Gov. Mitch Daniels delivers a State of the State address that doesn’t mention “manufacturing?” That makes no reference of “industry?”

How can that be? Daniels is governor of the most manufacturing-intensive state in the nation, a governor who made efficient and responsive government, fiscal responsibility and economic growth the hallmarks of his Administration. The Republican handily won re-election in 2008 because of the successes in implementing that vision, including major new manufacturing investments in the state.

Those successes — and the relative short length of the speech — probably explain the omission of the word “manufacturing.” Hoosiers know his goals and know his record. Rather than rehash or tweak, now is the time to redouble the efforts in areas that still needs work: local government and education. The educational portion of Daniels’ speech should be of intense interest to manufacturers and could easily apply to any state. From the text:

Let’s start by affirming once again that our call for major change in our system of education, like that of President Obama, his education secretary and so many others, is rooted in a love for our schools, those who run them and those who teach in them. But it is rooted most deeply in a love for the children whose very lives and futures depend on the quality of the learning they either do or do not acquire while in our schools. Nothing matters more than that. Nothing compares to that. (continue reading…)

In our continuing coverage of State of the State addresses today, we noted these comments from governors of two very different states, New Jersey and Mississippi.

New Jersey Gov. Chris Christie: “If we cannot shed regulations, reduce spending, and hold the line on taxes, we cannot attract and create the jobs our citizens so desperately need.”

Mississippi Gov. Haley Barbour: “[Our] goal has to be to grow our economy faster than the nation as a whole, and we can do it. We have to focus on our advantages: low taxes, a friendly business climate, rational regulation, abundant natural resources and especially a first rate, affordable work force.”

Now comes Illinois, where lame-duck lawmakers approved Gov. Pat Quinn’s plan to balance the state budget and raised the personal income tax by 67 percent! The state’s business tax will go up by 46 percent! The Huffington Post reports that, according to the The Tax Foundationthe hike would force Illinois businesses to pay the highest combined national-local corporate tax rate in the industrialized world.

From The Chicago Tribune, “Quinn congratulates Democrats on income tax increase“:

A triumphant Gov. Pat Quinn congratulated fellow Democrats early today after the Illinois Senate and House sent him a major income tax increase without a single Republican vote in favor.

Quinn smiled and shook hands on the floor of the Senate around 1:30 a.m. after the Senate voted 30-29 for the bill, which would raise the personal income tax-rate by 67 percent and the business income tax rate by 46 percent.

If it’s a triumph, it’s of the Phyrric sort. Gov. Mitch Daniels of Indiana made two telling observations in interviews as reported in The Herald-Review, “Indiana governor says Illinois tax hike would be good news for his state“:

• “We already had an edge on Illinois in terms of the cost of doing business, and this is going to make it significantly wider.”
• “Folks in Illinois will eventually have to decide: Is this working well enough for us or do we want some-thing different? Point one of our anti-recession strategy here is to avoid doing what they’ve now decided to do.”

Surveying the tax policy debate today, we ascertain that the only thing certain is uncertainty.
Washington Post, “Obama, Democrats fail to agree on plan for expiring tax cuts“:

President Obama and congressional Democrats failed to agree on a strategy Thursday for extending an array of expiring tax breaks, with the party badly divided over whether to temporarily extend the cuts for all taxpayers or stick with their pledge to protect only the middle class

Radio talk show host Hugh Hewitt has been urging Congressional Republicans to demand a permanent extension of tax cuts, and he discussed tax policy with Gov. Mitch Daniels of Indiana, in an interview at the Republican Governors Association meeting in San Diego Thursday.

HH: Right now, this tax hike is looming at us. It’s coming at us like a tidal wave. And Paul Ryan said on Hannity the other night, and we love Paul Ryan, but he said we’ll take a two or three year extension of the existing tax rates. What do you think of that policy? What ought to be the policy of the Republicans going into this negotiation?

MD: Those are two different questions. I mean, first of all, I trust Paul Ryan. He’s one of the best assets the country’s got now. And he and I think alike about a lot of things. I mean, the right policy, of course, would be certainty, permanence, predictability. This is always the case in tax policy. A lot of businesses say they can live with a sub-optimal tax system as long as they know what the rules will be. You know, in Indiana, we passed the biggest tax cut in state history, and we cut property taxes, which are now the lowest in America. But maybe the more important thing that we did was we, and we just made this part of our constitution two weeks ago, we put those caps, there’s a cap now at 1% on the value of your house, 2% on your farm or rental property, 3% your business, permanently. It can be lower than that, but it can never be above it. And a lot of businesses say that it’s the certainty of that that’s as important to them as the fact that the rates are low. And the same would apply, I think, to federal policy.

But look, if Paul Ryan and other folks down there who know that think that let’s get the best deal we can now and fight another day, I’d defer to their tactical judgment.

