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It's Time for Massachusetts to Buy Local

Posted by Bob Rio on Apr 20, 2016, 7:30:00 AM

It seems everyone these days wants to buy from local sources.

Farmers_Market.jpg“Buy local” has become a familiar battle cry in restaurants, retail stores and roadside stands among consumers who prefer to know where their favorite products are made. These consumers want to be confident that the items they buy are made sustainably and that their purchases support local jobs.

But why does the concern for locally made products in Massachusetts seem to stop at the farmers market? Why have scores of Bay State companies, some household names, and the thousands of local jobs they provided, disappeared with virtually no notice or outcry from state officials? And why has our commonwealth not resolved the problems that drove these companies away?   

Do you own a Polartec jacket for hiking (or to make it look like you hike)? The company, formerly known as Malden Mills, was started in 1906 and was miraculously able to recover after a devastating fire in 1995 nearly bankrupted the business. Polartec recently announced the closing of its Lawrence manufacturing facility, putting 350 unionized employees out of work and moving production to New Hampshire and Tennessee.

Use salad dressing on that locally sourced lettuce? Cain’s products, started in Boston 1914, is closing its Ayer plant, putting another 100 people out of work. The company is moving production to Pennsylvania, Georgia and Kentucky.

The list goes on. General Mills in Methuen, makers of Yoplait yogurt since 1993 closed, sending 144 jobs to other states. Kraft foods, located in Woburn for some 95 years, is putting another 200 people out of work. Sunny Delight is cutting 50 jobs in Littleton. Notini and Sons in Lowell, 100 jobs lost after 125 years. Courier Corp, a printer founded in 1824 and recently sold to an out-of-state firm, is shutting down its Westford plant putting 200 people out of work.

And those 1,144 jobs lost are just the ones that have been publicly announced in 2015 and 2016.

The reason for these closings are varied and complex. Some companies were sold to out-of-staters, while others cited high costs in Massachusetts for labor, housing, health insurance or energy. Some just used the euphemism “competitive realignments,” which probably includes a little bit of everything.

But all of the announcements have one thing in common – these companies and brands are not coming back and their employees and suppliers who depend on them are looking for jobs.

Massachusetts takes a back seat to no one in its ability to brag about the reason companies locate here – our universities, our educated work force, our innovation industries. General Electric’s announcement in January that it will move its corporate headquarters to Boston unleashed a euphoric wave of valedictories about the innovation ecosystem that GE hopes will help it to create the industrial Internet.

But the state seems strangely unconcerned with the reasons that companies leave. It’s disheartening, especially for the hard-working people who lose their jobs and their livelihoods. How can we make the Massachusetts economy successful for everyone if we don’t know why companies come or go?

The 4,500 member employers of Associated Industries of Massachusetts believe that the acceleration in business closings has much to do with the persistently high cost of health care and energy in Massachusetts.

Health-care costs in Massachusetts remain 36 percent more than the national average. Between 2005 and 2014, increases in health insurance premiums have outpaced income gains, consuming more than 40 percent of family income growth over the past nine years.

The relentless acceleration of health-care spending and health-insurance premiums threatens both the continued growth of the Massachusetts economy and the ability of citizens to access the commonwealth’s world-renowned medical system. It also threatens the commonwealth itself - MassHealth, the government insurance program for low-income residents, now accounts for 40 percent of the state budget at $14.7 billion annually.

Energy costs are likewise among the highest in the country – nearly double most places these companies are moving production to.

To those that care about the price of electricity – and that includes many companies outside the Boston area – our high prices are a never-ending drag on local profits. At a 5 percent profit margin – probably about right for food businesses – every dollar increase in electricity, health care, taxes or other costs that don’t contribute to increased production means another $20 in revenue is required just to break even. At some point, even the strongest fighter gives up.

The future promises little change. Despite an outcry from the business community about high electric rates, the legislature recently passed – and the governor was happy to sign - a new solar bill that will continue our highest-in- the nation subsidies. The justification - to protect solar jobs.  

While it is comforting to know that the Legislature is willing to tax some industries to support favored ones, it is also time to realize that Massachusetts is made up of several economies. The economies in the eastern part of the state have different issues than those in the central, western and southeastern areas, particularly around the bottom-line cost areas such as electricity and health care.  

Sure, companies will always realign their businesses. In some cases that may spell job losses for Massachusetts, in other cases, like GE’s, it may signal gains. But the state should not be complicit in a company’s demise by failing to respond to economic issues.

You’ll still be able to buy Polartec jackets, eat Yoplait yogurt and slather your sandwich with Cain’s mayo at the time next year. But the good jobs at good companies providing good wages we’ve depended on for decades won’t be locally sourced any more.

Topics: Health Care Costs, Economic Development, Energy

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