[INSPRATIONAL MUSIC STING] - We're joined once again by our good friend, Peter C. Connolly, Chief Executive Officer, CEO, of New Jersey Manufacturing Extension Program, NJMEP is the acronym.

- Yes, sir.

- Good to see you, Pete.

- Good to be seen.

Glad to see you again, Steve.

- You got it.

The website is up right now.

Tell everyone what the organization is, your mission, and how you support the manufacturing community.

- Sure.

So we're the New Jersey Manufacturer Extension Program.

Our goal is to assist New Jersey small and medium manufacturers with organization excellence, development and excellence.

And we are one of 50 organizations.

There's one of us in every state, and we work with the 10,000 small/medium manufacturers in New Jersey.

- So Peter, we're about halfway through as we tape this program in 2026.

What do you see as the one or two, one and two most significant challenges facing the manufacturing community in the state?

- Well, depends on where you are.

Across the board, it's corporate business tax all the way.

Corporate business tax, we're at sitting at about 11.5%.

Pennsylvania in the next two years is driving down to be about 5%.

South Jersey is transportation.

As our good friend Senator Michael Testa would say, "It's not New Jersey Transit, it's North Jersey Transit."

But actually, I was just down with him yesterday in Atlantic City.

New Jersey Transit has just set up six new bus lines that will go from Millville, Vineland, Camden, Glassboro, and Atlantic City.

So that was just announced yesterday.

So great things.

But corporate business tax is probably the biggest issue.

- By the way, check out our website, steveadubato.org.

It's up right now.

Previous interviews we've done with Senator Testa, this issue has come up, and Pete knows that.

Pete, let me follow up on this.

I was telling you, I was watching another network, a business network, this morning before we came on, and a whole debate back and forth about the impact of the so-called Trump tariffs.

He didn't do it alone, but there are tariffs.

He's pushing them.

The administration's pushing them.

- Yes.

- It's confusing to me what the impact of those tariffs is and has been on the New Jersey manufacturing community.

You say?

- So yes.

So there's misleading information.

It is not a tax on the country.

The country that we are importing from is not paying the tax.

The importer of record pays the tax, pays the tariff.

So if you're buying stuff at Walmart or at Target, they're paying the tariff and passing that on to consumers.

So that goes throughout the United States, not just New Jersey.

For New Jersey manufacturers, you do deal with export companies.

So right now, the Supreme Court has basically rejected tariffs and said that the administration does not have the power to do it, only Congress.

So that was in February 20th.

- Sure.

- So what you're seeing with New Jersey manufacturers is that they're not going to get most of that money back that they've paid in tariffs to exporters.

It's going to go to the export company, whoever they're importing from.

So if you're sitting in Newark, you see all those import-export companies that are sitting there in Port Newark.

Those companies are, the small manufacturers are starting to work with the import/export that they do get paid.

Whether they do or not is yet to be seen.

- You know, Pete, so interesting, as you lay this out, there's a lot of, I use this word, uncertainty, meaning it's not clear where things are going.

It's not clear who gets that money.

And you and I have talked about this offline a lot.

- Right.

- And you made it clear, it goes to the exporter, if you will, right?

- Yes.

- And also what's going to happen with the courts?

What's going to happen with this election and who's going to be in Congress?

And what's that going to mean regarding tariffs and other policies?

And a new governor six months into her term, Governor Sherrill.

- Yes.

- Here's the question.

How the heck do you plan, as a leader in manufacturing, with so much uncertainty?

- You can't.

It changes.

Yeah, I get this question every day, and it's uncertainty.

Companies, that's what they're looking for.

The stock market is looking for certainty and we can't find certainty.

So actually the government is now imposing more tariffs under Section 122 of the 1974 Tariff Act where they can raise tariffs up to 15% for 150 days before they have to go get approval from- - And that falls, sorry for interrupting, Pete, that falls outside of the Supreme Court decision.

- Correct.

- Go ahead.

- So they have 150 days.

Now, they're not doing every country.

It's probably the big five, which is Canada, China, Japan, Germany, and I think Vietnam is the other one.

And it's a wide range, but they have 150 days.

They have begun to pay back.

There's about $166 billion worth of tariffs they've collected.

So far, they have approved 80 billion to be repaid, and they've paid only about 20 billion to date.

- So a lot of stuff happening on the federal level.

I mentioned the new governor or Governor Sherrill.

What is the most impactful policy action that the Sherrill administration could and should take from your perspective?

By the way, let me disclose New Jersey MEP, an underwriter of those of us in public broadcasting, our company.

I want to be clear.

What is the most impactful, meaningful policy decision you believe the governor, together with the legislature, could make, should make that would have a positive impact on the manufacturing community in the state?

- Permitting.

- Permitting.

- It's the biggest thing.

- Permitting, the hugest thing.

She's on a 21-county tour of going out, save time, save money, and how to reduce permitting throughout New Jersey.

- Permitting for what, Pete?

Sorry for interrupt, permitting for what?

- Permitting for expanding your business, permitting for roadways, permitting for parking lots, extending your buildings, you name it.

It's just a roadblock.

There's horror stories out there.

As I said, she's doing a 21-county tour.

She's done Bergen County, Morris County, Somerset County, Mercer County, - Hunterdon County.

- To do what?

To do what?

Meaning she's going out there and her team, Kellie Doucette, who's their chief operating officer, and getting feedback on what the key issues are in everything we hear is permitting, in the amount of time and cost it takes.

I give two examples.

One is the microbrewery business.

You're allowed to serve hard pretzels, but you can't serve soft pretzels.

One is a snack, one's a food.

You tell me what the difference is.

- Wait.

And so how does that impact a manufacturer of soft versus?

- Well, a manufacturer, but that's just an issue with permitting.

I would say in manufacturers, we have a customer that has a 70,000 foot facility.

They just expanded 20,000 and the 20,000 is not in the tax-exempt zone.

So now they lost their whole tax-exempt zone, even though it's contiguous to their property.

So there's just regulatory issues and permitting issues out there that are just causing New Jersey companies problems.

- It's not my job to editorialize, but it sounds like you just said that government needs to facilitate and help businesses succeed.

We're not even talking about subsidizing.

- We're talking about - No.

- just getting out of the way and helping the process while you regulate for safety and all those things.

But what you seem to be talking about is not about safety.

It's about how government works or doesn't work.

- The DEP process and Department of Transportation process is just, it's antiquated.

- State government.

- And now, when you change it... And now, you know, she's made some moves, putting Kris Kolluri in front of both the Turnpike Authority in New Jersey Transit.

A smart move.

Very smart move.

So, she's trying, you know, she's 150 days in, you know, she's making a difference.

- By the way, check out our full length "State of Affairs" program that we did with Governor Sherrill.

The website will be up again right now.

Next time we have her in, which is in a few months, we will talk about the issue of how state government works or doesn't work and how the aide, not her, the agencies and state government facilitate and support business and what needs to be done to improve it.

Peter Connolly is the Chief Executive Officer of New Jersey Manufacturing Extension Program, NJMEP.

Peter, thank you for joining us.

We appreciate it.

All the best.

- Steve, pleasure to be with you.

- You got it.

Stay with us, we'll be right back.

- [Narrator] State of Affairs with Steve Adubato is a production of the Caucus Educational Corporation.

Funding has been provided by EJI, Excellence in Medicine Awards.

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