This is a reprint of an article printed in the Sunday Bergen Record on 4/17/11 by Alex Macinnes, Staff Writer. See http://www.northjersey.com/news/119995144_Finding_the_bottom_.html for the full article. Tom Smith, our Managing Director was quoted in this article.
New Jersey lost 3,400 manufacturing jobs last year, and despite the fewest job losses in that sector in 10 years, area manufacturers are not ready to celebrate those employment figures.
That reluctance to look for a silver lining, even as some industry observers predict a small rebounding in manufacturing hires for 2011, follows two decades when New Jersey shed 253,000 manufacturing jobs, according to the U.S. Bureau of Labor Statistics. The survivors, mostly smaller shops that produce lower quantities of higher-value goods, say they do not trust talk of an industry recovery, and therefore, will not bring on new hires.
“We’re not seeing the recovery we expected,” said Robert Schmidt, owner of machine tool maker F.P. Schmidt Manufacturing Co. in South Hackensack. “Washington is saying things are looking up, the recession is over and the stock market is up. We see no cause for it.”
New Jersey manufacturers last year reduced their workforce by 1.3 percent, from 259,000 jobs in January to 255,600 in December, according to the federal count. It was the first time in five years the job loss was contained to fewer than 10,000 positions, and some optimistic manufacturing leaders believe that after decades of hemorrhaging jobs, the industry has found its natural bottom — and could even rebound, slightly, this year.
Manufacturing jobs in New Jersey:
|Actual job loss
|Percent job loss
Source: U.S. Bureau of Labor Statistics
A similar analysis of county manufacturing activity is incomplete, because the U.S. Bureau of Labor Statistics has not released 2010 numbers at the local level. Even so, between 2001 and 2009, Bergen and Passaic counties saw the largest drop-off in textile employment. Bergen County lost 81 percent, or 1,459, of its textile jobs, and Passaic County saw a 69 percent drop, or 1,462 positions, during that period.
Companies continue to rely on foreign manufacturers for high-quantity runs of mass-produced textiles, such as clothing, according to business leaders.
Where they do see some hope is in the manufacturing of parts for durable goods — larger-ticket items that need precision tooling, such as printers or medical devices. Tom Smith, executive director of the New Jersey Tooling and Manufacturing Association, believes companies are ready to replace old machinery, and he hopes when they do, they will rely on U.S.-based manufacturers to fabricate those parts.
“My sense of what our members told us was that 2009 was really dead and 2010, there were kernels of recovery,” Smith said. “I’ll predict for 2011 [the number of overall sales] will be higher at the end of the year, because the economy is growing.”
The U.S. gross domestic product expanded 3.1 percent in the first quarter and has increased for six straight quarters.
Others agree with Smith, saying those companies that made due with outdated equipment during the recessions will now invest in replacing machinery and tools.
That would be welcome news for Bergen County and Passaic County machinery manufacturing shops, which eliminated 2,011 jobs, a 40 percent reduction, between 2001 and 2009. During that period the two counties lost 61 machinery manufacturing companies, a 25 percent slide.
Machinery Services Corp. of Paterson has been providing industrial plants with custom-built machinery for 40 years. The company installs, rebuilds and services equipment for area paper and foil manufacturers and the waste water treatment industry. Its president, Rich Taylor, believes that many of his clients have put off major projects for too long.
“We see an uptick here in our activity level,” Taylor said. “People are very conscious of cost, and we’ve seen the cycle before where they didn’t do anything for an extended period to the point where they have to do something. We have people who are now considering projects that were put on hold for quite some time.”
To accommodate that projected growth, Taylor said he will increase his current workforce of 75 employees by about 10 percent this year.
Timothy McBride is president of Lydon Oven in South Hackensack, a company that produces industrial and scientific drying ovens, mostly for pharmaceutical companies. McBride cited several examples of customers replacing their ovens, but he does not think the early surge in orders will result in a strong rebound this year.
“My projections for the balance of 2011 are just kind of so-so,” he said. “It doesn’t look, at this point, any rosier than it did a year ago. We survived, but we have the same issues that we had a year ago.”
Those issues include a decline in orders for replacement parts and fewer requests for new ovens. McBride said the lack of replacement-part orders indicated to him that some of his clients had turned off their ovens during the last few years, and “that was very scary.”
Nationally, employment in durable-goods manufacturing has risen by 243,000 since December 2009, according to the Bureau of Labor Statistics. That growth, and New Jersey’s relatively stable 2010 numbers, has some state business officials guardedly optimistic that smaller, more precision-based manufacturers will lift production and their workforce.
“The name of the game now is to survive, you have to be more flexible, you have to be smaller and you have be able to turn on a dime to meet customer specifications quickly,” said Philip Kirschner, president of the New Jersey Business and Industry Association. “That leans more to smaller manufacturers, but they’re around. Collectively, they have really helped stanch the bleeding from loss of mass manufacturers.”
Kirschner said the smaller production orders is less likely to be done in other countries. Nations such as China operate more mass production that “can be done anywhere at the lowest cost.”
“What is left is the company who does smaller jobs, custom jobs that are not easily outsourced,” Kirschner said.
That company can sometimes be referred to as a “job shop,” a small operation that specializes in general machining. Those shops supply larger manufacturers that need a limited run of new parts for their equipment.
Brown Industries of Paterson is one such job shop — a business that can produce ventilation dampers or create moldings for food producing companies.
“Any industry, we take jobs from anyone,” said Joseph Brown, owner of the East 31st Street workshop.
Brown, who employs one machinist, agrees with Kirschner that many companies that need larger runs will go overseas. That, however, does not necessarily mean more opportunity for him, mainly because as the larger manufacturers leave New Jersey, that leaves fewer clients.
“You have far less people needing tools, because there’s less manufacturing here in the state,” he said.
The only growth Brown sees for his company is a result of a competitor’s ill fortunes.
“We’ve increased slightly in work, but that’s because this one place went out of business and I think we’ll get more of their work,” he added.
One of Brown’s colleagues doesn’t believe the national or state employment figures, because, the information does not match the reality. And, even if the economy improves, it is too early and risky to hire someone new, said Richard Ebersbach, president of Ringwood‘s Bach Tool Precision. Started in 1992, Ebersbach’s company fabricates machine parts and employs three workers, down from six in 2008.
Ebersbach dismissed the latest numbers as good news, because, he said they still show an industry in decline, no matter the pace.
“To say that things are better, because they’re less worse, it’s really not better,” he said. “Why have things gotten the way they are? [Those jobs] are not going to go back to where they were. Just because it’s less worse, I’m sick of hearing that.”