Posted on: Sunday, November 30, 2003
Loss of manufacturing jobs accelerating
By Dave Carpenter
Associated Press
CHICAGO — The gleaming new Winzeler Gear factory annex looks for all the world like a model of manufacturing success for the 21st century.
The muted whirring of plastic molding machines fills a spotless and airy futuristic hall, where a corner of the production floor has its own art gallery.
The fleet of prolific, automated equipment includes a brand-new $300,000 robot the size of a minivan. The plant's star worker, it turns plastic pellets into 10 million automotive parts a year, then inspects them and packs them neatly into boxes.
John Winzeler's father and grandfather could scarcely have imagined this kind of output when they founded the company in 1940. Yet there's trouble at this plant in suburban Harwood Heights, Ill., and it's a story that is unfolding in various forms at thousands of other U.S. manufacturers.
Despite all the sophisticated automation and efficiency, revenues are down and demand has shrunk as cost-conscious buyers turn increasingly to China, India and other inexpensive markets.
Winzeler, who has $10 million invested in the new 22,000-square-foot annex, fears he hasn't moved fast enough to stem the decline of business. Beyond that, he worries about the future of manufacturing in general — including the steady loss of jobs.
"I'm concerned with the speed with which things are changing and the uncertainty of it all," he said. "That's all compounded by the recession we're coming out of. I don't think any of us knows what's going to happen."
U.S. manufacturing productivity remains high, efficiency has improved and an economic recovery is starting to show signs of trickling down to struggling manufacturers.
But a gradual decline in factory employment over the decades has accelerated at a startling pace since 2000, taking away 2.8 million U.S. manufacturing jobs — one in every six — and resulting in 39 straight months of lower employment. That has raised important and often troublesome questions in manufacturing bastions in the Midwest and beyond.
In Illinois alone, the No. 4 manufacturing state, more than 150,000 manufacturing jobs have vanished since June 2000 — an average of more than 100 a day. State unemployment rose to a 10-year high of 7.1 percent this fall, largely because of lost manufacturing jobs that didn't get absorbed into the growing service sector.
While more pronounced than in other Midwestern states, that shift reflects what is going on elsewhere.
"Both the nation and the region are morphing out of manufacturing," said William Testa, an economist at the Federal Reserve Bank of Chicago.
Economists say it's largely the strong increases in productivity that have shrunk demand for workers, and U.S. manufacturing itself is not in perilous decline. But that's little consolation to those who have been left behind. Manufacturers of plastics, furniture and machine tools, and the employees and towns who depended on them, are among those that have been knocked down or out by competition.
In Rockford, Ill., for example, idled factory workers crowd the unemployment office, the local jobless rate exceeds 11 percent and more than 3 million square feet of industrial space in the surrounding area sit vacant.
Paychecks have shrunk for even the laid-off factory workers fortunate enough to have found new jobs.
The city of 150,000 has been a fortress of manufacturing for more than a century — a heritage reflected in the brick buildings on each side of the Rock River flowing through downtown. Now it is paying a price for clinging to heavy industry, watching manufacturers like Ingersoll International, Textron Fastening Systems and Hamilton Sundstrand shut down, cut down or move, taking thousands of jobs with them.
Laid off from her job at a Motorola plant outside Rockford two years ago, Sandra Ekstrom looked around and saw no future in factory work. So the 39-year-old single mother of two reinvented herself in the job market, going to community college and starting a new career this year as a medical secretary.
There's hope for improvement and she's out of a manufacturing sector that looks to her and others like a dead end. But she still has to survive on pay that's barely half the $16 an hour she made as an assembler for Motorola in nearby Harvard.
"Within the last five years there are a lot of plants that have been closed," Ekstrom said. "Any factory-based trade is pretty much gone. Eventually there's not going to be anything for a lot of those people to do. So it's really scary."
The economy's downturn, culminating in a recession in 2001, touched off the avalanche of job losses. But that only sped up a process that already was building momentum as a result of several trends.
Blame the robots for one. Improved technology, including a quantum leap in computer-chip processing power, lets firms make better and cheaper tools, trucks and electronic gadgets — with more automation and fewer humans. Winzeler Gear went from making 2 million gears a month with 55 people a decade ago to today's capacity of 16 million gears a month with 35 people.
Outsourcing is another reason for the decline. Manufacturers have increasingly been contracting out functions such as computer servicing and cafeteria operations to become leaner. That means not all the lost manufacturing jobs were wiped out — some just get counted in the service sector, now the single largest force in the economy.
There's no statistical quibble about the impact of overseas competition. Numerous companies, from heavyweight multinational corporations to comparatively small firms, have switched production to low-priced labor sites in China, India or Mexico. Others have been forced out of business by cheaper foreign products.
The result has been a three-year slump that's as bad as any since the Great Depression of the 1930s, Thomas Duesterberg, head of the industry group Manufacturers Alliance, told a Chicago symposium this fall. Manufacturing has accounted for nearly 90 percent of all job losses since total U.S. employment peaked in March 2001, and many of the jobs aren't expected to return even when the manufacturing sector rebounds.
Joel Goldberg, vice president of operations at Chicago-based Atlas Material Testing Technology, recalls when Japan, not China, was going to drive the nail into the coffin of U.S. manufacturing. While his outlook for industry isn't quite that dire, he is concerned about its gradual erosion as jobs and plants move elsewhere.
"When you peel away the layers of an onion, you only have so much left," he said. "And that's the fear — that we will lose our manufacturing expertise."
Still, numerous companies have managed to prosper by adapting quickly to changing times and switching strategies, products, locations or even entire business models.
Those who have been the most successful saw the tides shifting while the good times were still rolling in the 1990s and began retooling before the recession hit.
"Over the past five years there have been dramatic shifts," said Mary Rose Hennessy, director of Northern Illinois University's business and industry services division, which does corporate training for manufacturers. "But if you haven't been changing gradually over the past 15 years ... the whooshing sound to China is much more dramatic."
Symbols of the new era of manufacturing stand out like icons on the sprawling factory floor of Carol Stream, Ill.-based Prince Industries — a contract manufacturer that makes or assembles precision metal products.
Stacked boxes carrying metal parts ready for assembly bear labels in Chinese lettering as well as English: "Prince USA. Made in China." Across a brightly lit aisle, company president Greg Roskuszka shows off a Swiss-made laser cutter that cost $650,000 and does the work of three older machines, or dozens of humans before that.
With a new plant in Shanghai, a factory in the western Chicago suburbs crammed with ultramodern automated equipment and a commitment to change, Roskuszka dismisses gloomy industry talk of the disappearance of U.S. manufacturing as "a big lie."
"There's a lot of crying-in-your-beer stuff going on" because of China, lost jobs and other pressures, he said. "But you have to change. ... You can't produce things the way you used to."
