success. Which is, ostensibly, what economic development is about. Furthermore, it is a strong issue of concern with employees and community residents who rely on employment in local manufacturing business to drive sales in the service and retails sectors. Employees and residents are, like unions, strong interest groups that play a role in the policy selection process of state legislatures. Employment data, unlike exports and share of real state gross domestic product is easily accessible through the National Bureau of Labor Statistics. We utilized established theory on economic development strategy to create a typology of policies (Mattoon 1993; Leicht and Jenkins 1994; Strother 2004). These 38 policies include tax credits, technological assistance programs, export promotion programs, ombudsman, among others. These 38 policies are then categorized into three possible general economic development strategies: wave I, II, and III as defined by Leicht and Jenkins (1994) and Strother (2004). Our economic development strategy typology is defined in the following Tables 1-3. The definitions used to categorize identified policy from the states in our analysis are generally accepted within the field of economic development. To establish non-spuriousness in our research we must control for both antecedent and intervening variables. Our literature review led us to identify two key variables to control for: unionization and party affiliations of the statehouses. In addition to their antecedent effects on employment and wage levels, unions can exert powerful lobbying influence on state lawmakers in proportion to their membership levels, thus functioning as an intervening variable between our independent and dependent variables. It is not unreasonable to ask whether states with stronger manufacturing employee unions will tend to 15 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r enact legislation of different manufacturing policy wave from states with weaker unions. For these reasons, our research design accounted for unionization rates. The political inclinations of the legislatures surveyed in this research are controlled for in our research framework. The political ideology and party affiliation of politicians affects their policy selection and acts as an intervening variable. We attempt to control for this intervening variable by collecting data about the majority party control of the statehouse and the party affiliation of the governor. Policy Type Wave One Economic Development Strategy Abbreviation Explanation Accelerated Depreciation Direct Loans AD Enterprise Zones Fair Employment Practices EZ FEP Financing for Existing Plant Expansion Industrial Park FEPE Job Training Programs JTP Loan Guarantee LOAN G Minimum Wage Law MWL Private Development Credit Corporation PDCC Research and Investment Tax Credit Revenue Bond R&I TC Right to Work Laws RTW Tax Abatement TA Tax Credit for Job Creation TC-JC D LOANS IP RB Companies write off the costs of their machinery and buildings faster than they actually wear out. Creates lower tax bills Agency guarantee to pay back a portion of a loan if the business owner defaults Specific geographic area targeted for economic revitalization Government entity cannot discriminate based on race or religion. Federal laws for this do not exist, but individual states have passed similar laws. Direct investment or loans to expand manufacturing plant operations within the state An area zoned and planned for the purpose of industrial development Programs that provide training for jobs; usually for welfare recipients, the poor, and workers who have lost jobs due to foreign trade A promise by a government to assume private debt if the business owner defaults Standard set by the government that determines the minimum wage for hourly, daily, or monthly work. Private, nonprofit economic development organization that serves as a catalyst for industrial and commercial growth. They help with business plan development, risk assessment, financial projections, funding resources, marketing strategy, and market analysis. Government-sponsored benefit that provides cash incentives for companies conducting R&D in the U.S. A special type of municipal bond distinguished by its guarantee of repayment solely from revenues generated by a specified revenuegenerating entity associated with the purpose of the bonds. Enforced in 22 states, they prohibit agreements between trade unions and employers making membership or payment of union dues or "fees" a condition of employment, either before or after hiring. When a taxing board grants a taxpayer a stay of paying a tax for a short or long term, for a total or percentage of the tax. Businesses that hire certain workers for newly-created or certain vacant positions may be entitled to one of these. 16 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Tax Exemption TE Workers Compensation WC Various tax systems grant a tax exemption to certain organizations, persons, income, property or other items taxable under the system. Such status may provide a potential taxpayer complete relief from tax, tax at a reduced rate, or tax on only a portion of the items subject to tax. Make it possible for a hurt employee to sue and try to prove employer wrongdoing. These laws have been relaxed and now litigation is avoided. Table 1 Wave I Policy Typology Policy Type Wave Two Economic Development Strategy Abbreviation Explanation Assistance Programs AP Business Incubators BI Customized Labor Training for HighTechnology Industries Environmental Regulation CLT HT I Export Promotion Program EPP Public Venture Capital Program Research and Development Tax Credits for High-Tech Industries Technology and Managerial Assistance Program Technology Assistance Centers PVCP Technology Grants TG Technology Transfer Programs TTP ER H-T TC T&MAP TAC Programs that assist economic development in disadvantaged areas. Programs and centers that provide business resources and services to entrepreneurial companies. Training programs specifically created to develop the skills of workers in high-technology industries. Federal governmental actions to regulate activities that have an environmental impact in the United States. The goal of environmental policy is to protect the environment for future generations while interfering as little as possible with the efficiency of commerce or the liberty of the people and to limit inequity in who is burdened with environmental costs. State agency markets state manufactured goods nationally or internationally or provides supply-side incentives to improve export competitiveness. A public investment agency that provides funds to new and emerging enterprises. Tax credits that benefit R&D for high tech industries. A high tech industry has "to be a maker/creator of technology, whether it be in the form of products, communications, or services." Programs often administered by business development centers that provide marketing, financing and other managerial support as well as advice on the effective use of existing technology. A center providing reliable advice and information. Centers should be trusted and credible organizations, providing assistance in a timely and suitable manner, and offer follow-up services to encourage implementation of adopted technology. "Grants/awards supporting research at industry, academic, and other institutions" Programs sharing skills, knowledge, methods and technologies among governments and other institutions. Table 2 Wave II Policy Typology 17 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Policy Type Wave Three Economic Development Strategy Abbreviation Explanation Business Councils, Industrial Development Associations BCIDA Business Environment Ombudsman BEO Business Welcome Events BWE Coordination of Economic Development with Other Programs Electronic Bulletin Boards Interstate Regional Cooperation CEDOP Lotteries L Partnerships to do Planning and Promotions Permit One-Stop Shops PPP Site