Employment in the manufacturing sector here has fallen sharply, and while some manufacturers are optimistic about future growth, most everyone agrees the U.S. recession is exacting a toll, or will.
Manufacturers employed 16,600 people in the Spokane metropolitan area in February, down almost 9.8 percent from the 18,400 they employed a year earlier, preliminary state figures indicate.
That job number, however, should improve as more data come in from manufacturing employers, says Doug Tweedy, regional labor economist for the Washington state Employment Security Department here.
"Those are very preliminary numbers," Tweedy says, and he cautions that, historically, January and February are the two weakest months for manufacturing employment in the county.
The job losses came as manufacturers of windows, doors, and other goods used in residential construction cut back, he says.
Stan Key, manufacturing industry manager for Greater Spokane Incorporated, says "We're faring better in the Spokane region than most places in manufacturing."
From 2007 to 2008, Spokane had a 4 percent loss of manufacturing jobs, from 19,000 in 2007, to 18,200 in 2008. Nationally, there was a 4 percent loss of manufacturing jobs in 2008 from 2007, Tweedy says.
Yet during the last three months of 2008, manufacturing employment was off by 900 jobs in October, 1,400 jobs in November, and 1,700 jobs in December, Tweedy says. He says the Boeing Co. machinists' strike last fall primarily was responsible for that three-month fall-off in employment. Tweedy says some companies that make aircraft parts here laid off employees because of the strike.
"That was a temporary event, and that's been settled," and it also means the manufacturing employment decline in Spokane County in 2008 wasn't as high as the 4 percent nationally, he says.
Boise, Tweedy points out, had a 10 percent decrease in manufacturing employment in 2008.
Manufacturing employment has fallen as a percentage of total employment here, to 7.9 percent in February from 8.5 percent a year ago, the state figures show.
Not all types of manufacturing are slumping, says Tweedy. Some, such as chemical manufacturing, metal fabrication, and plastics and rubber manufacturing, are growing, he says.
"There are sectors of manufacturing that are up and growing and hiring," Tweedy says. "There are labor shortages in some cases, especially for skilled" workers.
Among those manufacturing pockets that seem to be doing well, says the GSI's Key, are companies that make parts for aviation manufacturers. "They've stayed as strong as any of them," he says.
Also on that list are Kaiser Aluminum Corp., which is Spokane's largest manufacturer in terms of employment, and Kim Hotstart Mfg. Co., a maker of heating technology for large engines.
"There are some glimmers of good news out there," Key says.
Berg Cos., which produces flexible containment products, flexible tanks, covers, tents, and insulated product wraps at its manufacturing facility in Spokane Valley, is looking to grow, says company spokeswoman Lindsey McDonough.
Still, the longtime company understands the challenges of the current economic environment in which manufacturers find themselves, McDonough says.
"Consumer spending has been trending in a negative fashion since mid-2008," she says. "The purchase of durable and nondurable goods has seen a significant drop. Most companies have noted these decreases in spending by the consumer, and manufacturers are having a difficult time surviving the economic decline."
She says that as companies begin to lose business and raw materials begin to increase in price, staying afloat in today's economy has become very difficult.
"Most manufacturers are seeing an increase in price from their supply chain, which translates to the requirement to raise the price of finished goods for the end customer or lower the profitability of goods to the business," McDonough says. "Currently, with the already reduced consumer spending trends, the market does not support these raised prices. This can translate into financial ruin for many manufacturers."
Berg Cos. employs 54 in Spokane Valley between Berg Flexible Containment and Berg Manufacturing Inc., and 75 at Berg Integrated Systems, McDonough says. Berg Integrated Systems, which operates in Plummer, Idaho, on the Coeur d'Alene Indian Reservation and is part of the Berg Cos.' family of manufacturing businesses, manufactures expandable shelters and large fuel bladders.
The company opened a sales and marketing office in Coeur d'Alene in February as part of an expansion, McDonough says. It's hoping to expand into Post Falls before long by building a manufacturing facility there. Yet, when that will happen depends on market opportunities, she says.
"We foresee the need for a larger manufacturing space in the near future and would like to expand into the Post Falls area as many of our current employees are living in Northern Idaho," she says.
She says the company intends to hire additional employees to work in the Post Falls facility when it opens.
Although one Spokane Valley manufacturer, Wagstaff Inc., is going strong now, it says it's not recession proof.
Wagstaff, a longtime provider of casting equipment to the aluminum industry, has increased its employment here to 323, from 312 in July 2008, says CEO Paul May. The company also has an additional 52 employees at its Hebron, Ky., operation and another 16 employees elsewhere in the world, he says.
"Aluminum usage continues to expand, particularly in China and India, prompting the need for expansion of existing facilities and construction of new facilities, particularly smelters," May says.
In 2007, Wagstaff began ramping up to meet new demand, which resulted in significant employment growth, May says.
Yet, as a result of the worldwide recession, expansion plans have slowed, and "Wagstaff will likely be affected by this in late 2009 or 2010," he says. "Our work force is governed by our incoming revenues; it will not be growing until the recession turns around and new orders develop."
Matt Gerber, president and CEO of Liberty Lake-based SprayCool Inc., which manufactures liquid-cooled enclosure products for defense, aerospace, and industrial electronics applications, says mainstream acceptance of the company's technology in military markets has been increasing, versus demand for traditional conduction and air-cooled electronics cooling systems for harsh environments.
The company was supplying one military program from 2000 to 2007, but that has increased to nine programs today.
SprayCool's employment has slipped from 102 people in February 2008 to about 75 people today. Gerber says the reduction was due to SprayCool's decision last fall to shut down the last of its efforts to serve the commercial market.
If SprayCool can reduce both the cost of the technology and its complexity further, that will broaden its use from its now predominantly military applications.
"Once we see broader adoption in the military market, we are optimistic that we can again step into the commercial market at that point," Gerber says.
SprayCool has patented a liquid cooling technology that uses a fine mist of non-corrosive, non-conductive liquid, sprayed in a thin layer, which evaporates and cools electronics. Its products isolate the electronics from dirty, corrosive environments found in military and industrial applications.
Gerber says he expects the company's technology will be more mainstream in two to three years. Right now, SprayCool manufactures up to 10 enclosures per month, but a slower month would lower that production to two or three units. The enclosures range in price from about $10,000 to $100,000.
Some of the worst news of late here, has been bad, indeed.
General Dynamics C4 Systems, of Scottsdale, Ariz., announced in February that it will close its General Dynamics Itronix Corp. plant here by the end of 2009 because of lagging sales and the poor U.S. economy. The defense contractor said 300 of the Spokane operation's 380 employees will be let go, 60 will be offered jobs at the company's engineering design center in Sunrise, Fla., and 20 will be offered the opportunity to work remotely. Itronix, a maker of rugged wireless laptop computers and handheld devices, was bought by General Dynamics in 2005.
Cleveland-based Sherwin-Williams Co. announced early last week that it will close the Columbia Paint & Coatings plant, at 112 N. Haven here, by the end of this summer. The closure will cost 37 people their jobs, although they'll be able to apply for places elsewhere in Sherwin-Williams' system. Nine sales and marketing employees here will be retained. The Spokane plant makes architectural and industrial paints and coatings.
GSI's Key says he blames the general economy for the difficulties manufacturers face. Key recently attempted to recruit manufacturers in Southern California. Companies there, he says, reported their sales were down 50 percent to 70 percent.
"That makes the job of recruitment a little harder," Key says. "They can't take money out of their operations for a move."
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