Preserve and expand Washington’s traditional manufacturing jobs | Don Brunell

As the budget battles continue in Olympia, state lawmakers are rightly focusing on the need to retain and expand good-paying aerospace and high-tech manufacturing jobs.

As the budget battles continue in Olympia, state lawmakers are rightly focusing on the need to retain and expand good-paying aerospace and high-tech manufacturing jobs.

At the same time, we shouldn’t overlook — or take for granted — the considerable economic contributions of Washington’s traditional industries.

For example, forestry was the first economic powerhouse in our state, dating back to 1849.

The Washington Forest Protection Association reports that today more than 50,000 people are employed in forest products, including pulp and paper production. When you add in contractors and suppliers, as well as the economic impact of employee spending, Washington’s prolific forests support 118,548 jobs, paying almost $5.3 billion a year.

In addition, the forest products sector pays almost $176 million a year in taxes and fees to state and local governments. They could be contributing more, as they did in the past, if our state and federal policies would be more balanced and encouraged management rather than allowing trees to die and become wildfire fuel.

Oil refineries are another economic mainstay.

According to a study by the Washington Research Council (WRC), our state’s five major petroleum refiners provided 1,986 full-time jobs in 2011 at an average annual wage of $120,276. In addition, the refiners employed 2,919 high-wage contract workers who do maintenance and repairs.

While the average business has a “job multiplier” effect (outside jobs supported) of two or three, the multiplier for our state’s refineries is 13.23, meaning that each direct refining job generates an additional 12.23 jobs in the state.

In total, these five refineries support more than 26,000 jobs, providing almost $1.7 billion in personal income for Washington state in 2011.

But how does this important industry fare when it comes to taxes and fees?  Surprisingly, refiners in high-tax California fare better than their Washington counterparts. In fact, the WRC found that the tax burden in Washington is more than four times the burden in California.

Yes, California has a corporate income tax and we don’t. But while California taxes corporate profits, our business and occupation (B&O) tax is levied on gross income, regardless of whether you make a profit.

Advantage:  California.

Still, some would like to target Washington’s refiners for even higher taxes and fees. But rather than jeopardize these high-paying jobs, why not work to expand them?

The solution is on our doorstep.

North Dakota’s Bakken Formation and Three Forks Formation hold up to 11 billion barrels of recoverable oil. The U.S. Energy Information Administration estimates that by this time next year, North Dakota will be producing more than a million barrels of oil each day. But there’s not enough refinery capacity in the region to transform that crude oil into higher-value petroleum products.

Some people are taking notice.

The Wall Street Journal reports that the North Dakota oil boom is spurring the first full-fledged refineries to be built in the U.S. since 1976.

 

In March, companies broke ground on a 20,000-barrel-a-day refinery west of Bismarck, N.D. that can produce a variety of products from diesel fuel to kerosene. At least three other refineries of similar size are moving off the drawing boards.

Even so, these new refineries will be able to process only a fraction of the new oil. With the Keystone Pipeline still in limbo, who will reap the benefits of this new find?

In 2011, Washington refineries processed 536,000 barrels of oil per day. The potential exists that, with the proper investments — and our state’s stringent environmental protections — we could double that capacity within a few years.

The question for us is, are we going to starve our traditional industries to the point where we eliminate thousands of high-paying jobs or will we take advantage of an unprecedented opportunity on our very doorstep?

 

About the Author

Don Brunell is the president of the Association of Washington Business. Formed in 1904, the Association of Washington Business is Washington’s oldest and largest statewide business association, and includes more than 8,000 members representing 700,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.

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