Tuesday, April 20, 2004

CORTLAND, N.Y. — Typewriter manufacturer Smith-Corona, long suffering from a weak business strategy and outdated products, laid off about 850 workers in the mid-1990s and abandoned this town.

Cortland, a small city of about 20,000, for a short while considered itself an early victim of NAFTA as Smith-Corona chased cheaper labor south to Tijuana, Mexico.

“A lot of people did not know how they would continue on. But Cortland did survive. It wasn’t Smith-Corona, N.Y.; it was Cortland, N.Y.,” says Mike Chernago, the Smith-Corona vice president who closed the upstate New York operation.

In its heyday, the company employed about 4,800 workers in Cortland. By 1994, it offered jobs for only about 200 white-collar workers. And this small city entered a global battle to attract other employers and create jobs.

Cortland is hardly alone among American towns as industries fold amid changing times and new competition.

In this series, The Washington Times examines Cortland and two other small manufacturing cities — Martinsville, Va., and Lewiston, Maine — that suffered massive layoffs amid wrenching economic changes in the past decade. Each of the three now is at a different stage of retooling, which means replacing traditional industries with new companies and new jobs: While Martinsville continues to struggle, Cortland makes slow progress and Lewiston has recast its job base.

Although Cortland absorbed most of the economic losses of the mid-1990s, the town still fights to create manufacturing and service-sector jobs in a fierce international market.

Manufacturing used to be the heart of Cortland’s economy. In 1990, almost 30 percent of jobs were in factories. The figure had slipped to 25 percent by 1994. Of 18,800 payroll jobs last year, 2,600 were in manufacturing — less than 14 percent.

Cortland’s tiny, 19th-century downtown was built from stone and brick. Agricultural and industrial pioneers once lived in the Victorian houses. Interstate 81, sometimes called “the NAFTA highway,” runs along the town’s doorstep.

City leaders still fret about the impact of international competition, especially from China, and about trade agreements such as NAFTA (North American Free Trade Agreement), the U.S. pact with Mexico and Canada that went into effect in 1994.

“How do we get companies here, versus China, Germany or Mexico?” asks Linda Hartsock, executive director of the Cortland County Business Development Corp. and Industrial Development Agency. “We are tied to the international economy — it is an issue and a concern for us.”

Cortland was settled in the rolling hills of central New York, about halfway between Syracuse and the New York-Pennsylvania border, a rural swath dotted with small towns and dairy and livestock farms.

The region suffered a series of setbacks as companies shed factory jobs. Syracuse air-conditioning equipment manufacturer Carrier Corp., for example, announced in the fall that it would move 1,200 jobs to plants in Asia.

‘Dicey times’

Cortland tried to rebuild its economy by attracting new companies and encouraging existing businesses to expand. But keeping or replacing jobs is never easy.

Despite the uphill climb, political and business leaders are not giving up.

“I think that is the lesson from Smith-Corona: Innovate or die,” Mrs. Hartsock says. “This is still a vibrant and viable small town.”

The Cortland area has seen ups and downs since Smith-Corona left, although the changes are not always related to foreign competition. Rubbermaid, for example, began to transfer operations to Ohio and Texas in 1998, eliminating more than 450 local jobs as it consolidated operations nationally.

Still, foreign competition often gets the blame.

“It’s dicey times. The competition is extremely keen,” says Rep. Sherwood Boehlert, New York Republican, who represents Cortland.

Mr. Boehlert, who supports free trade, sees open markets as an opportunity for economic growth.

“Companies are facing severe challenges in the international marketplace, but they are up to the challenge and winning,” he says.

Working smarter

Cortland remains a home to old-line manufacturers, has seen homegrown companies develop and has attracted outside businesses. On one level, the town was able to engineer part of its recovery based on the legacy of well-established names such as Smith-Corona and Rubbermaid.

Richard Cincotta started working at Smith-Corona as a stock chaser in 1979, then became an apprentice in the metal-stamping trade. He was laid off in 1983 when imports from Japan forced the company to cut back, but quickly found work in another local tool shop.