Information SI EBB IRC POSS Groups of local businesses with similar industry interests that collaborate and advocate as an industry block. Industrial development associations are economic development organizations ready to assist companies and site. A go-between for businesses and the community to provide business with free, confidential assistance to help them understand and comply with environmental regulations A "red carpet" of sorts for businesses interested in opening a manufacturing business in a given state. Usually includes site visits, industrial assessment of the location benefits for business within a region, among other attraction efforts. Programs to coordinate economic development with other programs such as housing, agriculture, or education. Communication systems online where one can share, request, or discuss information on just about any topic. Cooperation between states for the purposes of policy cohesion on a state-to-state and state-to-national level. (ex. A state's policy for an amount of tonnage of timber to be transported across state boundaries will reflect maximum that's allowed in any other state Policies that allow lotteries to be used to finance business development outside of a standard tax-structure. Partnerships between government-to-industry or industry-toindustry, providing collaboration for a respective manufacturing industry. A location in which industry can get all required governmental permits to manufacture a given good. Computerized databases available from state agencies. Table 3 Wave III Policy Typology 7.0 Methodology Our methodology is a mixed method approach combining a quantitative estimation procedure for analyzing and selecting states for our study with a qualitative logic model of the relationship between measures of employment retention in target industries, unionization rates, and political climate and our economic development strategy typology. Our quantitative selection method uses two key criteria: employment retention in industries of interest and cluster competencies in industries of interest. We created a proxy variable for the economic condition of manufacturing industries called the employment resilience indicator and used standard location quotient analysis to identify states with cluster 18 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r competences in industries of interest. States were then analyzed to collect data for the employment resilience indicator, manufacturing policies, unionization rates, and the political climate of the statehouse. The qualitative logic model used a keyword strategy to categorize state manufacturing policies into our economic development strategy typology. This typology was then used to compare cases in three natural treatment groups: high employment retention, medium employment retention, and low employment retention. Each treatment group included a high unionization state, low unionization state, conservative political climate state, and liberal political climate state to control for these antecedent and intervening variables. 7.1 State Selection State level manufacturing policy was analyzed over six states. These six states were split into three treatment groups on the basis of our independent variable, the employment resilience indicator. States were selected on the basis of their core manufacturing industries and the resilience of employment in their overall manufacturing industry. 7.1.1 State Selection Criteria One: Georgia's Strategic Target Manufacturing Industries In 2003 Governor Perdue appointed The Commission for A New Georgia to act as a consultant to the state on management and performance. This commission convened a Strategic Industries Task Force which recommended in 2004 that Georgia maintain and expand its competencies in nine strategic target industry sectors. These strategic target sectors included aerospace, agribusiness, energy and environmental, healthcare and eldercare, life sciences, and logistics and transportation. According our client's request for specific manufacturing policy, we 19 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r identified ten industry subsectors provided by the commission that are relevant to manufacturing. The North American Industry Classification System (NAICS) provided us with a standardized approach to classifying our strategic manufacturing subsector targets. Strategic Industries Task Force Recommendations Aerospace NAICS Manufacturing Subsector Targets Machinery manufacturing (NAICS 333) Beverage and tobacco product manufacturing (NAICS 312), Wood product manufacturing (NAICS 321), Paper and pulp Agribusiness product manufacturing (NAICS 322) Petroleum and coal products manufacturing (NAICS 324), Energy and Machinery manufacturing (NAICS 333), Computer and Environmental electronic product manufacturing (NAICS 334) Medical equipment and supplies manufacturing (NAICS Healthcare and Eldercare 3391) Life Sciences Chemical manufacturing (NAICS 325) Logistics and Transportation Transportation Equipment Manufacturing (NAICS 336) Table 4 Georgia’s Strategic Target Manufacturing Industries Core manufacturing industries for states were determined using standard location quotient based cluster analysis. A location quotient is “the sectoral percentage of employment in a smaller geographical are divided by the same-sector percentage for the entire area” (Bogart and Ferry, 1999). This was calculated using the following equation and data from the Bureau of Labor Statistics. Where: ei = State employment in industry i e = Total State employment 20 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Ei = National employment in industry i E = Total National employment This method provides a dimensionless variable, a location quotient, that identifies if a state has greater than average density of employment in an industry. If the location quotient is greater than one then the state is presumed to have a cluster in the industry. Thus, the location quotient is used as a proxy variable for clustering in an industry. We ran cluster analysis for all Georgia manufacturing subsectors from 2008 using data from the Bureau of Labor Statistics to ascertain Georgia clusters and found the following clusters: NAICS Code ERI NAICS 321 Wood product manufacturing 1.48 NAICS 322 Paper manufacturing 1.6 NAICS 323 Printing and related support activities 1.09 NAICS 311 Food manufacturing 1.54 NAICS 313 Textile mills 5.25 NAICS 314 Textile product mills 8.04 NAICS 335 Electrical equipment and appliance mfg. 1.2 NAICS 326 Plastics and rubber products manufacturing 1.08 NAICS 327 Nonmetallic mineral product manufacturing 1.39 Our manufacturing policy survey focuses on the ten manufacturing subsectors recommended by the Commission for a New Georgia and does not target all of the manufacturing subsectors that Georgia already has clusters in. Therefore, the manufacturing industries that Georgia has a cluster in that we included in our survey were wood product manufacturing, paper manufacturing, and food manufacturing. 21 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Our state selection strategy then led us to calculate location quotients for all states with greater than 100,000 employees in the overall manufacturing industry (see Appendix A for calculations). Those states with clusters in four or more strategic target manufacturing subsectors were then considered for our second criteria. 7.1.2 State Selection Criteria Two: Employment Resilience Indicator In order to test our hypothesis we devised an indicator to measure our independent variable; the employment retention of a state's manufacturing industry. The employment resilience indicator (ERI) is an ordinal scale that allows us to rank our states by their manufacturing employment retention over a three year time span (see Appendix A). The indicator is calculated with the following formula: Where: Ei = Initial Employment Ef = Final Employment Because all states saw a decline in employment in our time series between 2006 and 2009 all of the states we surveyed have an ERI greater than one. ERI's range from 3.5 for Michigan, which has seen the gutting of its automotive industry over these years, to 13 for Maryland, which has lost approximately 10,000 manufacturing jobs over those years. Georgia has an employment resilience indicator rating of 4.6 which is third behind Michigan and Florida. This shows the necessity for this research to improve the manufacturing prospects in Georgia. 