Companies that forge, bend, stamp or weld metal have become a $14 billion industry in Texas, representing 14 percent of the state’s overall manufacturing economy, Texas Comptroller Glenn Hegar said Tuesday.
Hegar touted the importance of an industry that added 14,000 jobs statewide in the past year while touring Klein Tools’ two Mansfield facilities.
“It’s as impressive as I’ve ever seen,” Hegar said. “It’s pretty phenomenal. Fabrication is the largest portion of manufacturing in Texas. I want to talk about how important it is as a driver of the state economy.”
Klein Tools moved its manufacturing headquarters to southwest Mansfield in 2011 from Illinois. The company makes tools for professionals, particularly electricians and linemen. Klein Tools offers internships and training to high school students in the Mansfield school district while also partnering with Workforce Solutions for Tarrant County to help people find jobs.
For every $1 in wages that Klein Tools pays to its 450 employees, $1.60 goes into the local economy through indirect jobs, Hegar said.
The Tuesday morning meeting and tour at Klein Tools also featured U.S. Rep. Joe Barton, R-Ennis, and Rep. Bill Zedler, R-Arlington and several Mansfield city council members and city officials.
Hegar also talked about how cities can prepare for the next recession when, not if, it hits. The decline in oil prices hit Houston and the Permian Basin harder than it did Dallas-Fort Worth, which still grew in areas other than energy.
“Because of the diversity and the work ethic in the state of Texas, Texas is poised like it did last time to come out of it quickly,” he said.
Michael Klein II, director of business systems for Klein Tools, said he enjoyed showing off his workforce and the processes they use to fabricate tools.
“It feels good to have someone of his stature visit us,” Klein said. “It’s great to show of what we’re doing here in Mansfield.”
Business owners sound off
Several business owners took the opportunity of Hegar’s visit to talk about problems they are facing from audits and e-commerce to labor shortages and making jobs appealing to millennials.
Diana Sellers, CEO of Sellmark, bought about 40 cubicles online from an out-of-state company. She didn’t know she was supposed to pay a use-tax on that purchase. Next thing she knows, she’s being audited by the Texas Comptroller, forcing her to crawl around in a dusty attic looking for five years worth of tax records. She’s had to take this year-long audit on herself rather than pass it off to an employee.
“It’s overly burdensome and cumbersome,” Seller said.
Others business executives were sympathetic to Sellmark facing an audit from the state. Zedler urged her to reach out to her representatives.
“A lot of time there’s something in the law that we may not be familiar with,” Zedler said. “If you find something like that, we’ll be more than happy to work on it. The main thing we want to do is make it easy to do business in the state of Texas.”
The issue of e-commerce and sales tax remains a thorny issue for business owners, too. While Hegar, Zedler and Barton remain sympathetic to the local business owner who has to compete with online giants like Amazon, solving this nationwide problem is anything but simple.
Amazon, millennials and more
Texas officials made a deal with Amazon several years ago regarding sales and use taxes that required the Seattle-based giant to expand its fulfillment centers, which it has. Hegar said this deal predates his time in office.
The biggest problem comes from third parties selling through Amazon not paying sales and use taxes, Hegar said. Complicating the matter further is the fact that Alaska, Delaware, Montana, New Hampshire and Oregon don’t have sales tax.
“If a company has a physical presence in Texas that I can send a team to audit them,” Hegar said. “If they’re in another state I can’t. We’re dealing with those issues all the time.”
Business executives also lamented about the challenges of finding a qualified workforce who can pass a drug test and criminal background check. That quickly led to a discussion about the challenges of having older experienced workers retiring and filling positions with millennials who often have a sense of entitlement, several business owners said.
They are demanding higher pay, flexible hours and are challenging many of the traditional norms of the workplace without paying their dues.
Even cities like Mansfield deal with this issue as they hire workers for dirty jobs, like going into the city sewer, said Joe Smolinski, deputy city manager for the city of Mansfield.
“They’re all going to marry a movie star and drive a Lamborghini,” Smolinski said. “They’re expecting to come in making a lot of money. As a public and private entity, you have to find a way to communicate with those folks and get them to see the purpose in what they’re doing.”