BY ROD KING, Greater Fort Wayne Business Weekly
news@fwbusiness.com
Despite disturbing, disappointing and sometimes discouraging news about plant closings, lost jobs and the continuing turmoil in the automotive industry, manufacturing in Allen County and the eight surrounding counties of northeast Indiana is thriving. In fact, manufacturing leads in employment and payroll just as it has in the preceding half-century.
According to John Stafford, director of the Community Research Institute at Indiana University-Purdue University Fort Wayne, "If you devise a model of the overall business structure of the region to determine who will bring in the most new net income, I think you'll find that manufacturing will play a large role in that number."
Manufacturing, he added, has never been stable. It's constantly changing, and it's doing that now at an increasing pace here and around the world.
"New technologies will allow companies to maintain their output, but it will be accomplished with fewer people," Stafford explained. "Those who don't invest in technology now won't be able to compete in the future and will subsequently go out of business. Along the way, jobs will be lost to technology and to outsourcing of lower-level jobs.
"The loss of jobs is directly tied to companies being able to compete, which in turn focuses on a company's need to be more cost effective. That translates to more technology, more streamlined methods and fewer people."
Stafford added that a company's output is not tied directly to employment, and outsourcing is not the major cause of lost jobs.
That's difficult to reconcile with recent news reports, though. Hershey will shift some candy production to Mexico, a loss of 1,500 jobs. Chrysler is slashing 10,000 jobs in Detroit.
Borg Warner in Muncie expects to close in 2009, resulting in a loss of 780 jobs. The Yamaha Musical Products plant in Grand Rapids, Mich., will lose 200 workers this April when it closes. And when Ford closes its St. Paul, Minn., plant, 2,000 workers will be affected.
Things are not rosy in paradise, either. A news item in mid-February stated that Hawaii is losing manufacturing jobs, too.
The nine-county northeast Indiana region has not been immune to the job-loss syndrome in the past six years, according to the U.S. Bureau of Labor Statistics quarterly census of employment and wages. In 2001, the number of manufacturing jobs stood at 85,807. Over the next half-dozen years, that number gradually decreased to 78,140 in 2006, a loss of 6,867 jobs.
A total of 18 companies in the region were Trade Adjustment Act certified in the last few years because their business was adversely affected by foreign import or export goods, causing them to either ship work overseas or go out of business. Four companies - Hayes Lemmerz International in Huntington, Dana Corp. in Andrews, Amcast Automotive in Fremont and CTS Corp. in Berne - have closed, resulting in 450 layoffs.
Other TAA certified firms that have lost jobs due to downsizing or shipping work overseas include: Connors Corp., Benteler Tool & Die and General Electric, all in Fort Wayne; Invensys Appliance Controls in North Manchester; Atwood Mobile Products in LaGrange; Tower Automotive in Kendallville; Cequent Electrical Products in Albion; EMF Corp. in Angola; and Halex A. Scott Fetzer Co. in Hamilton.
The list also includes five Auburn firms: Eaton Corp., Cooper Standard Automotive, Kimball Electronics, Alcoa and Auburn Foundry.
Northeast Indiana, and the state in general, were not hit nearly as hard as its northern neighbor, Michigan, which lost nearly 218,000 jobs over the same period. It was followed by Ohio, Illinois and Pennsylvania. The Brookings Metropolitan Economy Initiative, published in February by the Washington D.C.-based Brookings Institution, states that despite the huge number of jobs lost, manufacturing remains a major driver of the nation's economy and the economy of the Great Lakes region.
Challenges ahead
Stafford points to three trends that will affect manufacturing in general in the future. The first is mounting pressure to increase product output by utilizing technological advances and doing it with fewer people. The second is the need for additional highly skilled workers.
"And the third," he said, "is one of the biggest issues facing companies in the near future, that of replacing the baby boomers who will be retiring in large numbers in not too many years and taking with them a huge repository of skills and expertise that will not be available in the remaining job pool."
Stafford said a survey of manufacturers done in 2005 by the National Association of Manufacturer's Manufacturing Institute, the Center for Workforce Success and Deliotte Consulting confirms that the skill shortages are extremely broad and cut across industry sectors. Those shortages are having a widespread impact on manufacturer's abilities to achieve production levels, increase productivity and meet customer demands.
It also states that high-performance work-force requirements have significantly increased as a result of the skills-gap shortage and the challenge of competing in a global economy.
The survey sums up its findings by saying that "clearly, this situation calls for urgent action by both public and private stakeholders. If our country is to remain competitive, the issue of education and training reform must now be given at least as much focus as top business concerns of trade, tax, energy and regulatory reform."
Another study, produced by Thomas P. Miller and Associates in 2005 and titled "What Indiana Makes, Makes Indiana: Analysis of Indiana Manufacturing," concludes that manufacturing remains the most significant component of the economy and the largest single generator of state and local tax revenue.
It points out that most of the growth in innovative manufacturing over the next decade will occur in the traditional industries. The study also affirms Stafford's contention that manufacturing is a high-skill, high-tech, high-pay industry and that the days of high-pay, low-skill jobs quickly are coming to an end.
The Brookings Initiative goes on to say that not all manufacturing jobs can or should be saved. However, a combination of trade, health-care and economic and work-force development policies can help to retain and expand employment in high-productivity manufacturing in the United States.