22 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r States with more than four or more clusters in strategic target manufacturing subsectors were ranked according to their ERI for years 2006-2009. Our ERI variable was subdivided into three treatment groups. Treatment group one, low ERI, was selected by states that had ERIs less than 5.0. Treatment group 2, mid ERI, was selected by states that had ERIs between 5.0 and 8.0. Treatment group 3, high ERI, was selected by states that had ERIs above 8.0. Our team then selected two states from each treatment group that represented a liberal and conservative bias on the basis of statehouse majority party affiliation to control for political climate as an intervening variable. Unionization rates were included in our research as an antecedent variable. The following is a table of selected states: Treatment Group State Low ERI (<5.0) Indiana 4.8 17.4 Low ERI (<5.0) North Carolina 4.9 3 Avg ERI (5.0-8.0) Pennsylvania 6.6 14.5 Avg ERI (5.0-8.0) California 7.3 7.2 4 Democrat 9 22.6 5 Democrat ERI Union Membership Clusters Political Climate 8 Republican 6 Democrat 7 Republican High ERI (>8.0) Washington High ERI (>8.0) Utah 8.5 5.5 5 Republican Georgia 4.6 4.8 3 Republican 7.2 Policy Collection: The Legislative Landscape Review 23 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r The Office of Policy Analysis and Research and the Georgia Institute of Technology developed a novel methodology of analyzing science and technology legislation at the state level (Hayslett and Pechar, 2009). Legislation is collected on the state level to provide a quantitative database of state legislation within a given sector (i.e., science and technology policy, manufacturing, etc.). The Legislative Landscape acts as a tool for policymakers and policy analysts to assess and visually represent data on comparative state policies. This methodology has only been applied to science and technology legislation. Our research expands the Legislative Landscape methodology to analyze manufacturing policy. 7.2.2 Legislative Landscape Search Survey The research methodology necessary for a Legislative Landscape analysis involves data collection, validation, analysis, and dissemination. State-level data collection on legislation consists of recording legislative data on bills related to manufacturing. "Information collected includes: the bill number, the short title or a short description of the bill purpose, whether or not the bill was enacted, and a web link to the bill". (Hayslett and Pechar, 2009) A keyword-search list was developed that focuses on key terms relating to targeted manufacturing subsectors. The keywords for each targeted subsector are as follows: NAICS Code NAICS 311: Food Manufacturing NAICS 312: Beverage & Tobacco Product manufacturing NAICS 321: Wood Products NAICS 322: Paper Manufacturing Keywords Food, Livestock, Agriculture, Agribusiness Tobacco, Alcohol, Brewer, Distillery Wood, Sawmills, Wood Preservation, Veneer, Plywood, and Engineered Wood Product Converted Paper, Pulp, Paper, Paperboard, Paperboard Mills, Pulp Mills, and Paper Mills 24 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r NAICS 324: Coal & Petrol Manufacturing NAICS 325: Chemical Manufacturing NAICS 333: Machinery Manufacturing NAICS 334: Computer & Electronic Product Manufacturing Petroleum, Coal, Petrol, Refinery, Refine, Lubrication, Lubricant Chemical, Chemical Manufacturing, Pharmaceutical, Pharmaceutical Manufacturing Aerospace, Air-Conditioning, Energy, Equipment, Heating, Heating Manufacturing, and Machinery Semiconductor, Communications Technologies, Computer, and Electronic Transportation, Motor Vehicle, Automobile, Trailer, Motor Home, Truck, Motor Vehicle Parts, Aerospace, Aircraft, Railroad Rolling Stock, Ship, Boat, NAICS 336: Transportation Equipment Manufacturing NAICS 3391: Medical Device Manufacturing Medical Supplies, Medical Equipment General Manufacturing Manufacturing, Manufacturer, Manufacture, Entrepreneurship, Policy: Entrepreneur, Innovation, and Innovate Statehouse websites that include legislation were identified and recorded for our survey. Similar to the Science and Technology Legislative Landscape, bills were included in our analysis if they met a frequency of targeted words appearing twice or more within a given document. For legislation that clearly have an impact on state programs and initiatives, but only have one matching keyword in the document, they will be accepted under the "spirit of the bill" clause. Only bills that were passed into law and pertained to direct manufacturing policy were included in our collected data. Some bills might reach the search criteria for more than one keyword. Within each bill we coded particular policies by policy type so some bills were coded for multiple policies. The statehouse websites for each of the six target states were all different and the approaches our team used for each state varied. The table found in Appendix C was utilized in providing a guideline for searching each state for legislation: The statehouse websites all included a method of selected the year from which legislation was being considered or passed. If displaying only enacted law was an option for a search parameter, it was chosen to further limit the search return. Some of our keywords for NAICS 25 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r code consisted of more than one word. Appendix D, Tips for Full-Text Searching, provides a general guideline used by the team when conducting a search. Because each website had its own keyword search structure, difficulties arose when trying to apply a consistent method for keyword searching across states. A preferred search structure for state legislation would contain similar functions to the search parameters available on North Carolina's website: a search criteria box that searches full text of the most recent version of the legislation, a legislative session year parameter, and a parameter that acts as a limiting function only showing enacted/ratified legislation. To categorize and code the collected bills we used qualitative analysis software called NVivo published by QSR. Once the text of the law was placed into NVivo, it was coded for the following fields: state, year of bill passed, and NAICS subsector code. Policies within each bill were then coded according to our typology. This allowed the team to readily identify which policies fell into Wave I, II, or III state of economic development policy. The team developed a policy type cheat sheet (see Appendix B) for the purposes of easily targeting and coding policy in NVivo and to improve inter-coder reliability. Legislative cycles differ from state to state. Since the client for this project desires an analysis that represents state policy for the last three years. Relevant legislation affecting targeted subsectors was included from current 2010 legislative sessions as well. 7.2.4 Manufacturing Policy Survey After policy was coded in NVivo the number of coded policy was exported to an Excel file that graphed selected NAICS code on the state level against policy types. The numbers of 26 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r policies were aggregated into Wave I, II, and III categories. The numbers were then graphed against all six states Employment Resilience Indicator. The manufacturing policy survey also included data requested by the Enterprise Innovation Institute, summarizing Wave II policies by NAICS industry