NATION U.S. manufacturing begins to soar again after drop in business

Manufacturers are bouncing back with fewer workers.
CHICAGO TRIBUNE
CHICAGO -- The comeback in the nation's manufacturing sector is bringing a smile to Harry Moser and thousands of his colleagues at McCormick Place this week.
After years of decline, manufacturing is getting healthy again and the attendees at the world's biggest trade show for machine tool technology are infused with a more upbeat attitude than it has seen in years.
"Our business in August was way up," said Moser, president of two Lincolnshire, Ill.-based firms, Charmilles and Mikron, that provide milling and cutting equipment to machine shops. "That's exceptional because summer is slow anyway and people usually hold off making orders until they come to the show. But our orders are 30 to 40 percent over what we expected."
Others at the International Manufacturing Technology Show had similar stories.
"We've seen some work that had gone to Asia now coming back," said Chris Kaiser, president of BIG Kaiser Precision Tooling Inc. based in Elk Grove Village, Ill. "We now have 24 employees, up from 20 at the first of the year. This year, each month has been better than the one before."
William Strauss, senior economist at the Federal Reserve Bank of Chicago, said manufacturing orders have increased in 12 of the past 14 months.
"Nationally, manufacturing peaked in June 2000, and has seen a tough couple of years since. But with the 14-month surge, it's recovered 95 percent of its losses. We're sitting just 0.3 percent away from hitting an all-time record."
Getting the advantage
Several factors are working to the advantage of North American manufacturers now, said John B. Byrd III, president of the Association for Manufacturing Technology, which sponsors the trade show.
Rising U.S. productivity combined with escalating shipping costs and difficulty obtaining raw materials for Asian manufacturers have put North American manufacturers in position to enjoy the best boom in a generation, Byrd said.
U.S. manufacturers still face health-care costs and tax policies that put them at a disadvantage with foreign competitors, but for the time being other factors have overcome those burdens, he said.
Every aspect of manufacturing is looking up except for employment, he said.
"The average manufacturing facility in the U.S. is 55 percent more productive today than it was 12 years ago," said Byrd. "When you're more efficient, you need fewer workers. The reason for the decline in manufacturing jobs isn't that the jobs went overseas. They've been replaced by technology.
"In the last five years American manufacturing jobs have declined by 11 percent. During that same period jobs in China declined by 16 percent."
Run by computer
While machine tools still cut, twist and bend metal into new shapes, they now are largely computer-controlled. Manufacturing benefits from computer chips that double their efficiency roughly every two years.
On the shop floor that means that whereas one employee used to operate one machine, he now may oversee the operation of three or four, said Moser. And machine shop operators are constantly on the prowl for new technology to further boost productivity.
One product line Moser's firms sell uses electricity to vaporize metal. That's an established technology, and Moser said its business grew by about 20 percent in recent months. But his other product line -- high-speed milling -- is newer technology that enables shops to do things more quickly and flexibly.
"High-speed milling machine sales are up about 140 percent over last year," he said. "That's because the technology has improved rapidly and acceptance of it has grown."