- The Washington Times - Tuesday, December 9, 2003

CHICAGO - The Winzeler Gear factory recently spent $300,000 for a fleet of automated machines that quickly and quietly turn plastic pellets into 10 million automotive parts a year. But this apparent model of 21st century manufacturing has not helped Winzeler stop the loss of business to oversea competitors. It’s a story that is unfolding in various forms at thousands of other U.S. manufacturers.

Despite all the sophisticated automation and efficiency, revenue is down and demand has shrunk as cost-conscious buyers turn increasingly to China, India and other inexpensive markets.

The revamped plant is producing auto parts at a rate that would be unimaginable to John Winzeler’s father and grandfather, who founded the Harwood Heights, Ill., company in 1940.

But Mr. 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 weren’t 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.

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. 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.

The economy’s downturn, culminating in a recession in 2001, touched off the avalanche of job losses.

But that only speeded 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 persons a decade ago to today’s capacity of 16 million gears a month with 35 persons.

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 effect 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, is concerned about a 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.”


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