code, year, state, bill code, and policy type. This was beneficial in that it allowed the team to pull multiple policy themes that were reoccurring across states in Wave II. 7.4. Intercoder Reliability Consumer incentive policies for emerging technologies were not included in our analysis. We only considered those economic development policies that directly supported manufacturing industry within the state. Indirect consumer incentives may benefit in-state industries but there is an amount of leakage that could not be accounted for in this research. Regional variances in lexicon and word usage must be taken in to account when facilitating a keyword-based legislative study. Also, word endings must sometimes change when searching a database of bills to allow for variance in the search capabilities of a given site. The Legislative Landscape allows for such variances by stating that the data collector can substitute keywords with similar wordage (i.e., petrol or petroleum, manufacture or manufacturer, chemical or chemicals, etc.) To maintain intercoder reliability definitions for policy types were developed before the team began coding legislation. A review of this document assisted the researcher in maintaining an understanding of the policy types. It should be taken into account that much of the policy coding occurred independently, with coded policy being compiled upon completion. Although minor amounts of spuriousness in coding occurred as a result of our independent coding, one team 27 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r member went back and reviewed all coded policies for accuracy. The Office of Policy Analysis and Research developed a two-person team method to address spuriousness in data sourcing of policy with the Legislative Landscape. Their method measured percent agreement in bills sourced by team members overtime, increasing accuracy over time. This method can be readily applied to policy coding that utilizes NVivo in further studies. 8.0 Findings As stated earlier in our literature review and our methodological framework, our three key variables were ERI, state politics, and union membership statistics. Our findings attempt to link state manufacturing policy wave selection to these variables. Our hope is to see if the data holds to the predictions made by our hypothesis, which was informed by our readings. Table 8.0.1 lists the results of our research linking ERI, Political Climate, Union membership, and policy wave selection. The bills are sorted by state and wave according to our typology. The political index represents the democrat-republican split in the state capital of each state. A 1.0 rating here means that the state is 100% democrat controlled, and a -1.0 represents 100% republican control. States ERI Wave I Wave II Wave III Total WA UT 10 8.4 40 7 13 1 28 2 81 10 CA PA 7.3 6.6 7 5 6 1 8 4 21 10 NC IN GA 4.9 4.8 4.6 8 11 5 0 8 1 1 4 0 9 23 6 Wave I % Wave II % HIGH ERI 49.38 16.05 70.00 10.00 MID ERI 33.33 28.57 50.00 10.00 LOW ERI 88.89 0.00 47.83 34.78 83.33 16.67 28 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Wave III % Political Index Unionization % 34.57 20.00 0.28 -0.48 22.6 5.5 38.10 40.00 0.24 -0.05 7.2 14.5 11.11 17.39 0.00 0.16 -0.08 -0.20 3.0 17.4 3.7 Table 8.1.1 Figures 8.1.1 and 8.1.2 below summarize our findings regarding our hypothesis by state. We are interested here in the relationship, if any, which exists between the employment retention of a state and the type of state economic development strategy selected by the statehouse. Our six states are plotted below in accordance with this relationship in 8.1.1. The overall trends are plotted in 8.1.2. Initially it is evident that the most popular strategy across all states has been a Wave I approach. With the exception of one state, Wave I policies comprised at least 45% of the policies of every state. The outlying state on this count is California. This makes some sense as California had become home to an extremely large and varied set of firms during the 90s and early 2000s. California would not particularly need to attract new firms but rather would be focused on retention and further development instead, characterized by Wave II and Wave III approaches. Our data show that reliance on Wave I policy scales negatively to ERI. According to our data, there is also a strong positive relationship between increased ERI and Wave III policy implementation. This makes sense according to Wave theory, as Wave III policies can only be built upon a solid employment and regulatory foundation. Our weakest states seem to lack this pre-requisite and thus rely almost exclusively on Wave I (North Carolina) or a nearly equal split of Waves I and II (Indiana). However, our data does not show any definitive relationship between ERI and Wave II policy implementation. 29 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r ERI v Policy Wave Selection 10 8.4 7.3 ERI 6.6 4.9 4.8 4.6 Wave I Wave II Wave III 0% 20% 40% 60% 80% 100% Percentage of Policies Belonging to Waves I, II, III Fig. 8.1.1, Fig 8.1.2 ERI v Wave Selection Trend Policy Wave Selection 100 80 60 Wave I 40 20 Wave II 0 Wave III 4 6 8 10 ERI 8.2 Political Climate It is important to see how the political climate of a state works as an intervening variable concerning the passing of legislation. Fig. 8.2.1 shows the political makeup of the selected states. The data were calculated by taking the number of Republicans and Democrats state legislators averaged over the previous two legislative sessions. There were no extreme changes from the two sessions in terms of the numbers of each party affiliation. 30 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Fig. 8.2.1 Table 8.2.1 shows the number of bills passed by each state by wave. Democrat states are blue and Republican states are red. The data shows that a high ERI does not necessarily mean that the legislature is proactive or involved in higher-wave policies. Utah and Washington scored in the upper range in the ERI, but the political climate of the two states is extremely disparate. Washington has almost a 2:1 ratio of Democrats to Republicans, as well as a Democratic governor, and 33% of their policies are categorized as Wave III. They are also proactive in 31 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r manufacturing legislation in general, because they had a total of 81 policies, with nearly half being Wave I policies. Utah has a 3:1 ratio of Republicans to Democrats, a Republican governor and has just two policies classified as wave III. They seem to not be active in manufacturing legislation, with a total of only ten policies over the time period. State WA UT CA PA NC IN GA ERI 10.0 8.4 7.3 6.6 4.9 4.8 4.6 Wave I Wave II 40 13 7 1 7 6 5 1 8 0 11 8 5 1 Table 8.2.1 Wave III 28 2 8 4 1 4 0 Total 81 10 21 10 9 23 6 Political Index 0.28 -0.48 0.24 -0.05 0.16 -0.08 -0.20 In the middle ERI range, Pennsylvania and California are comparable. Pennsylvania has almost a split state legislature, with Republicans having a slight majority. The governor is Democratic. California has a fairly large Democratic majority in their state legislature, but a Republican governor. 