Recruiters say state stacks up against competition

Late last year, Winchester, Va.-based Trex Co. opted to go with Olive Branch, Miss., instead of Cape Girardeau as the site for a new $160 million synthetic deck manufacturing plant, which would have been a huge economic boost for the city.

The reasons Trex gave for taking its jobs elsewhere were simple -- logistics, transportation availability and cost differentials.

Then the William F. Braun Milk Hauling trucking business recently announced it was moving its headquarters to Perryville, Mo., after decades of doing business in Illinois, because the company's owners said the climate for business was better in Missouri.

So one business chooses to come to the Show Me State and another doesn't. What does that say about Missouri and its efforts to recruit new businesses to the Show Me State and undo the loss in the recent years of tens of thousands of jobs?

"Well, we're doing what we can," said Mitch Robinson, director of the Cape Girardeau Area Industrial Recruitment Association. "Every situation is different and every business is looking at different factors."

But overall, Robinson and other business recruiters in Missouri said the state stacks up well against its competitors, though all said there is room for improvement.

"I think we do very well," Robinson said. "But there are several things that can be done to make the climate more positive."

Robinson said that Southeast Missouri typically competes with Tennessee, Arkansas and Kentucky and sometimes Mississippi. He said that he doesn't remember ever going head to head with Illinois.

Robinson pointed to positive statistics, including:

Missouri has one of the lowest tax burdens in the nation, with the 48th-lowest tax burden per worker, according to the U.S. Census Bureau.

Missouri's state and sales taxes, as a percentage of national income, rank 38th in the nation.

Missouri's state sales/use tax rate is 4.225 percent, which is less than a business would pay in 28 other states.

Missouri has the 35th-lowest unemployment insurance tax burden per worker in the nation.

Despite its reputation, Missouri has the 26th-lowest workers' compensation tax burden per worker in the country.

The right to work

However, Robinson can think of one major disadvantage that Missouri has.

"I'm going to lay it all out there: One of our biggest problems is right to work," Robinson said. "Missouri is not a right-to-work state. That is an issue that is very hard to put a dollar amount on. It's a concern for companies."

A right-to-work law is a state law that prevents labor-management agreements requiring a person to join a union as a condition of employment. Kentucky is not a right-to-work state, but Tennessee, Arkansas and Mississippi are.

That gives those states an advantage, Robinson said.

"Lots of times, we're not even considered for projects by many companies for that," he said. "They strictly want to be in a right-to-work state. That's something that does impact us."

Larry Tucker, the director of the Perry County Industrial Development Authority, agreed that Missouri competes with other states well. For example, the Braun trucking company decided to move its headquarters to Perryville from Illinois because the company said it was cheaper to do business in Missouri.

The company has estimated that it will save up to $44,000 a year in workers' compensation costs and up to $25,000 a year because Missouri has a sales-tax exemption on rolling stock such as trucks.

However, Tucker said that the announcement may mean there's a better business climate in Missouri, but that the relocation is purely for tax purposes and comes with no benefit to or jobs for Perry County.

"Our information is that they will only be setting up a shell corporation for tax purposes," Tucker said.

Other competing states are also actively marketing themselves, and all offer various advantages. Tennessee, for example, touts that it has no sales tax on raw material and no state property tax. It also offers a reduced sales tax on energy fuel and water for some manufacturers and an investment tax credit of 1 percent.

Kentucky's economic recruiters point out that Kentucky's work force is more than 5 percent more productive than the national average and Kentucky ranks 13th among the 50 states in gross state product per wage. Statisticians computing electric power costs in the industrial sector place Kentucky lowest in the nation, and nationally it is considered the fourth most favorable state for doing business.

Arkansas's economic development Web site promotes the state's available buildings and sites, as well as incentives, financing, customized training and export assistance.

Conservative incentives

Buz Sutherland is the director of the Small Business Development Center at Southeast Missouri State University. He said that another drawback that Missouri has is that it is more conservative when it comes to offering businesses incentives to come here, such as tax credits, grants, abatements and other enticements to start or relocate a business here.

"The competition is so much more fierce now," Sutherland said. "The packages they put together, it's gotten outrageous. You've got to wonder in some cases if the true economic advantage of having a particular plant coming will ever offset tax incentives and other things a state will do for them. The states may be losing money in some cases. Missouri is much less likely to give away the store."

But when looking at tax structures, infrastructure, transportation network and labor force -- all key factors for business -- Sutherland said that Missouri "stacks up reasonably well."

Jim Grebing, a spokesman for the Missouri Department of Economic Development in Jefferson City, pointed to State Farm's recent announcement that its restructuring wouldn't mean the Columbia, Mo., office would close as feared. That decision came in spite of Louisiana's $33 million package of tax breaks and other incentives to keep its office open.

"Sometimes it's all about a good quality of life," Grebing said. "We're not going to be the right fit for everybody, but Missouri certainly has a lot to offer."

smoyers@semissourian.com