Could second Trump Administration make Mississippi manufacturing great again?

• “If the President really starts banging on that drum, maybe they’ll speed up the process,” said MMA CEO John McKay.

Mississippi’s manufacturing sector is optimistic about the opportunity for growth under the second Trump Administration but recognizes that the specter of increased tariffs could pose a challenge within certain industries.

Mississippi Manufacturers Association CEO John McKay believes the Magnolia State will benefit greatly from President Donald Trump’s ambitious manufacturing resurgence plan. 

“Overall, I believe we can be very successful under a new Administration that values manufacturing,” said McKay. “It’s very exciting!”

In the first two minutes of his inauguration address last Monday, Trump emphasized, “America will be a manufacturing nation once again, and we have something that no other manufacturing nation will ever have: the largest amount of oil and gas of any country on Earth. And we’re going to use it.”

In his virtual address at the World Economic Forum (WEF) on Thursday, President Trump asked all top companies across the world to choose the U.S. as their manufacturing base.

“My message to every business in the world is very simple: come make your product in America, and we’ll give you among the lowest taxes of any nation on Earth,” he said. 

But will this grand plan, lacking specifics, work?  

For example, corporate taxes have dropped 35 percent in 2017 to 21 percent. President Trump wants that rate cut to 15 percent. 

“Obviously, any action taken to lower the tax burden for corporate payers is a net positive … to incentivize companies to reinvest their capital made from profits back into their operations to hire more people, buy more machinery, and generally get more productive,” said McKay. 

But dropping the corporate tax rate from 21 percent to 15 percent will not be accomplished by executive order alone. Congressional action will be necessary. 

“If the President really starts banging on that drum, maybe they’ll speed up the process,” said McKay. 

MMA works closely with the National Association of Manufacturers (NAM) about “a host of tax changes we’d like to see,” McKay pointed out. 

“Some of those tax changes were part of the 2017 package, but as part of that deal, some of those tax breaks have sunsetted,” he said. 

For example, an important R&D (research and development) incentive tax credit has slowly started to expire. Accelerated depreciation of equipment (in year one versus 10 years) is slowly ebbing. 

“Those tax-related issues that were very helpful in the original tax plan are ones I can see us working on with neighboring states and the national association as priority items, along with potentially lowering the corporate rate,” said McKay.

President Trump’s vow to see the Federal Reserve lower interest rates would create opportunities for manufacturers looking at long-term investments, said McKay.

“Similar to the corporate tax rate, Trump doesn’t have the broad authority to just lower interest rates,” McKay said cautiously. “Over the last 12 to 18 months, the Federal Reserve has signaled rate cuts, but inflation hasn’t slowed as much as they’d like.” 

Trump said he plans to nix the “Green New Deal” and revoke the electric vehicle (EV) mandate, thus “saving our auto industry.”  

“We’ll build automobiles in America again at a rate that nobody could’ve dreamt possible just a few years ago,” President Trump said. 

McKay declined to answer whether the moves will come soon enough to mitigate an economic slowdown at Nissan’s manufacturing plant in Canton, or the impact of the proposed Nissan and Honda super-merger to better compete with Toyota and Volkswagen. 

How the President’s new plan will impact the volatile furniture industry remains to be seen, given that foreign manufacturers may soon face hefty tariffs to supply components to American furniture makers. 

“When COVID hit, there were logistic nightmares with supply chain interruption,” said McKay, noting the pandemic drove some component manufacturing, including cut-and-sew jobs, back to American plants. 

“If we have a blanket tariff from, say, China or a group of Asian countries, and I’m a furniture manufacturer with 70 percent of my components coming from China, I’ve got to make some decisions,” he said. “Do I make my products more expensive? Do I find a domestic supplier to fulfill those needs at a decent cost? That’s where the tariff discussion gets very complicated.”

How would Mississippi fare among other states competing for new and/or expanding manufacturing business?

“Mississippi has unique and valuable competitive advantages,” said McKay, pointing to a robust inventory of site-ready spaces, a competitive cost of living, and the state’s corporate tax structure. 

“Having site-ready spaces is a huge value because companies are looking for speed to market,” he said. “We can compress that time frame quicker than other places. We have a great regulatory environment. We don’t have layers of bureaucracy. We have a good workforce. Mississippi is the place manufacturers need to be.”