Now Mr. Cincotta, 44, is back in the old Smith-Corona factory with his own company, Midway Metalforming. He operates out of a small section of the cavernous building, which was almost empty in 1999.

“This used to be the punch-press area,” Mr. Cincotta says, referring to the equipment used to put holes in sheet metal.

His little company runs a few state-of-the-art, mostly automated stamping machines that spit out small wire clips and other pieces for manufacturers. Business has doubled since the machine shop opened in 2002, and this past winter, he hired another full-time employee.

But that brings the grand total of workers to three full time and two part time. Because Mr. Cincotta is staying on the technological edge with metalworking and stamping equipment, he needs half the labor he would have just a few years ago.

“My parts and machines turn labor into smart labor … it sometimes takes away five positions,” he says.

And Mr. Cincotta is looking to start exporting, although not because he wants to. One major customer, Carrier Corp., is leaving Syracuse and asked him to ship electrical parts to Singapore.

Rebuilding to compete

Local leaders point to the former Smith-Corona plant, which covers about 9 acres, and the companies moving into it as a sign that Cortland has a solid economic future.

The main building steadily filled up and is scheduled to be 100 percent full by this summer. Parts of the nondescript shell are walled off for pristine, modern manufacturing operations and the desk-bound operations of a mortgage company. Other sections look much the way they did when Smith-Corona pulled out, with greasy machine tools on concrete floors.

The 21 tenants also include another machine shop, a cutting-edge outfit that manufactures filtration equipment, a jewelry maker and a company that makes wooden decks.

“It’s a very competitive world out there. No matter what industry, it can’t just compete locally anymore, it has to compete worldwide,” says Mr. Chernago, the former Smith-Corona executive.

Mr. Chernago, now in his mid-50s, markets and manages the old plant for a local owner. He also runs a 10-man machine shop, Indacom Tooling, that couples old Smith-Corona equipment with new software and technology to increase productivity.

Ten years ago, Indacom would have needed twice as many workers to do the same jobs, Mr. Chernago says.

Competitiveness means holding the line on labor costs, company officials note. So even though the old Smith-Corona plant is nearing capacity, fewer than 200 work there — less than one-fourth of the 850 laid off in the mid-1990s.

Investing locally

The Cortland community used other existing facilities and contacts in the corporate world to attract new jobs.

“We had to slowly rebuild,” Mrs. Hartsock says. “And we had to organize the private sector … to focus on how to grow their own companies, particularly if they were part of global networks. Rather than invest [in another state or overseas], invest here.”

Investors converted plants to new uses. A former corset factory now houses the administrative offices of a company that tests and certifies the quality of products from around the world. It also holds the administration and distribution center of one of the largest children’s retailers on the Internet: Webclothes, which imports apparel from overseas and ships around the world.

Marietta Corp., which makes and packages sample- and travel-sized soaps, shampoos and other grooming products for marketing drives and hotels, invested $5.3 million to expand its manufacturing operation. Marietta converted an old Rubbermaid facility for the purpose.

Some small companies thrive in the international market. One of them is Cortland Line, which makes synthetic fly-fishing lines.

“The strongest part of our business is exports,” company President Brian Ward says.

A Swedish conglomerate, DeLaval, invested millions in a local farm operation, Dairy Development International, that experiments with new technology and trains farmers from China and Estonia, company President Larry Jones says.

And some Cortland businesses are tapping entirely new markets. WetStone, an Internet security firm, helps the government detect hidden messages sent among terrorists on the Internet.

Measuring success

Smith-Corona remains a defining loss for Cortland. Despite some progress, bad news from other companies followed. Rubbermaid pulled out in 1998. This year, Ramsey, Minn.-based BMC Industries said it would shed 200 factory jobs at its Cortland subsidiary.

BMC is phasing out the manufacture of aperture masks, the components that separate and focus electron beams to produce a sharp color image in television tubes and computer monitors. The subsidiary, Buckbee-Mears, suffered from industrywide overproduction and relocation of television manufacturing to Asia. An outside investor might rescue the local subsidiary, but that hasn’t happened yet.

Typewriters and television-tube parts. Few would argue that the U.S. manufacturing base is weaker because Cortland no longer makes typewriters. Parts for color picture tubes used in traditional TVs and computer monitors could well be heading toward the same obsolescence.

