Report: mixed outlook for Ohio factories

Columbus Dispatch

COLUMBUS

Manufacturing in Ohio has begun to show signs of life since the state emerged from the recession. But a new report shows just how far the sector has to go to return to levels of employment seen in 2000.

In 2000, 18.3 percent of Ohio workers were employed in manufacturing, according to the report from IHS Global Insight. Today, 12.8 percent work in manufacturing, even after the sector has gained ground the past three years.

“It’s been a miserable decade, to say the least, particularly when it comes to Ohio manufacturing,” said Karl Kuykendall, an IHS economist.

“We know when we look in the rearview mirror, the pain that we felt was real,” said Eric Burkland, president of the Ohio Manufacturers Association.

Ohio manufacturers were first hurt by a recession in the early 2000s. Then manufacturing took a nosedive during the most-recent recession, the worst economic downturn since the Great Depression.

Job cuts were dramatic, and cash flow for much of the industry dried up to the point that Burkland said there were “worries that we would lose so much fundamental industry capability that we couldn’t recover.”

The state’s manufacturing sector shed about 400,000 jobs over the decade, according to Ohio Department of Job and Family Services data. The state had about 1 million manufacturing jobs in 2000.

But manufacturers have started to come back, adding about 55,000 jobs over the past three years. Productivity also is improving.

Innovation has kept the industry alive. Burkland said the state’s manufacturers have developed new designs and embraced new kinds of materials and technologies.

“That’s really the big story,” Burkland said. “It’s productivity increases that keep us competitive in global markets.”

Even with the loss of jobs, Ohio’s manufacturing sector produced $80.7 billion worth of goods in 2011, the fifth-most in the country and 16.7 percent of the state’s total economic output. The state averaged about $85 billion from 2005 to 2007 before dropping during the recession.

Despite the cuts over the years, the sector still accounts for nearly a fifth of the state’s wages, and Ohio’s percentage of workers in manufacturing is seventh-highest in the country, according to IHS figures.

Productivity per worker is up about a third since 2000, according to IHS figures.

IHS’ most-recent report shows that although Ohio continues to add manufacturing jobs, neighboring states including Indiana, Michigan and Kentucky have been adding them at a higher percentage over the past year.

“Ohio came out very strong,” Kuykendall said of the state’s gains immediately after the recession. “The momentum has cooled a bit since.”

Also, the state’s manufacturers have yet to benefit in a big way from the Utica shale in eastern Ohio, he said. That could change as the area, which is expected to produce significant oil and natural gas, becomes more developed and produces more manufacturing jobs, Kuykendall said.