40% of Pennsylvania’s state manufacturing policies are Wave III, out of a total of ten. California has passed more than double the policies, and each wave sports about the same number of policies. North Carolina and Indiana fall into the low ERI category. North Carolina has a 60% Democratic majority in their state legislature, and a Democratic Governor. Indiana has a slight Republican majority in their state legislature, and a Republican governor. North Carolina had only one of nine policies categorized as wave III, with the rest being wave I. Indiana is a little more proactive in manufacturing policy, but about half of those policies are Wave I. 4 of the 23 polices are Wave III, while the remainder is wave II. 32 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r In the categories of High, Middle, and Low ERI, the states in each category have opposite majorities in the state legislature. Washington supports the literature that says liberals are more likely to intervene in the manufacturing sector. Utah supports it as well, but in the opposite way. Utah is heavily conservative, and therefore has very little policy directed toward the manufacturing sector. These two states were the most partisan of the six. California is an outlier in this section, because the state has over 60% Democrats, but advanced wave policy for that state is low. A possible explanation is that there is a Republican governor, blocking potential manufacturing legislation. The rest of the states have more moderate majorities in their legislatures. Pennsylvania, like California, has a governor with a different policy affiliation than their legislature. Combined with a very small Republican majority, the inference can be made that policy is often gridlocked in this state, with the result that little policy actually gets through the process. North Carolina has a Democratic majority in the legislature and a democratic governor, but the produced policies do not show an inclination toward the advanced waves. But their manufacturing policies as a whole is pretty thin, so other factors may have to be taken into consideration. Indiana shows a higher proclivity toward manufacturing policy, even though the state skews to the right. The policies spread out over all three waves, so other research must be done to understand what is causing this. Figure 8.2.2 below shows the breakdown of policy selection by wave for the Republican and Democrat states by percentage. These percentages were done by averaging the percentages of the relevant waves for each state within the category in order to control for some states having more total acts of legislation passed than others. Figure 8.2.3 graphs the trends for policy waves 33 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r versus political climate given as % Democrat control of the statehouse (Republican control would be the reverse of the graph). Fig 8.2.2, Fig 8.2.3 State Politics v Wave Selection Policy Wave Selection 100 80 60 40 Wave I 20 Wave II 0 Wave III 0.2 0.3 0.4 0.5 0.6 0.7 Percent Democrats in Statehouse Comparison of the two categories brings out some interesting characteristics. As shown in table 8.2.1, Democratic states passed much more legislation than did the Republican states – an average of 27 policies per state versus 12. This meshes with the existing literature about liberals being more open to policy intervention. As indicated in the previous section, at least half 34 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r of the policies for each state fell into Wave I. Democrat states passed eight more wave II policies than did the Republican states, and twenty-seven more wave III policies, despite the fact that there were three Democrat states and four Republican ones. Looking beyond the actual numbers, however, shows a clear trend (figure 8.2.3). There seems to be a strong relationship between Democrat control and increased Wave III policy, with a corresponding decrease in Wave I. Wave II policy again seems to have no correlation with the data. As an antecedent variable, the political party makeup of a state legislature has an effect on how much policy is passed. Democrats are likely to pass more legislation than do Republicans, and it is likelier to be of later Wave. This finding for Wave I and III corresponds with the reading we did on the subject. Wave II again continues to be an enigma. 8.3 Union Membership Rate It is also important to consider whether the rate of unionization of manufacturing employees can be correlated with state ERI and state policy wave selection. As with the question of political leaning, being able to detangle this variable would allow us to make a stronger case for associating policy wave selection with state ERI. States WA UT CA PA NC IN GA ERI 10.0 8.4 7.3 6.6 4.9 4.8 4.6 Unionization % 22.6 5.5 7.2 14.5 3.0 17.4 3.7 Table 8.3.1 35 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Unionization rates were determined by three-year averages over our legislative time span from 2006 to 2009. As seen in table 8.3.1, our state selection included 4 states with very low unionization rates and 3 states with moderate unionization rates. Every ERI category for our states included at least one state with low unionization and one state with moderate unionization. This was not a result of deliberate selection (see 7.2. State Selection). Union Membership v ERI 14 12 10 ERI 8 6 Union % v ERI 4 2 0 0 5 10 15 20 25 Union Membership Figure 8.3.1 Figure 8.3.1 plots the trend of state union membership against state ERI. The results are not what we expected. Although the data suggests a slight trend, there is no indication of a strong correlation between increased unionization and increased employment retention (ERI). Utah, one of our two highest ERI states, has nearly no union membership, while the high union membership North Carolina has one of the lowest ERIs of our states (and the entire nation). Looking at table 8.3.1, one can see that there are both high and low union membership states in each of our ERI bands. This data seems to cast doubt on the consensus in the literature that unionization correlates with employment retention. This may be because union membership 36 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r rates have fallen heavily in recent years, perhaps to the point that unions can no longer influence hirings and manufacturing policy like they once could. 9. 0 Conclusions Our research led us to conclude that there is strong evidence for a positive correlation between ERI and economic development policy Wave selection for Wave I and III policy. We can also make the same conclusion for state politics and economic development policy Wave selection. These findings agree with our hypothesis and are in line with the literature in the field. The literature was also correct in predicting that more Democrat legislatures will be more active in passing policy in general. However, our findings were not in line for our hypothesis regarding union membership and employment retention. We had theorized that higher rates of the former would lead to an increase in the latter, but the data just did not bear that out. The correlation, if it exists, is weak at best along our states. It may be possible that the null hypothesis must be accepted in this case – that there is no longer any correlation. 10.0 Recommendations The role of our national manufacturing policy tool survey is to facilitate the adoption decisions of existing entrepreneurial Wave II manufacturing policy from states with cluster competencies in Georgia’s target industries to Georgia’s statehouse. Our research does not 37 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r attempt to evaluate these policies; instead, it provides Georgia lawmakers with a concise and organized summary of manufacturing policy from other states so that they might easily assess the inter-state policy climate within which Georgia's industrial policy regime competes and adopt relevant policy to improve the policy environment for Georgia's target industries. We identified 29 Wave II manufacturing policies from six states; Indiana, Washington, North Carolina, California, Utah, and Pennsylvania, that specifically target one of Georgia's ten target industries or apply generally to all manufacturing industries. These policies are categorized by industry and Wave II policy type and summarized below. Among these 29 policies we discovered three salient themes: small business development, incentives for high-technology enterprise, and support for environmental sustainability measures. Of the 29 policies, 5 were oriented towards high-technology, 9 towards small business, and 12 towards environmental sustainability. A discussion of these themes is provided in section 10.9 Policy Themes: Small Business, High Technology, and Environmental Sustainability. [for final paper consider creating thematic insets] The pursuit of a streamlined search method that would simplify the way legislative keyword searches were conducted in the Legislative Landscape would allow our team's research to be conducted in a more expeditious as well as scientifically valid way. A conceptualized method that would be preferred over the current search methods offered by the six selected states would be that each state provide full access to a text version of every passed bill for each legislative session. 