Industry pushes a tax break on power

The state's biggest business lobby says a bill to reduce manufacturing expenses would help employers

GREENSBORO -- North Carolina manufacturers are pressing the legislature to exempt them from paying taxes on energy as they try to lower costs and compete globally.

If they're successful, the state could forgo about $50 million in annual revenue. But the manufacturing sector could gain strength, said John McAlister, vice president for government affairs at the North Carolina Chamber, the state's biggest business lobby, which is pushing the change.

A provision in the budget bill approved by the House this month would phase out sales and excise taxes on energy that manufacturers buy to run their plants. The Senate budget proposal released Tuesday did not appear to have similar language.

The tax exemption, though, still could pass. The Senate plan has a $30 million place-holder for pending tax adjustments, and the manufacturing language could be included there. Or it could be added as a final budget bill is hashed out between the two chambers.

"It's something that's been on the radar screen of the legislature" for some time, McAlister said Tuesday on the sidelines of a manufacturing summit that the North Carolina Chamber held in Greensboro. "We are pleased that we have a good shot of getting that done."

The state's manufacturers are stepping up efforts to make changes that could cut their expenses and improve their operations in North Carolina. The conference, attended by 350, was intended to raise the profile of the sector, which has suffered declines in recent years.

"This is an under-recognized part of our economy," said S. Lewis Ebert, president of the North Carolina Chamber, formerly known as N.C. Citizens for Business and Industry.

Though textiles, furniture and other traditional manufacturers have shed thousands of workers in the past decade, others have added products or markets to boost their competitiveness.

They are trying to reverse the view that the manufacturing industry is destined to collapse in North Carolina -- and ensure that officials don't ignore their needs.

"The perception out there that jobs in our industry must go overseas or south of the border is just dead wrong," said John Cawthron, chief executive of TIMCO Aviation Services in Greensboro, which services airliners and employs about 1,800 people.

Still, keeping industry takes work, company executives said Tuesday. They want help in cutting health-care costs and taxes, as well as protection against frivolous lawsuits.

The chamber released a poll of 300 manufacturers that gave further insight. Among the findings:

* 45 percent said the state economy was not on the right track; 43 percent said it was.

* 50 percent said they were not satisfied with the state government's handling of manufacturing needs; 39 percent said they were.

* 48 percent said the cost of doing business in the state was the same as elsewhere; 25 percent said it was better and 14 percent said it was worse.

* Asked whether they would consider leaving the state, 77 percent said no.

The energy tax exemption could make North Carolina more attractive, McAlister said. Surrounding states already have similar provisions in place.

"It's sort of a continuous improvement process, in terms of the business climate," he said. "You're always thinking about: What can we work on to get better?"

Sometimes, it takes action on the federal level. Republican U.S. Sen. Elizabeth Dole pledged to fight for trade agreements that benefit the state's manufacturers and for other changes that could lower their costs.

"We're working hard to make sure we keep taxes low, and that we constantly assess regulation," she told conference attendees.

(Staff writer Dan Kane contributed to this report.)