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Delaware Most Attractive for Manufacturing, Survey Says With BC-Manufacturing Climate-List

June 14, 1989

CHICAGO (AP) _ A private annual survey rating state manufacturing climates got a cool reception Wednesday from some critics, who say it inaccurately forecasts which locales could attract and maintain big business.

State officials in California, for example, which got a No. 22 ranking among the nation’s 29 top manufacturing states, were unimpressed with the 10th annual survey by the international accounting firm Grant Thornton.

″You can’t compare a major global economic power (California) with Nebraska, North Dakota or even Wilmington, Delaware,″ said Tony Quinn, director of research for California’s Department of Commerce.

In the Thornton survey, released Wednesday, Delaware replaced New Hampshire as No. 1 in manufacturing climate among manufacturing-intensive states. New Hampshire fell to No. 3 behind Virginia.

Peter Praetz, manager of the survey, said Delaware topped the list because of its skilled work force, wage levels and government policies toward manufacturing.

Among the 21 lower manufacturing-output states, North Dakota was first in manufacturing climate due to its low labor costs and good quality of life, followed in order by South Dakota and Nebraska.

The rankings were based on 21 factors in five categories: state and local fiscal policies; unemployment benefits and workers’ compensation levels; labor costs; energy costs and work hours lost because of strikes; and quality of life.

But Praetz acknowledged that states such as New Hampshire, Vermont and Mississippi - which all usually rank high in the survey and all are in this year’s top 10 among high-manufacturing states - have not become manufacturing giants.

And some states ranked low on the list, including No. 21 Illinois and California, have had significant growth in manufacturing in the past year, he said.

The survey designated 29 states as ″manufacturing intensive″ because they have exceeded the national average in manufacturing shipments or workers over the last four years, according to Thornton’s 205-page report. The remaining 21 states have lighter concentrations of manufacturing under the same criteria, the report said.

The survey found New Hampshire had the best government fiscal policies, and Mississippi had the nation’s lowest wages.

Hawaii and Alaska were included for the first time in the survey, which carries a $50 pricetag. The states, both in the ″low manufacturing intensity″ category, were 13th and 19th respectively.

The report was criticized by Ford Harding of Chicago-based PH&H Fantus Inc., a consulting firm that finds new locations for offices, research laboratories and distribution centers.

″The study has little if any value,″ Harding said in a telephone interview from New York. ″Some of the specific statistics used in the study do have merit.″

Harding said companies that are trying to relocate have varying concerns. A company with a lot of capital may be worried about real estate costs, while a business with a lot of employees may be interested in labor expenses.

″Each company will have a somewhat different mix,″ he said. ″Trying to use something generic defeats what is important to the company.″

Quinn said many important elements of the manufacturing climate in California were overlooked in the Thornton survey - the fact that the state graduates 200,000 students a year, has more scientists and engineers than any other state and is home to a third of the nation’s high-tech manufacturing.

But Praetz said the study simply was designed to compare states.

″One of the main feedbacks we get is it keeps the concerns of manufacturers available to people,″ he said. ″The study is also used by state development agencies and manufacturers to look at conditions in their states and compare them to other states.″

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