38 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r For future analysis, our research team would recommend expanding the analysis conducted on the sample of 6 states to a wider range of states that maintain core competencies in strategic manufacturing subsectors similar to Georgia. We believe the findings presented in this study will provide EII and the Georgia General Assembly with a foundation for implementing the next wave of manufacturing policy in the state of Georgia. 10.1 General Manufacturing Policy General manufacturing policy is applicable to all target industries. Year State Bill # Title of Legislation Policy Type Bill Summary HB 2009 Washington 2227 Evergreen Jobs Act Authorizes the state board for community and technical colleges to develop curricula and training Customized Job programs for the development of the Training for skills and qualifications for highHightechnology industries identified by Technology the department of community, trade, Industries and economic development. New Business Recruitment Grants for Local Economic HB Development 1434 Organizations Assistance Programs Establishes a program to assist local economic development organizations in economically disadvantaged areas by providing operations grants to recruit new business enterprises to the counties served by the organizations. Small Business Assistance SB Increased Access 2010 Washington 6667 Plan Business Incubators Authorizes the board of regents of Washington State University to establish the Washington State University small business development center. Small Business Export Finance SB Assistance Center 2010 Washington 6667 Powers Customized Labor Training for High-Tech Industries Authorizes the department to work generally with small businesses and other employers to assist in workforce training. Small Business Export Finance SB Assistance Center 2010 Washington 6667 Powers Export Promotion Programs Promotes and markets the state's products and services both nationally and internationally. 2009 Indiana 39 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Small Business Export Finance SB Assistance Center 2010 Washington 6679 Powers 2007 Indiana 2009 Indiana Amendment to the Indiana Code Concerning HB Economic 1424 Development Forms the small business export finance assistance center. Research & Technology Parks Allows the Indiana economic development corporation to designate a certified technology park if the corporation determines the application demonstrates a firm commitment from at least one business engaged in a high technology activity creating a significant number of jobs. Technology & Small Business Managerial HB Development Center Assistance 1697 Lead Center (sic) Programs Small Business Export Finance SB Assistance Center 2010 Washington 6679 Powers Economic SB Development 2008 Washington 6855 Funding 2009 Indiana Export Promotion Programs Amendment to the Indiana Code HB Concerning 1589 Environmental Law Microenterprise SB Development 2007 Washington 5652 Program Establishes a small business division to contribute to the strengthening of the economy of Indiana by encouraging the organization and development of new business enterprises, including technologically oriented enterprises by way of incentivizing entrepreneurship and innovation in small business. Technology & Managerial Assistance Programs Gives the small business export finance assistance center the power to provide export finance and risk mitigation counseling to Washington exporters with annual sales of $200,000,000 or less. Technology & Managerial Assistance Programs Authorizes the community economic revitalization board to provide financial analysis and technical assistance for industrial development facilities when the board reasonably considers it appropriate Technology Grants Authorizes the Indiana recycling market development board to use money in the Indiana recycling promotion and assistance fund to make grants for research and development projects involving recycling. Technology Grants Creates a strategic partnership between the Department of Community, Trade, and Economic Development and the Washington Microenterprise Association to provide organizational support and grants for microenterprise training, 40 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r technical assistance and financing. Small Manufacturers Innovation and Technology SB Modernization Transfer 2008 Washington 6510 Funding Programs Expands state support for the Federal Manufacturing Extension Partnership by establishing a mechanism to reduce the up-front costs of innovation and modernization technical assistance and skills training to small and mid-size Washington manufacturers. 10.2 Food Manufacturing Policy 2010 Indiana SB 368 Amednment to the Indiana Code Concerning Utilities and Transportation Technology and the make an Assistance Appropriation Centers Establishes the renewable energy resources fund to support the development, construction, and use of renewable energy resources. Creates a foundation to provide grants for research which benefits the planting, production, harvesting, handling, processing, or shipment of Washington tree fruit. Washington Tree SB Fruit Research Technology 2010 Washington 6543 Commission Powers Grants 2009 California 2007 Utah 2010 Indiana Directs the Ocean Protection Council to develop and implement a voluntary sustainable seafood promotion program that consists of a marketing assistance program for seafood caught in California that is certified to internationally accepted standards for sustainable seafood. Ocean Protection AB Council: Sustainable Business 1217 Seafood Incubators HB 339 Regulation of cottage food production operations Purchase of Food HB Products Grown in 1142 Indiana Business Incubators Provides for the registration of cottage food production operations as legal food establishments. Miscellaneous Directs state agencies and entities that use state funds to purchase 20% and 15%, respectively, of all farm or food products from businesses located in Indiana. Technology Grants Appropriates $1,536,000 for a hardwoods research and promotion 10.3 Wood Products Manufacturing Policy HB General Fund for 2007 Pennsylvania 1286 the expenses of the 41 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Executive, Legislative and Judicial Departments of the Commonwealth center. 10.4 Paper Manufacturing Policy 2009 Washington Washington State SB Operating Budget Technology 1694 for Fiscal Year 2009 Grants Provides $50,000 for the University of Washington to assess the current energy profile of Washington state pulp and paper mills. 10.5 Coal and Petrol Manufacturing Policy 2009 Washington Relating to Expanding the HB Energy Freedom 2289 Program Technology Assistance Centers Establishes the energy freedom program within the department of community, trade, and economic development to accelerate energy efficiency improvements, renewable energy improvements, and deployment of innovative energy technologies. 10.6 Machinery Manufacturing Policy 2009 Indiana Renewable Energy Development: An act to amend the Indiana Code concerning utilities and transportation and to HB make an Technology 1349 appropriation Grants Establishes the renewable energy resources fund to provide funding for grants or other financail incentives for renewable energy manufacturing projects. 