The state’s leading manufacturers’ group said Illinois could miss out on the benefits of a growing manufacturing sector despite a tentative U.S-Mexico trade deal.
Even before President Donald Trump's administration announced a tentative deal with Mexico, the U.S. manufacturing sector was growing. Some have attributed the growth to federal tax cuts enacted this year and Trump’s deregulation efforts allowing for easier expansion and more operational investments, among other economic factors.
The Institute for Supply Management last week reported growth for the U.S. manufacturing sector for August.
Illinois Manufacturers’ Association’s Mark Denzler said the trade deal with Mexico will benefit manufacturers across the country, even in Illinois.
“Trade is imperative for the manufacturing sector,” Denzler said. “Mexico is our second-largest trade partner. Illinois exports about $10 billion worth of goods there, which is about 15 percent of total Illinois exports. The electronics components, automotive, are two particular sectors that rely heavily on Mexico.”
While trade details haven’t been fully released, Denzler said the important thing is for Illinois products made by 570,000 employees in the state to be fairly traded with Mexico.
The nation’s economy will surely benefit from the trade deals, Denzler said, but in Illinois, state-level business regulations may repel investment.
“This is a time when manufacturing is hot,” Denzler said. “Manufacturers are coming back to the United States, they’re growing and expanding. A large part of that is cheap natural gas because of hydraulic fracking. You’ve seen the huge flux of chemical plants, but Illinois is just not poised to take advantage of that because of, often times, rules and taxes.”
In Illinois, companies face the same federal and global challenges, Denzler said, but they also face obstacles from the state.
“The differences are state regulations and policies,” Denzler said. “We see in Wisconsin or Indiana or Michigan and why they have substantial manufacturing growth compared to the anemic growth that we’ve seen in Illinois [and that] largely can be attributed to state policies pushed by largely Democrat lawmakers.”
The Democratic majority at the Illinois statehouse has been resistant to addressing things like the cost of workers’ compensation,saying they don’t want to diminish benefits for injured workers.
Denzler has for years highlighted Illinois’ costs for workers' compensation being the highest in the Midwest, and among the highest in the country.
Even with Illinois’ benefits like it’s infrastructure and workforce, Denzler said he worries that employers might go elsewhere because of the increased regulations and costs.
The U.S. trade deal with Mexico must still be finalized and Trump said he’s working on a deal with Canada.