Sen. Orrin Hatch (R-UT) and Sen. Chuck Grassley (R-IA) held a colloquy on the Senate floor on Thursday. From Sen. Hatch’s release, “Hatch Outlines Cost of Looming Tax Increase on Utah Families, Businesses.”
(continue reading…)

Gov. Mitch Daniels of Indiana announced this week that he will lead another Hoosier trade mission to China and Japan beginning in November. About 40 members will join the delegation, which will travel to Shanghai and Zhejiang, Indiana’s Chinese sister-state, then on to Nagoya and Tokyo in Japan.

From the news release, “Governor to travel to China and Japan“:

“Following our first trip to China last year, we’ve had several successes. The potential for more jobs from China is growing, and we’ll spend additional time there this year,” said the governor. “Of course, our trips are always built around visiting our customers in Japan, and we’ll do the same again this year.”

More than 42,000 Hoosiers are employed by more than 200 Japanese companies in the state. Those companies have investments here of more than $9.8 billion. Since last year’s trip, China-based Y.K. Furniture announced plans to establish a $24 million U.S. headquarters in Marion and lithium-ion battery maker EnerDel announced an agreement with Wanxiang, the largest auto parts producer in China, which EnerDel says will rapidly accelerate its business plan. The governor met with officials from Y.K. Furniture and Wanxiang during his 2009 trip to China. (continue reading…)

Gov. Mitch Daniels of Indiana was at the American Enterprise Institute on Tuesday, June 15, for a day long conference, “Health Care Reform: An Initial Checkup,” where he gave the keynote address. Excerpt from his remarks:

I wish honestly that national health care policy had headed in some direction more like this [Indiana's model of consumerism in health care]. When people sometimes ask me what we ought to do or what my reaction to this whole bill is, I sometimes start by saying that “in a dead end, full speed ahead is the worst option.” That’s what I think we did. My own view is that we could hardly have built a health care system more guaranteed to produce excessive costs. . . . Whatever else you think or say about it, don’t call this reform. It didn’t reform anything. It took the form we had and blew it up to poster size. And I’m afraid by perpetuating the drivers of higher costs, it’s setting us up for more disappointments in the future.

Daniels, a Republican, was also interviewed by AEI’s Nick Schulz, editor of American.com. Video segments of the interview are available here. Since there appears to be a renewed push for some form of government carbon-tax-regulation-control scheme, this exchange is timely:

Schulz: The cap-and-trade legislation and carbon regulation are much in the news again, and there’s activity here in Washington on that front. You’ve described the current legislative push for cap and trade as a way to regulate carbon as a kind of imperialism. Sounds like strong stuff, but I want to give you a chance to explain what did you mean by that exactly? If you’re not in favor of cap and trade, are you in favor of, say, carbon taxes or some other way to deal with carbon regulation?

Daniels: The reference to imperialism was a reference to the differential way that at least some of the initial schemes would have fallen on our state – massive cross-subsidy, raise the costs of utility bills, maybe double them in a state like Indiana, raise the cost of doing business, driving jobs out of our state, probably off shore, while leaving untouched or even subsidized places like, well, California or elsewhere. So it was massively unfair, and I tried to raise dissent on behalf of the workers and the ratepayers of our state.

You know, the whole notion here of carbon dioxide regulation seems to me requires a huge burden of proof be carried before we do this. (continue reading…)

The Fort Wayne News-Sentinel covered NAM President John Engler’s remarks Thursday at the Economic Club of Indiana, “State’s biz success praised.” Excerpt:

In particular, he said [Gov. Mitch] Daniels’ quick response in cutting spending as revenues fell, as well as Daniels’ emphasis on trying to improve vocational training, align well with his view of how government should encourage manufacturing.

“Your governor’s priorities dovetail nicely with manufacturing across the United States,” he said.

He said manufacturing nationally is continuing a slow recovery from the depth of the recession, but he said a vigorous recovery of that crucial sector in the American economy won’t be cemented until consumer demand rebounds, business investment picks up and exports increase.

As he explained, manufacturing is a still a mainstay of American business. The U.S. produces 21 percent of the world’s output of manufactured goods.

“We are still far and away the greatest manufacturing economy in the world,” Engler said.

He disparaged national lawmakers as much as he praised Daniels. Many officeholders in Washington, he said, “love jobs, but have little regard for job providers.”

Glenn Harkness of the Economic Club also tweeted Engler’s speech at www.twitter.com/econclubin, and he did a nice job.

In preparation for NAM President John Engler’s speech next Thursday to the Economic Club of Indiana, we’ve been reading up on things Hoosier and came across this speech by Gov. Mitch Daniels to the same organization in March. The governor has a keen sense — and solid record — of how government restraint and accountability can support economic growth, so it’s a good read.

Daniels recalls his days in the 1990s as a top executive for Eli Lilly before he was named director of the Office of Management and Budget, telling this story:

I brought a little slide show along. I got up one day last week and decided because this is a data-driven and well-informed audience, and also just as a little variety over the long oration, I would try to show you a few things along the way. I hope that it will enliven and not deaden the next half hour before we get to your questions. I promised Alecia this will not make her feel like she is back at work. I hope you’ve improved on this, but there was a whole lot of PowerPoint stuff when we were at Lilly together, as I recall. Alecia and I used to say that when a Lilly scientist passed away and presented credentials to Saint Peter, if challenged for entrance, the first words would be, “First slide please.” So here you go.

