Report - 2024 Washington State Manufacturing Council Report To The Legislature 2024

Summary

A report of the Washington State Manufacturing Council to the Washington State Legislature, transmitted by the Washington State Department of Commerce with a cover letter dated December 16, 2024 under Chapter 64, Laws of 2021, Section 3(1). The letter, signed by the department's Workforce Innovation Sector Lead, is addressed to Secretary of the Senate Sarah Bannister and Chief Clerk of the House Bernard Dean. Drawing on Employment Security Department data, the report states that manufacturing businesses grew 15.6% over the past decade while sector employment declined 4.4%. It describes the Council's deliberations on Research & Development tax credits and streamlined site permitting, and states that members could not reach consensus on integrating labor standards into either proposal. The report lists the Council's business, labor and workforce development members.

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                                      STATE OF WASHINGTON
                            DEPARTMENT OF COMMERCE
          1011 Plum Street SE  PO Box 42525  Olympia, Washington 98504-2525  360-725-4000
                                        www.commerce.wa.gov



December 16, 2024



The Honorable Sarah Bannister, Secretary of the Senate
312 Legislative Bldg.
PO Box 40482
Olympia, WA 98504-0482

The Honorable Bernard Dean, Chief Clerk of the House of Representatives
338B Legislative Bldg.
PO Box 40600
Olympia, WA 98504-0600

Re: Chapter 64, Laws of 2021, Section 3(1), Washington manufacturing workforce report

Dear Secretary Bannister and Chief Clerk Dean,

On behalf of the Washington State Manufacturing Council (WSMC), the Department of
Commerce is submitting the enclosed report, summarizing the states manufacturing sector while
outlining key policy discussions aimed to foster growth and sustainability in this vital industry.
This report reflects the Council’s commitment to driving innovation and competitiveness, while
addressing challenges within the sector.

The report draws on data from the Washington State Employment Security Department, and
builds upon insight from the 2022 Washington State Manufacturing Council Report. Both the
progress and ongoing challenges within the sector are highlighted – including a 15.6% increase
in manufacturing businesses over the past decade contrasted with a 4.4% decline in employment
during the same period.

These findings underscore the urgency for addressing barriers to workforce development and
industry expansion.

During this reporting period, the Council engaged extensive deliberation on two key policy
areas: Research & Development (R&D) tax credits and streamlined site permitting processes.
While significant progress was made in framing these policies, the Council was unable to reach a
consensus on the integration of labor standards within these proposals. The Council continues to
work collaboratively to resolve these differences, and to ensure proposed policies align with the
shared goals of economic growth and equitable workforce development.
The Council’s work reflects the collaborative efforts of leaders, from business and labor, unified
in their commitment to strengthening Washington’s manufacturing sector. By maintaining open
dialogue, we aim to develop policies that foster innovation and competitiveness while ensuring
shared prosperity for businesses, workers, and communities across the state.

Should you have any questions or require further clarification, please contact me directly. The
Council looks forward to a continued partnership with the legislature as, together, we advance
Washington’s manufacturing future.

Sincerely,




Kairie Pierce
Workforce Innovation Sector Lead
Washington State Department of Commerce

Enclosure (1)
                    Washington State Manufacturing Council Report
                         To the Washington State Legislature


Introduction
The Washington State Manufacturing Council (WSMC) presents this report to summarize
the current landscape of the state’s manufacturing sector and offer recommendations on
critical policy areas to drive industry growth and sustainability. This report draws from
data published by the Washington State Employment Security Department (ESD) and the
findings of the 2022 Washington State Manufacturing Council Report.