Dollar value sales for “direct view” TVs, made with tubes, are falling while liquid crystal display (LCD) and plasma TV sales are skyrocketing, according to the Consumer Electronics Association.

A churning job market is nothing new for American workers. At the turn of the last century, 40 percent of all workers were employed in agriculture. Today, fewer than 2 percent work on farms, according to the Bureau of Labor Statistics.

One measure of success for cities such as Cortland is the type of jobs that replace the old ones. Many of the new positions do not pay as well or offer similar benefits.

Michele Peak started working at Smith-Corona in 1976, when she was 17.

“I expected to retire from Smith-Corona,” she says.

But when the company started scaling back in the mid-1980s, she jumped to the local manufacturer of television parts, Buckbee-Mears. As that job looked less certain, she made another switch; now she pieces together jewelry for Montage Design inside the former Smith-Corona plant.

“The money was a big change,” Mrs. Peak says. “I’m very happy here, but there was a very big difference. I had to adjust to that. But there’s not a whole lot of jobs in Cortland. You take what you can get.”

‘A painful transition’

A study from nearby Cornell University showed that about one-quarter of former Smith-Corona workers were able to find jobs that required higher skills and paid better wages, but most saw a deterioration in job types and income.

“Workers make a transition, but it is a very painful transition. They almost always transition toward jobs that are less well-paid,” says Lourdes Beneria, author of the study and a professor of city and regional planning and women’s studies at Cornell.

The approximate annual loss in earnings per worker was more than $8,000, a significant setback that tipped wages below $20,000, said the study, published in 2001.

State and federal programs offered training to learn new skills, and most workers were eager to upgrade. But the jobs did not always emerge to take advantage of those skills, the report said.

A follow-up study on Rubbermaid workers showed similar results.

Throughout the region, new jobs have been slow to materialize. Even when they do, they often are not high-wage, high-skill positions.

In nearby Syracuse, a half-hour commute on Interstate 81 for Cortland’s job-seekers, 1,600 private-sector jobs were added in 2003. Those, however, were mostly in labor-intensive service industries such as restaurants and retail, says Roger Evans, principal economist with the state Labor Department.

“The jobs that are growing do tend to be a little lower paying than the jobs that are lost,” says Richard Deitz, a senior economist with the Federal Reserve Bank of New York in Buffalo.

Nationwide, the most new jobs are expected to come in a diverse array of fields, led by high-paying careers such as registered nurses and college teachers, but followed closely by less lucrative positions in retail sales, customer service, food preparation and service, cashiers and janitors, according to Bureau of Labor Statistics projections through 2012. Central New York is expected to mirror the national trend.

Broadening the base

For Cortland, successes made up for some, but not all of the losses. The county averaged 1,600 unemployed workers through 2003, fewer than a decade earlier. But in the meantime, the labor force shrank.

Cortland County’s unemployment rate last year averaged 7.1 percent, higher than the statewide average of 6.3 percent, according to state Labor Department data.

The biggest employers no longer are manufacturers, but the State University of New York and Cortland Memorial Hospital. Managers for some of these employers meet about once a month to discuss specific issues, from downtown parking to foreign competition.

Executives take turns as hosts. At a meeting last summer, Mr. Chernago welcomed two dozen company officials at a picnic-style lunch in a small warehouse where he keeps his collection of classic Studebakers.

Business leaders are hopeful, but wary of outside pressure.

Monarch Machine Tool, which makes metalworking machinery, has seen business slip to Asia. In 1981, the company churned out 40 machines per month, but now makes that many in an entire year, says Wayne Hanna, the company’s recently retired president.

On the positive side of globalization, Monarch’s largest foreign market is China. But the vast majority of business remains in the United States, where the customer base has slipped. The company, like the Cortland area, needs to protect itself, Mr. Hanna says.

“As we look to go forward, we need to evolve into niches where we are protected from competition,” says Mr. Hanna, now a consultant for other Central New York businesses.

“We have to expand business beyond where we are today. That is also the challenge for Cortland, to broaden its base.”

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