N.J. agency fights back, helps plants boost productivity
Eatontown — An all-expenses-paid move and a five-year tax exemption. That’s the latest deal Eli Liebermann says he was offered to relocate his manufacturing plant to New Mexico. A tempting offer, to be sure, but Liebermann, president of Innovative Power Solutions, which makes generators and transformers for the aerospace industry, turned it down, just like he’s turned down a list of other states that have aggressively courted his company in recent years.
What’s keeping him here? Emotional ties to New Jersey, not economic factors. He likes the Jersey Shore, the state’s diversity and its proximity to New York City.
“I still think New Jersey is the best state in the union,” said Liebermann, 62, of Ocean Township, who moved to the state from his native Israel in the 1980s to work at AlliedSignal, now one of his chief competitors.
The problem for him and his 40-employee company is that New Jersey is also one of the costliest states in the United States to run a business, due to its high property, income, corporate and sales taxes, high labor costs and challenging regulatory climate.
Those high costs have driven manufacturers out of the state in droves. In the past decade alone, New Jersey has lost almost 150,000 manufacturing jobs, a 35 percent drop.
Many of these jobs have migrated to other states and foreign countries where the taxes and labor costs are low, and the incentives hard to resist.
“If you’re thinking of expanding or relocating, it’s almost a no-brainer,” said Christopher Reese, a field agent for the New Jersey Manufacturing Extension Program. The nonprofit organization, modeled after the agricultural extension programs that help farmers, works with manufacturers such as Innovative Power that want to remain in the state, typically because of family ties or work-force considerations.
The program focuses on finding ways to cut costs and boost productivity, using efficiency principles pioneered by Toyota, the Japanese automaker.
With Reese’s help, Innovative Power is in the process of revamping a portion of its production line, using a $50,000 grant from the state Department of Labor and Workforce Development to defer 50 percent of the cost.
So far, the results are dramatic. Bill Schatzow, the plant’s operation manager, says that a transformer that used to take up to two months to produce can now be made in about a week, without the costly errors that used to hold up
“It works,” said employee Anthony Langley, 45, of Neptune. For him, the change has meant moving from a traditional, linear assembly line to a new U-shaped workspace he shares with two other assemblers doing related work on the same transformer. Each now has all the tools and materials he needs within arm’s reach, systematically arranged and color-coded.
“At most, that’s 10 percent of what’s needed for us to be a lean manufacturing facility,” Liebermann said. He’d like to do more, to prepare for an anticipated rush of orders in 2012, but he can’t afford it now with the entire aerospace industry still reeling from the global economic downturn.
The manufacturing extension program is limited, too, in how much help it can provide. Two years ago, due to the budget crisis, the state stopped funding the organization — a $1.2 million annual hit that represented a third of its operating budget.
Chris Reese, a field agent for the New Jersey Manufacturing Extension Program, explains how it helps companies like Innovative Power Solutions with efficiency-improving programs that enable them to remain in the state.