Manufacturing Council Members
Alison Budverson, Out of the Box Manufacturing, Business Co-Chair
Todd Mitchell, Heat and Frost Insulators Local 7, Labor Co-Chair

Business Members: Phil Stephenson, PACCAR; Susan Champlain, BOEING; Chris Preti,
Jubilant Hollister Stier; Russ Vaagen, Vaagen Timbers; Amilia Clark, Goodwin Composites;
Adam Day, First Mode

Labor Members: Shana Peschek, Machinists Institute; Ted Cummings, United Steelworkers
Local 338; Jon Holden, IAM751; Gaylan Prescott, United Steel Workers, District 12; Brenda
Wiest, Teamsters Local 117; Scott Tift, AWPPW; John Traynor, Washington State Labor
Council, AFL-CIO

Workforce Development Members: Dave Mastin, AWB; Kelly Sowers, Impact WA; Becky
Wallace, Office of Superintendent of Public Instruction; Kimbery Hetrick, Career Connect
WA; Marie Bruin, WA State Board for Community & Technical Colleges

Key Findings
The 2022 report highlighted significant trends and challenges in Washington’s
manufacturing industry. While the number of manufacturing businesses has grown by
15.6% over the last decade and 4.5% in the past five years, employment in the sector has
declined by 4.4% and 4.6%, respectively, over the same periods. These mixed results
indicate that while businesses are expanding, the sector faces difficulties in maintaining
employment levels. Growth in specific industries such as food and beverage manufacturing
contrasts with the notable decline in sectors such as textile product mills. 1


1 Data on manufacturing growth and employment trends are sourced from the Washington State Employment

Security Department, Quarterly Census of Employment and Wages (QCEW), 2023.


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Policy Recommendations
During the course of deliberations, the Manufacturing Council engaged in extensive
discussions regarding two critical policy areas to address these challenges: Research &
Development (R&D) tax credits and streamlined site permitting processes. These policies
were identified as key strategies to drive innovation, improve competitiveness, and reduce
barriers to growth. However, the Council was unable to reach consensus on specific
language for these policies, particularly regarding labor standards and their integration
with the proposed measures.

Research & Development (R&D) Tax Policies
While broad agreement on the need to incentivize research and innovation through
targeted tax credits was achieved, the Council could not reach consensus on provisions to
ensure adherence to agreed-upon labor standards. Points of discussion included:

   •   Eligibility and Credits:
               o Proposed tiered system for tax credits based on business size.
               o Divergent views on the role of labor standards in determining eligibility
                   for credits.
   •   Incentivizing Innovation and Accountability:
               o Agreement on requiring annual tax performance reports.
               o Disagreement on how to measure and enforce compliance with labor
                   standards.
   •   Long-Term Vision and Performance Review:
               o General support for periodic performance reviews.
               o Differing perspectives on incorporating labor outcomes into evaluation
                   metrics.

Streamlined Site Permitting
The Council also deliberated on streamlining permitting processes to reduce regulatory
delays and costs. While the proposed framework aimed to increase efficiency, consensus
could not be reached on how to align these processes with robust labor standards. Key
areas of discussion included:

   •   Opt-in Process:
          o Agreement on providing manufacturers the option to opt into an expedited
              permitting process.
          o Unresolved concerns regarding local workforce impacts and wage
              protections.
   •   Clear Criteria and Faster Approvals:
          o General agreement on establishing clear project criteria.
          o Disagreement on enforcement mechanisms to ensure labor compliance.


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   •   Expedited Appeals and Local Preemption:
          o Support for reducing redundant regulations.
          o Divergence on the balance between efficiency and safeguarding labor
             interests.
   •   Enforcement and Accountability:
          o Shared commitment to statutory deadlines.
          o Differing views on the role of fines and their allocation to labor-related
             programs.

Conclusion
The Washington State Manufacturing Council remains committed to fostering growth and
sustainability in the state’s manufacturing sector. While significant progress has been made
in identifying key policy areas, the Council continues to work together to resolve
differences, particularly regarding labor standards and their integration into proposed
policies.

The Council believes collaboration between business and labor is essential to ensuring
policies that drive innovation and competitiveness, while also upholding equity and shared
prosperity. By maintaining open dialogue and seeking common ground, the Council aims to
build a strong foundation for Washington’s manufacturing future.

The Council welcomes further input and looks forward to continuing efforts with the
legislature and additional stakeholders to advance critical initiatives.




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