Forty-six slides in total! Saint Peter wouldn’t stand a chance.

Gov. Mitch Daniels of Indiana delivered his State of the State address on Tuesday, and we’ll declare him the winner of the Wonkiest SOS of 2010. No other governor dares a line like, “Having as many as 22 different assessors setting property values in a single county was a formula for unfairness, waste and, all too often, corruption.  Moving assessment to a single, accountable county official was a matter of simple common sense.” 

Right on!

Yet of course it was a serious speech given in serious times of economic stress and budget cutting. And, yes, Daniels did mention “industry,” if not “manufacturing” — the terms we’ve been looking for in this month’s reviews of state of state addresses. The context was the state’s recent recruiting of electric vehicle manufacturers.

When the dust settles on this recession, we will have a higher share of America’s auto, RV and steel jobs than we did before.  In a 2009 when national business investment fell by almost one-fourth, the number of new jobs committed to Indiana actually grew over the near-record year of 2008.

2009 was the year when several young companies who may lead the electric vehicle industry chose Indiana for their plants.  Many of their suppliers are following them.  Our goal is to be the capital of this potentially massive industry of tomorrow.

And the best line we’ve seen anywhere in the context of state budget crises: “Solvency, like freedom, requires eternal vigilance.  We could be Michigan in a minute of meekness, Illinois in an instant of irresolution.”

From Think.no: “THINK fortsetter sin globale ekspansjon og kunngjør ny fabrikk i USA“: ” THINK ønsker å starte salg av THINK City i USA senere i år, og bedriften planlegger å investere 43,5 millioner dollar i bygging og montering av fasiliteter og produksjonsutstyr i Elkhart County. Fabrikken kan iverksette produksjon i første kvartal 2011.”

That’s great news!

And what it means is, per AutoBlogGreen, “Officially Official: Think will build City electric car in Elkhart, Indiana“: “After all the announcements and retractions, hints and tax abatements, it’s come to this: Think will make electric cars in Elkhart, Indiana. Think has been talking about building and selling the highway-speed Think City electric vehicle to the U.S. for quite some time and two locations in Indiana – Elkhart and nearby Middlebury – were in the running the longest to get the manufacturing facility.” See also, “Think CEO Richard Canny talks about Indiana plant deal, electric car plans for the U.S.”

Detroit News, “Think cars to be built in Indiana” “Michigan remains in the running for a planned technology center for electric car maker Think, but lost out on Tuesday to Indiana as the site of the company’s first U.S. manufacturing facility. The technology center would employ about 70 people, said Think spokesman Brendan Prebo. A decision on that facility could be made in the next three to six months. Think CEO Richard Canny was in Elkhart, Ind., Tuesday to announce the Norwegian company plans to invest $43.5 million in a former glass factory to start building the Think City electric car there in 2011.”

Indiana continues to beat out Michigan for new manufacturing investment. How does that keep happening? Well, money played a role in this specific case, as the Elkhart Truth reports, “Local, state incentives helped lure Think to Elkhart: “Financial incentives offered by state and local governments weren’t the deciding factor in bringing the electric automaker to Indiana, Think executives said, though it was part of the ‘price of entry.’”

But also look to Gov. Mitch Daniel’s more general philosophy of streamlined government, regulatory efficiency, and a favorable workforce and tax environment. (Contrast that to California’s mistakes.) And, as he said in a recent interview, “We must never walk away from the manufacturing base that’s made us strong.”

And in related news, a KPMG news release reports, “Global Automakers Will Significantly Increase Spending On New Technologies, Hybrid and Alternative Fuel Vehicles, Says KPMG Survey“: “DETROIT, Jan. 7 /PRNewswire/ — In response to consumer demand, senior automotive executives are expected to increase their investment in new technologies to produce more environmentally-friendly, fuel-efficient vehicles, according to the 11th annual global automotive survey conducted by KPMG LLP, the U.S. audit, tax and advisory firm.”

From an Indianapolis Star interview with Gov. Mitch Daniels earlier in the month:

Q: What’s Indiana’s next big thing in business?

A: I’ll just give some candidates; the market is going to tell us. The electric car could be one. We’re a perfect place for it. . . . Wind energy is another.

We must never walk away from the manufacturing base that’s made us strong.

Daniels says he cannot fault the President and Congress’ efforts to stimulate the economy, although he wishes the stimulus bill had included more infrastructure and fewer pet projects. As for the rest of the Administration’s economic agenda:

I think the health-care bill is not only a terrible distraction from jobs and what really matters right now, but it would be a crushing blow to small business, just very ill-advised. I really hope Congress will step back from it.

Cap and trade (to cut carbon emissions) is just simply a disaster. It’s senseless. Even if — we don’t know this, we don’t — but even if manmade activity may someday in decades raise the world’s temperature, this bill won’t affect that. It will impose enormous costs. It’ll double utility rates in this state.

(Hat tip: Yuval Levin.)