10.7 Computer and Electronic Manufacturing Policy 2009 Washington HB 2227 Evergreen Jobs Act Export Promotion Programs Supports green economy projects at both the state and local level by developing a process and a framework to provide priority consideration of opportunities leading to exportable green economy 42 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r goods and services, including renewable energy technology. 2008 California Career technical education: partnership academies: green AB technology and 2855 goods movement. Authorizes the Superintendent of Public Instruction to issue grants for the establishment of partnership academies dedicated to educating pupils in the emerging environmentally sound technologies until no less than one green Customized technology partnership academy has Labor Training been established in each of the nine for High-Tech economic regions established by the Industries state. 10.8 Transportation Equipment Manufacturing Policy 2008 California 2008 California AB 109 AB 109 Air Pollution: Alternative Fuels and Vehicle Technologies Air Pollution: Alternative Fuels and Vehicle Technologies Air Pollution: Alternative Fuels and Vehicle Technologies Public-Private Partnerships Provides for public-private partnerships to develop and deploy innovative technologies that transform California's fuel and vehicle types to help attain the state's climate change policies. Technology & Managerial Assistance Programs Creates the Alternative and Renewable Fuel and Vehicle Technology Program to be administered by the State Energy Resources Conservation and Development Commission, and the Air Quality Improvement Program to be administered by the State Air Resources Board to ensure alternative and renewable fuel and vehicle deployment projects, on a full fuel-cycle assessment basis, will not adversely impact natural resources.. Technology Grants Provides for competitive grants to develop and deploy innovative technologies that transform California's fuel and vehicle types to help attain the state's climate change policies. 2008 California AB 109 2008 California California Alternative Energy and Advanced SB Transportation Technology 1754 Financing Authority Grants Establishes a renewable energy program under the California Alternative Energy and Advanced Transportation Financing Authority to provide financial assistance to 43 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r businesses manufacturing components or systems, to generate new and renewable energy sources, develop clean and efficient distributed generation, and demonstrate the economic feasibility to new technologies, such as solar, photovoltaic, wind, and ultra low emission equipment. 2007 Indiana SB 106 The Indiana 21st Century Research and Technology Fund Technology Grants Provides grants or loans to support economic development that increases state competitiveness for federal or private research and development funding, stimulates commercialization, assists hightechnology diversification in alternative fuel technologies and fuel efficient vehicles, and encourages a cooperative environment among institutions. 10.9 Policy Themes: Small Business, High Technology, and Environmental Sustainability Washington, Indiana, and Utah provided wave II type support for small business between 2007 and 2010. Other states also provided support for small business but did not offer wave II policies in particular and so are not included in this discussion. As defined by Indiana Code 528-2-6, small business is a business entity that employs not more than 150 employees. Washington passed several bills supporting small business over three years. In particular, they passed the Microenterprise Development Program in 2007, the Small Manufacturers Innovation and Modernization Funding bill in 2008 and the Small Business Assistance Increased Access Plan in 2010. Legislators targeted small businesses because, "microenterprises are an important portion of Washington's economy, providing approximately twenty percent of the employment in Washington and playing a vital role in job creation." These laws use business incubators, customized labor training for high technology industries, export promotion programs, 44 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r technology grants, and technology transfer programs to extend greater support to small business. Taken from SB 6510, Washington's statehouse undertook these initiatives because they will, "enable a manufacturing firm to reduce costs, increase sales, become more profitable, and ultimately expand job opportunities for Washington citizens. Such growth will result in increased revenue from the state business and occupation taxes paid by manufacturers who have engaged in [these] services." Utah and Indiana also passed laws supporting small business during our time frame. Indiana passed HB 1679 which contained a technology and managerial assistance program and Utah passed HB 339 which specifically legalized small-scale "cottage" food manufacturing in the home and provided for appropriate health and safety regulations. Indiana also talked Indiana HB 1434 also established a Microenterprise Partnership Program that would lend to companies with less than five employees. All but Utah's cottage food manufacturing provision are general industrial policies that apply to all of Georgia's strategic target manufacturing subsectors. The cottage food provision is an innovative new policy that could lead to new business opportunities in Georgia's rural agribusiness industry. High Technology was another policy theme that stood out during this process. Indiana was surprisingly very active in this area. SB 106 called for grants and loans for alternative fuel technology and the production of fuel efficient vehicles. These funds were to be made from the twenty-first centruy research and technology fund. Also in Indiana was HB 1424 provided that certified technology parks are subject to the review of the Indiana Economic Development Corporation. It also requires the re-certification of businesses in the parks every four years. This is to keep the high technology parks at the state of the art. California AB 109 mandates that the 45 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r legislature be notified in the "green investment" of clean technology businesses. This effort to advocate progress in the clean technology sector shows progress in the high technology sector. Even thought only a few bills are mentioned here and come from only two states, substantive legislation has been crafted in the area of high technology, and more progress can only come from it. Some themes pop out when looking at local development of sustainable food manufacturing. Economic development by way of assistance programs is one of these times. NC SB 1067s goal is to "contribute to building a local food economy, thereby benefiting North Carolina by creating jobs, stimulating statewide economic development, circulating money from local food sales within local communities, preserving open space, decreasing the use of fossil fuel and thus reducing carbon emissions, preserving and protecting the natural environment, increasing consumer access to fresh and nutritious foods, and providing greater food security for all North Carolinians." The bill creates a local food advisory council that tries to meet all these needs, as well as duties regarding health and wellness, hunger and food access, economic development, and the preservation of of farmland and water resources. IN SB 194 establishes the Indiana local and organic food and farm task force to "develop a plan with policy and funding recommendations to: expand and support a local and organic food system; assess and overcome obstacles to increasing locally grown food and local organic food production." The stated goals are to "identify land preservation and acquisition opportunities for local and organic agriculture ... identify farmer training and dvelopment programs and make