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The future of manufacturing and government contracting in Md.

techtuesdaystraussPresident Donald Trump campaigned on the slogan, “Make America Great Again,” and he has consistently voiced his desire to bring overseas manufacturing jobs back to America. In doing so, he hopes to help boost the economy and increase employment rates. However, it’s unlikely that the president will “make America the same again,” and the manufacturing jobs that are brought back or created will not look and feel like the manufacturing jobs of old.

Maryland and Greater Baltimore have seen the manufacturing sector decline over several decades, with losses of companies such as Bethlehem Steel and General Motors, which once supplied thousands of manufacturing jobs to the region. While Maryland is unlikely to reproduce the jobs that have been lost, the region is still well poised to experience growth in a new generation of manufacturing jobs — specifically in Greater Baltimore.

According to the Maryland Department of Commerce, Maryland currently supports an excess of 100,000 manufacturing jobs, with the largest subsector being computer and electronic parts manufacturing, which reflects a change from the traditional manufacturing sectors that helped drive the economy through the 20th century. Today, the economic growth in the sector is driven by things such as product innovation, automation and logistics management.

The new manufacturing

Twenty-first century manufacturing is less labor intensive than previous generations and now requires more knowledge-intensive technical skills to operate machinery and equipment and drive research and development.

Growth opportunities exist in new product development in industries such as aerospace and defense, healthcare, information technologies, energy and advanced materials.

In addition to the focus on the manufacturing sector at the federal level, Maryland Gov. Larry Hogan has also focused his agenda on economic development in Maryland and job growth for the state. In April 2017, Hogan signed the “More Jobs for Marylanders Act” of 2017, which provides tax incentives for manufacturing companies in Maryland, such as income and real property tax credits as well as sales tax refunds and accelerated deductions related to the purchase of manufacturing equipment.

These incentives target new businesses locating to Maryland or existing businesses that create additional local employment.

Major opportunities

When you add all of these things with the Trump administration’s proposals to increase defense spending, the continued national debate on ways to provide Americans with quality and affordable health care, the region’s proximity to Fort Meade and world-renowned health care institutions, there are great opportunities for local businesses to see success.

Whether it be producing defense technologies, upgrades and improvements to information technology infrastructure, advances in medical treatments, or other high-tech products there are many sectors in a position to see economic growth and job development.

Established businesses can get involved in these sectors through research and development tax credits at both the federal and state levels, and small businesses and startups can achieve growth through Small Business Innovation Research and Small Business Technology Transfer grants.

Government contractors like Northrop Grumman and Lockheed Martin — currently the two largest manufacturing employers in the state, according to the Maryland Department of Commerce — should benefit from the new tax policies and the significance of government contracting dollars in the region. However, companies taking advantage of local incubators such as Johns Hopkins Technology Ventures Fast Forward program, the Maryland Technology Enterprise Institute or Baltimore’s Open Works, which was recently created to stimulate small-scale manufacturing, may be the drivers of innovation and research to fuel the industry growth.

Whether it be advances in existing products and technologies, development of robotics or life-changing medical devices, local entrepreneurs have access to a highly skilled workforce to envision and execute on new business opportunities.

While we don’t know exactly what the future will bring, the timing is right for the manufacturing sector to turnaround and contribute to economic expansion in Maryland and Greater Baltimore.

Michael A. Strauss, CPA is a director in the audit, accounting and consulting department and chairperson of the government contractor services group at Ellin & Tucker in Baltimore.

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