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March 19, 2012

Grinding It Out In Manufacturing | Technology, exports and greater efficiency help fuel industry resurgence

At Saint-Gobain's sprawling 103-acre Worcester campus, there are fewer employees working today than there were in 2007 and 2008, but the company's revenues have surpassed those pre-recession years.

A combination of newer technologies, efficiency measures and the pursuit of new markets has allowed the company to do more with less, said Robert Smith, vice president and general manager of Saint-Gobain's bonded abrasives division.

"2009 was a tough year here," Smith said. "Now, business is coming back."

Like many manufacturers, Saint-Gobain is using technology and more efficient processes to compete in a global economy.

The French company spent $10 million over the past few years to consolidate operations, renovate its space and rearrange some of its production lines with lean manufacturing principles in mind.

A new, high-tech press is now spitting out grinding wheels four times faster than previous equipment did. And production of smaller grinding wheels for the electronics industry is now housed in a more modern facility, which has helped the company pursue new customers.

With 1,300 employees, Saint-Gobain is far bigger than the average Central Massachusetts manufacturer, but its experiences are not altogether different, said Jack Healy of the Massachusetts Manufacturing Extension Partnership.

"That fact that manufacturers were able to survive through 2009 really says a lot about the health of our industries," Healy said. "Most of the companies I know lost 20 percent of their sales or more during 2009."

Manufacturers are not rushing to hire, but they are recovering, he said. And they're looking to build their capacity with an eye to the future.

Though the number of employees in Central Massachusetts' manufacturing sector has fallen by more than 22,000 (nearly 29 percent) over the past decade, Healy said manufacturing is stronger than ever when measured by efficiency, productivity and, for some, revenues.

"In any business, you would say 'Wow, what a success,'" he said. "But somehow we feel compelled to measure manufacturing based on jobs."

There are other positive signs for the sector. Average weekly wages for manufacturing jobs in Worcester County have risen $276, or 29 percent, since 2001.

And exports, an important sign of health, seem to be recovering, said Julia Dvorko, Central Massachusetts regional director for the Massachusetts Export Center.

"Recently I've started running into companies where 40 to 60 percent of their sales are international," Dvorko said. "A lot of times, international markets are the growth strategy."

In 2010, more than 57 percent of the Worcester metropolitan area's $2.4 billion manufacturing output was exported, the U.S. Department of Commerce said.

Exports from the Worcester area fell between 2005 and 2010, according to the department, but Dvorko expects to see improvement for 2011 once her office crunches all of the numbers.

Statewide data, which is available earlier than local data, showed improvements in 2010 and 2011. Exports climbed from $23.6 billion to $26.2 billion in 2010, then to $27.7 billion in 2011.

Banking On Exports

One of the many exporters in Central Massachusetts is Heat Trace Products in Leominster, where 30 employees make heated cable used in a variety of industries to keep pipes from freezing, as well as to maintain precise temperatures.

President Wayne Canty said exports account for approximately 60 percent of company revenues.

"One of the biggest changes has been the growth of international markets," Canty said.

Former Soviet Union republics such as Kazakhstan are major export locations for Heat Trace, which competes with Tyco International. Canty also has his eye on Brazil, a rapidly growing economy where he hopes to establish manufacturing operations. He traveled there last summer with a Massachusetts delegation headed by Gov. Deval Patrick.

"It's just growing so quickly," Canty said.

Developing specialized products that few others (or no others) can make has helped him grow his international business, he said.

Dvorko said the most successful exporters have their domestic houses in order before jumping into international markets. "We can help with a lot of things, but if a company isn't in good health, it won't work," she said.

Staying Flexible At FLEXcon

For Spencer-based adhesives and laminates maker FLEXcon, lean manufacturing processes and training employees across departments to use different machinery provided some cushion when 2009 came, said Michael Kelliher, executive vice president of sales and marketing.

The company did not lay off workers, but used furloughs and attrition to get by.

"We were very creative and it was a company-wide effort," Kelliher said.

Howard Letendre, director of finishing technology, said investing in new machinery has helped the company cut down on waste and speed up certain operations. For example, a manufacturing employee used to take about 40 minutes to set up the old equipment to produce an order. Automation has cut that to less than three minutes.

"It's about competing," Kelliher said. "Certainly, automation has played an important role."

Job Trade-Off

Manufacturing has become more high-tech and specialized by necessity. But the trade-off has been in jobs, said Martin Romitti, an economist at the UMass Donahue Institute who co-authored a recent report on job openings in the manufacturing sector.

The study found that there were 73,000 manufacturing job openings in Massachusetts during 2011, behind only the health care and social service sectors.

More interesting was that more than 94 percent of those openings were for positions in sales and marketing, customer service, management and information technology. There were far fewer openings for "traditional" manufacturing positions like machinists and assemblers.

"I think it really speaks to how much manufacturing has changed itself as an industry, particularly as manufacturers try to remain competitive in the global economy," Romitti said.

Manufacturers have adapted and evolved, and Romitti said he expects them to continue to grow and rebound from the recession. But he has concerns.

"From an economic standpoint, I have a great concern about needing to maintain a sizeable and efficient manufacturing sector in the United States," he said. "We need manufacturing to be this bridge to keep the economy healthy."

Still A Strong Presence

Approximately 293 Worcester County manufacturers – more than one in five – have closed, merged or left the state since 2001, according to data from the Executive Office of Labor and Workforce Development.

But there are still more than 250,000 manufacturing jobs in Massachusetts, more than 56,000 – or 22 percent – in Central Massachusetts, where manufacturing still accounts for more than 14 percent of the area's economic output.

Romitti hopes the study's finding that manufacturers are looking to hire for positions not traditionally thought to be directly related to manufacturing will push job seekers to apply.

He said some of the state's 240,000 unemployed workers might not realize a manufacturer could have a place for them.

The fact that there are fewer openings for production roles could be interpreted to mean manufacturers have less need for them. Judging by job numbers, that's true. But those jobs still exist, and the finding could also indicate lower turnover rates among an older workforce.

Career Path

Saint-Gobain, Heat Trace and FLEXcon all said they have longtime workforces with low turnover.

At FLEXcon, 80 percent of the staff has been there at least a decade.

That has its benefits. Experienced workers make fewer mistakes, said Kelliher.

But what happens when they retire?

At Saint-Gobain, Smith said the company has found a skills gap when it looks for new employees to replace those who are retiring. A drug test and a skills test in mathematics and reading manufacturing schematics usually weed out half of potential applicants, he said.

Another concern, said Brad Johnson, vice president of abrasives at Saint-Gobain, is that the people with the skills the company needs may not think of manufacturing as a good sector to work in.

"I think for people in the past, it used to be that manufacturing was a place to go where you'd get a good job and good benefits," Johnson said. "As a society, 15 years ago that kind of faded away, and manufacturing was a dirty, ugly business."

It can be a tough perception to shake, he said. But he said employees who work hard have a career ahead of them at Saint-Gobain, with good pay, competitive benefits and a chance at pursuing more education.

"I think people in this plant who are here for a while and are successful make a pretty good living," he said.

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