NATION Manufacturing continues its downhill slide

The future of U.S. manufacturing is being questioned as jobs vanish.
CHICAGO (AP) -- The gleaming new Winzeler Gear factory annex looks for all the world like a model of manufacturing success for the 21st century.
The muted whirring of plastic molding machines fills a spotless and airy futuristic hall, where a corner of the production floor has its own art gallery.
The fleet of prolific, automated equipment includes a brand-new $300,000 robot the size of a minivan. The plant's star worker, it turns plastic pellets into 10 million automotive parts a year, then inspects them and packs them neatly into boxes.
John Winzeler's father and grandfather could scarcely have imagined this kind of output when they founded the company in 1940. Yet there's trouble at this plant in suburban Harwood Heights, Ill., and it's a story that is unfolding in various forms at thousands of other U.S. manufacturers.
Revenues are down
Despite all the sophisticated automation and efficiency, revenues are down and demand has shrunk as cost-conscious buyers turn increasingly to China, India and other inexpensive markets.
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.
Jobs decline accelerated
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.
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. But 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.
The economy's downturn, culminating in a recession in 2001, touched off the avalanche of job losses. But that only sped up a process that already was building momentum as a result of several trends.
Not needing humans
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 people a decade ago to today's capacity of 16 million gears a month with 35 people.
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 impact 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.