Daily Journal

The numbers are staggering.

Mississippi lost more manufacturing jobs in 2001 - 9,100 workers - than it has doctors.

And from 1999 through 2002, the state lost 37,500 manufacturing jobs, 15 percent of its manufacturing base.

That loss was the steepest in the nation and the causes are many - from the North American Free Trade Agreement to less expensive labor around the world.

But an expensive legal environment in Mississippi isn't helping, and it's a major reason why the state needs tort reform, said Lex Taylor, president of Taylor Machine Works in Louisville and chairman of Mississippians for Economic Progress.

Taylor cited a recent Harris Interactive poll of 800 of the nation's leading corporate attorneys.

"In that study, Mississippi came up dead last," Taylor said of the state liability ranking. "We weren't just in the lower 10 percent, we were dead last in every category regarding the business climate."

Expansion options

Other manufacturers have noticed.

Lane Furniture Industries, formerly Action Industries, employs 4,400 in Northeast Mississippi and is Mississippi's second-largest industrial employer behind Ingalls Shipyard on the coast.

Any further growth of the company will take place elsewhere unless the state takes action, Lane officials said.

Lane President Tom Foy said the company is holding talks with the governor, lieutenant governor, and House speaker to make that point crystal clear.

"It's an embarrassing issue for the state," Foy said. "We've had articles in the Wall Street Journal, we've had advertisements by the U.S. Chamber of Commerce. And those all help determine the growth and success of our state. Our employees and our citizens don't deserve that and our elected officials have to do something about it.

"It's time. Enough is enough."

Lane and Monroe County officials recently broke ground on a $10 million wood products distribution center in the Wren community between Amory and Okolona. Lane has considered doubling the size of the facility to 1 million square feet and adding manufacturing that might mean another 1,000 jobs.

But none of that can happen in the current climate, Foy said.

He said the company would like to see some cap on noneconomic damages in civil lawsuits, along with other reforms such as an end to venue shopping.

"But to me, it's the whole issue and how we address it," Foy said. "I think as long as it's a positive and forward-moving proposal then I would certainly be supportive of it."

Tupelo attorney Jak Smith disagrees with the assertion that the legal climate is unfairly harming businesses.

"They talk about all the businesses that the awful tort climate is causing us to lose, but I don't see companies leaving the state," he said. "Show me where there is jackpot justice in north Mississippi, I'd like to see a case. Show me a case where the person got more than they deserved. I've seen a lot of cases, frankly, where juries have come back and given nothing to people who deserved (damages).

"Frankly, we don't sue Mississippi companies very much. Name a business that has left the state of Mississippi because of tort reform. ... Most of the cases are one company suing another."

Indeterminate causes

Many job losses are chalked up to trade impacts.

From 1994 to 2000, Mississippi lost more than 32,000 manufacturing jobs and 41,000 jobs overall following the passage of major trade agreements.

Of the 10 states suffering the highest rate of job losses, Mississippi was sixth worst, according to the Environmental Policy Institute, a nonpartisan, nonprofit think tank.

The only Southern states with a higher job loss rate than Mississippi's 3.3 percent were North Carolina at 3.7 percent and Tennessee at 3.6 percent. Alabama and Arkansas also were among the 10 worst trade-impacted states.

In 2001, 73 plant closings representing 9,100 jobs occurred in Mississippi. Another 25 plants representing 5,000 jobs have followed in 2002. But what part, if any, is attributable to excessive jury verdicts and legal costs?

"We can't say that everybody lost their jobs because of lawsuits," said Mark Leggett, governmental affairs director for the Mississippi Manufacturers Association. "It's usually a combination of reasons."

The MMA, though, has been instrumental in pushing a package of bills for tort reform. So far, the effort has been unsuccessful but MMA is still trying.

"We're still sticking with the same seven issues that we had during the regular session," Leggett said. "We haven't changed those."

A legislative study committee is holding hearings to determine if there's a need for tort reform.

"We're trying to convince the committee that this is not just a medical problem," Leggett said. "Even the doctors are saying, "It's the whole civil justice system and we're not asking that you carve out something for us. We recognize that the entire system is out of kilter. So deal with the system.'

"That's the same thing we've been saying as a business community."

MEC position

The Mississippi Economic Council, which bills itself as the state's chamber of commerce, represents a broad spectrum of the state's entire business community, including attorneys. As such, MEC is trying hard to come up with a sensible solution to the perceived problem, MEC leader Blake Wilson said.

The group already supports tort reform bills introduced earlier this year but is gauging how to approach the topic in a special session expected to be called by the governor in August.

"We strongly support changes in the system," Wilson said. "It's a crying emergency, a critical need, and we also support the seven positions advanced so far by Mississippians for Economic Progress, as well as a number of the other initiatives that have been proposed in the Legislature."

MEC, he said, is putting heat and light on the topic.

And so is Lane Furniture Industries, which has a payroll approaching $150 million.

"It's a factor for us with jobs," Foy said. "It's a factor with us in the way we price our product, and it's a factor with us in where we manufacture our product. It's a concern - and a very serious one that must be dealt with. It needs to happen soon not only for us but for the medical profession."

If Lane is to expand in Mississippi, change must occur by early 2003. The company's business model calls for building an addition to begin by the first quarter of 2004. But plans must be made sooner.

Job analysis

In April, the White House Council of Economic Advisors estimated annual direct tort costs of $180 billion - more than the nation spent on education, training, employment, general science, space and technology, conservation, land management, pollution control, administration of justice and unemployment compensation combined - that amounts to nearly $650 a year for every citizen of the United States.

But the picture may be worse for Mississippi compared to a neighbor.

Mississippians for Economic Progress stands by a controversial study it commissioned earlier this year by The Perryman Group of Waco, Texas.

"Mississippi has a judicial system that is widely believed to be imbalanced and, in fact, is considered one of the worst in the country," the study concluded. Compared to Alabama, which enacted tort reform in 1999, the costs to Mississippi by 2006 will be a net loss of another 18,000 permanent jobs, $244 million in annual retail jobs and $1.9 billion in annual total costs.

An additional 36,000 lost jobs attributable in part to the tort climate would also be lost if the state doesn't match Alabama's performance, the study concluded.

So how did Mississippi land a billion-dollar Nissan production facility two years ago, followed by an expansion this year?

"The opposing side will tell you quickly, 'Take a look at Nissan and that should answer the question,'" said Taylor of the Mississippians for Economic Progress group. "They're full of hot air. If the state of Mississippi will give me over $300 million in my business, that could go to paying a lot of liability exposure. But our state can't do that for every industry.

"We have got to be a state that stands on our own merit, our own resources, our availability of work force. We're proud to have Nissan, but it comes at a cost. ... And this imbalance in our judicial system in the state has truly become detrimental."