recommendations to expand training programs, identify financial incentives, technical support and training necessary to help farmers transition to local, organic, and specialty crop production by minimizing financial losses ..." WA (2007) HB 1311 creates a small farm direct marketing assistance program. This 46 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r program is assigned to assist small farms in their direct marketing efforts, help with compliance with rules and regulations as they apply. Also they will assist with developing infrastructure to increase direct marketing opportunities for small firms, promote localized food production systems, increase access to information for farmers who want to sell directly to consumers, reduce market barriers, and assist in getting grants. IN HB 1142 creates the committee on agriculture safety and production. It provies that a government agency may give 10% price preference (meaning that the agency will pay a higher price for the product) for agricultural products grown, produced or process in Indiana, and requires the department of agriculture to promote safety programs. The theme in these bills is to interconnect farmers with each other as well as providing government assistance to farmers in various ways, whether it be a task force, a marketing assistance program, or a committee on safety and production. Only one interesting policy gives us a wave I type policy. That is WA (2010) SB 6485 which creates a tax break for distillers whose raw material consumption comes at least half from the state of Washington. The license fee is reduced to only 100 dollars per year. This is an example of the legislature incentivizing the use of in-state products for in-state manufacturers. This policy is beneficial to other producers in the state, because of the tax break created from the purchase of in-state products. Most of these bills deal at least indirectly with the notion of sustainability, but only two define the term explicitly. NC SB 1067 defines sustainable food as "an integrated system of plant and animal production practices that have a site-specific application and that over the long term are able to do all of the following: satisfy human food and fiber needs; enhance environmental quality and the natural resource base upon which the agriculture depends; sustain 47 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r the economic viability of farm operations; and enhance the quality of life for farmers and the society as a whole." CA 1217 defines sustainability as "the continuous replacement of resources, taking into account fluctuations in abundance and environmental variability and securing the fullest possible range of present and long-term economic, social, and ecological benefits, while maintaining biological diversity." The CA bill also takes into account the internationally recognized standards to sustainable fisheries, and provides, when the funds are available, for grants to help fishermen to take sustainable actions. 48 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r 11.0 References "Never mind the quality feel the width: University–industry links and government financial support for innovation in small high-technology businesses in the UK and the USA"http://ideas.repec.org/s/kap/jtecht.html>The Journal of Technology Transfer Springer, vol. 35(1), pages 66-91, February. (2006). Working to Shape Energy Policy for the Chemical Industry. Chemical Week, 168(31), 34. Retrieved from Academic Search Complete database. Adams, Gordon. The Politics of Defense Contracting: Breaking the Iron Triangle. New York: Council on Economic Priorities, 1982. Print. Anderson, C. (n.d.). In the Next Industrial Revolution, Atoms Are the New Bits | Magazine. 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Second Quarter 55 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Appendices Appendix A: State Selection Criteria for States with Greater than 100k Employees in Manufacturing, 2008 State ERI 311 312 321 322 324 325 333 334 336 3391 Clusters Maryland 13.0 0.57 1.05 0.33 0.52 0.36 0.8 0.35 0.95 0.27 0.38 1 Nebraska 10.9 3.37 0.59 0.64 0.59 0.03 0.9 1.33 0.62 0.82 2.01 3 Washington 10.0 1.07 1.01 1.71 1.1 0.99 0.33 0.6 0.84 2.75 0.55 5 Massachusetts 9.1 0.62 0.53 0.23 1.02 0.33 0.86 0.68 2.22 0.36 1.42 3 Lousiana 8.6 0.79 0.9 Utah 8.5 1.12 0.36 0.85 0.69 1.14 1.08 0.58 1.18 0.98 2.74 5 Oklahoma 8.5 1.22 1.17 0.63 0.61 1.94 0.31 2.39 0.46 0.89 0.37 4 Texas 8.3 0.77 0.76 0.71 0.57 2.85 1.16 1.06 1.14 0.77 0.52 4 Conneticut 8.2 0.37 0.34 0.27 0.82 0.22 1.34 1.18 0.9 Iowa 7.9 3.1 Arizona 7.9 0.36 0.98 0.65 0.31 0.09 0.28 0.34 1.75 1.06 0.68 2 Kansas 7.5 2.13 0.26 0.45 0.54 1.63 0.85 1.58 0.69 3.32 0.6 Colorado 7.5 0.73 1.68 0.6 Wisconsin 7.4 1.93 0.66 2.28 3.75 0.15 0.86 2.81 0.85 0.98 0.72 4 California 7.3 0.89 1.97 0.53 0.51 1.21 0.82 0.57 2.08 0.66 1.38 4 New York 7.0 0.53 0.52 0.29 0.67 0.27 0.87 0.67 0.9 Minnesota 6.7 1.43 0.57 1.41 1.29 0.9 New Jersey 6.7 0.68 0.28 0.26 1.04 1.05 2.62 0.47 0.83 0.13 1.33 4 Pennsylvania 6.6 1.06 0.8 Missouri 6.6 1.37 1.42 0.98 0.95 0.54 1.07 1.26 0.29 1.33 0.72 5 S. Carolina 6.3 0.87 0.44 1.47 2.25 0.2 Arkansas 6.1 3.85 0.74 2.86 2.89 1.01 0.66 1.38 0.38 1.15 0.92 6 Illinois 6.1 1.17 0.84 0.4 Mississippi 6.0 2.1 Virginia 6.0 0.78 1.64 1.35 0.91 0.27 0.75 0.61 0.49 0.84 0.39 2 Alabama 5.9 1.68 0.96 2.85 2.25 1.13 0.84 0.78 0.85 2.36 0.62 5 1.23 1.33 7.14 1.97 0.97 0.13 1.01 0.19 5 2.17 1.95 4 0.59 2.17 0.86 0.24 1.04 2.97 1.01 0.96 0.42 5 4 0.25 0.46 0.44 0.52 1.19 0.34 1.16 3 0.62 1.4 1.29 1.36 1.29 1.24 1.1 0.3 0.85 0 2.07 0.4 2.58 6 0.71 0.62 1.2 1.83 1.43 0.39 1.42 0.9 7 5 1.21 1.05 1.27 1.76 0.74 0.57 0.86 5 3.64 1.37 2.64 1.05 1.3 0.29 2.07 0.31 7 56 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Tennessee 5.2 1.08 1.25 1.54 1.91 0.45 1.59 1.29 0.3 1.6 1.13 8 Kentucky 5.0 1.26 2.2 N. Carolina 4.9 1.23 2.38 1.61 1.41 0.33 1.65 0.93 1.08 0.7 Indiana 4.8 104 0.83 1.56 1.14 1.36 1.67 1.73 0.75 3.28 2.96 8 Oregon 4.8 1.25 1.31 4.63 1.07 0.27 0.36 0.79 2.46 0.74 0.98 5 Ohio 4.6 0.92 0.87 0.79 1.32 0.99 1.37 1.73 0.45 1.92 0.85 4 Georgia 4.6 1.54 0.59 1.48 1.6 Florida 4.5 0.35 0.95 0.48 0.39 0.44 0.42 0.38 0.66 0.45 1.15 1 Michigan 3.5 0.76 0.76 0.68 0.97 0.41 1.07 1.87 0.55 3.51 1.11 4 1.96 1.72 0.85 1.22 1.35 0.44 2.35 0.48 7 0.85 6 0.29 0.82 0.66 0.34 0.86 0.72 3 57 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Appendix B: Policy Type Cheat Sheet 58 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r Appendix C: Tips for Searching Tips for Full-Text Searching (Courtesy, North Carolina General Assembly Web Site Knowledge Base)  Multiple consecutive words within quotes are treated as a phrase; they must appear in the same order within a matching document.   Queries are case-insensitive, so you can type your query in uppercase or lowercase. You can search for any word except for those in the exception list (for English, this includes a, an, and, as, and other common words), which are ignored during a search.  Words in the exception list are treated as placeholders in phrase and proximity queries. For example, if you searched for “Word for Windows”, the results could give you “Word for Windows” and “Word and Windows”, because for is a noise word and appears in the exception list.  Punctuation marks such as the period (.), colon (:), semicolon (;), and comma (,) are ignored during a search.  To use specially treated characters such as &, |, ^, #, @, $, (, ), in a query, enclose your query in quotation marks (“).  To search for a word or phrase containing quotation marks, enclose the entire phrase in quotation marks and then double the quotation marks around the word or words you want to surround with quotes. For example, “World-Wide Web or ““Web””” searches for World-Wide Web or “Web”. You can use Boolean Operators (AND, OR, and NOT) and the Proximity Operator (NEAR) to specify additional search information 59 | E a s o n , H o r s l e y , P a t l i s , R a t t r a y , & S h e r e r