By: John Pletz email@example.com March 22, 2010
Manufacturers are hiring for the first time in two years, another sign the economy is slowly grinding forward.
Companies large and small that have survived the downturn — from Caterpillar Inc. to Peerless Industries Inc. — are beginning to call back laid-off workers or hire new ones. Illinois manufacturers added 1,000 jobs in January, according to state data, the first month-over-month growth since 2008, even as overall unemployment in the state continued rising, to 11.3% from 11.0%.
"Manufacturing in Illinois is turning the corner," says Mitch Daniels, an economist at the Department of Employment Security.
The addition of 1,000 jobs brings total manufacturing employment in the state to 555,100. But the gain doesn't begin to make up for the 115,800 jobs lost in the sector during the previous two years. With a 17% drop in employment since the recession started in December 2007, manufacturing was the second-hardest-hit segment behind construction.
Daubert Industries Inc. of Burr Ridge, which makes adhesives, undercoatings and other chemicals used by automakers and in construction, has hired four people in recent months after cutting nine of its 140 jobs last year.
"As the general economy picks up, we may have to do some more hiring on the production floor," says Roger Blake, chief financial officer. "But it's wait and see."
Mike Campagna, president of Peerless Inc., says the maker of TV mounting brackets hired about 50 people last year and plans to add another 85 to bring some production back from China. Overall, though, orders are only up "a little bit."
Manufacturing accounts for one out of 10 jobs in Illinois, the fifth-largest source of work. But those jobs have an outsized impact on consumer spending because they pay higher wages than most unskilled and semi-skilled positions: $35,000 on average, but up to $60,000 for unionized work in auto plants and more than $70,000 for highly specialized jobs.
Manufacturers are getting a lift from a variety of factors. For most, their customers have to restock after letting inventories dwindle to record lows last year. Others, such as Daubert, are seeing growth from expansion into new product lines or because rivals have gone out of business.
Peerless, which makes mounting brackets for TVs and projectors, hired about 50 people last year and plans to add another 85 as it brings a product line back from China to a new headquarters in Aurora. Shorter lead times from customers make it impractical to manufacture goods overseas and import them, President Mike Campagna says.
Headcount has rebounded to 400 from about 330 a year ago. Most production jobs at Peerless pay $23,000 to $35,000 a year, or $10 to $15 an hour. Mr. Campagna recently hired a supervisor, two machine set-up workers and two machine operators, and he is looking for two more toolmakers.
Overall, though, Mr. Campagna says orders are reviving slowly after dropping 25% last year: "We're up a little bit."
That's enough, says John Fortino, senior managing partner at Naperville-based recruiting firm Velocity Resource Group. "Even with a small blip of activity, (manufacturers) don't have the capacity to meet these orders. They cut to the bone," he says. "We have clients looking for engineers and plant managers for the first time in 18 months."
Chicago economist David Hale expects Illinois will add 50,000 to 100,000 manufacturing jobs in the next 12 to 18 months. That, along with a slight recovery in construction expected later this year, will begin chipping away at the state's unemployment rate, which is at a 27-year high. "I think we'll get down to 9% unemployment by autumn, 8.5% early next year and approximately 7% in 2012," he says.
Even the hardest-hit industries are rebounding. Glenview-based Illinois Tool Works Inc., which serves a wide swath of industries, saw double-digit sales increases in its transportation and construction segments during the three months ended Jan. 31.
Heavy-equipment maker Caterpillar is hiring back 300 workers in Decatur as orders for mining equipment pick up, especially overseas. It's also called back some workers at plants in Pontiac and Mossville, near its Peoria headquarters. "We're starting to see some pickup in demand," a Cat spokesman says.
Steelmaker ArcelorMittal is bringing back 750 workers as it restarts a furnace and two other production facilities in East Chicago, Ind., to meet rising demand for everything from autos to appliances. Nationally, steel production is up about 60% from a year ago, and mills are running at about 71% capacity, up from 40% a year earlier, according to the Washington, D.C.-based American Iron & Steel Institute.
' We have clients looking for engineers and plant managers for the first time in 18 months.'
Velocity Resource GroupFord Motor Co.'s factory on the South Side is adding a second shift and 1,200 jobs as the new version of the Explorer sport-utility vehicle moves from Louisville, Ky. Lear Corp., which makes seats for Ford, plans to add 285 jobs at its Hammond plant after cutting 121 positions in late 2008.
Those who are hiring are finding a deep labor pool. Lee Dwyer, vice-president of engineering at Starro Precision Products & Engineering LLC in Elgin, needs someone who can set up computerized production machinery. It's a highly skilled job that can pay up to $70,000 a year. He drew more than 50 applicants he considered qualified, from as far away as Colorado and Kentucky. "Before, you might get two or three," he says.
The timing couldn't be better for Mr. Dwyer, who is rebuilding his workforce as his company shifts from automotive and industrial work to medical devices and aerospace products. Starro, which had 100 workers before the recession, now employs about 20, but that could double by yearend.
"We're taking advantage of a bad economy to get some great talent," he says.
©2010 by Crain Communications Inc.