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Utah factories emptying out
Utah’s factories are emptying.
In the past 2 1/2 years, the state has lost nearly 15,000 manufacturing jobs, or one of every nine factory positions, Utah Department of Workforce Services data show.
By Steven Oberbeck
The Salt Lake Tribune
The number includes the jobs of nearly 1,000 steelworkers eliminated after Geneva Steel filed for bankruptcy in January 2002 and the steel mill closed. Workers in the aerospace, clothing, computer, food and other industries also have been affected.
Losses of such magnitude raise the specter of buildings sitting shuttered and machinery standing idle in shafts of cold sunlight on bare concrete floors — images that, on this Labor Day weekend, Horace Montoya, of Provo, finds alarming.
"How can a country be a superpower without any steel mills?" asks Montoya, who spent 28 years at Geneva as a scrap burner. "It is almost as if no one cares about the industrial base of our country."
Ed Mayne, a state senator and president of the AFL-CIO of Utah, agrees the United States is abandoning its traditional emphasis on the goods-producing sectors of manufacturing, agriculture and mining.
"We are losing our industrial base, and with it some of the best-paying jobs around," says Mayne, D-West Valley City. "What is really tragic is that they are being replaced with service-sector jobs that offer few benefits and often do not pay enough for people to go out and buy products necessary to keep the economy moving."
The nation has lost 2.6 million jobs since the economy began to weaken in 2000, and 2.5 million of those jobs were in the manufacturing sector.
"The recession and the decline in manufacturing jobs were very much the result of overproduction and excess capacity that built up throughout the economy in the late 1990s," said Jeff Thredgold, economic consultant for Zions Bancorporation. "We simply reached the point where there were too many goods on the shelves."
In response, manufacturers laid off workers to cut costs while they waited for inventories of unsold products to dwindle.
"We haven’t seen job losses in the manufacturing sector this severe since the Great Depression," Mayne said. "It’s a job loss crisis of historical proportions."
Such job loss numbers by themselves, though, may fall short as a measure of the manufacturing sector’s long-term performance on the national or state level.
"The general view that manufacturing is on the decline in this country just isn’t true," said Alan Reynolds, a senior fellow at the Cato Institute, a public policy research institute in Washington, D.C., that espouses free trade and free market economic policies.
"When people say manufacturing is on the decline they generally are talking about fewer people working in that sector of the economy," Reynolds said. "What they don’t point out is that same sector is producing more output with less labor than ever before."
Utah numbers seem to bear that out.
A decade ago, nearly 15 percent of the state’s workers held factory jobs, while today that figure is down to just less than 11 percent, or about 111,000 workers. However, the value of the goods the state’s manufacturing workers produced in 2000 was $8.5 billion, up nearly 85 percent from $4.6 billion 10 years ago.
It also is clear the state’s manufacturing landscape has changed.
Many of the products now produced — microchips, disposable medical devices, automobile air bags and a myriad of other modern-day devices — were unheard of decades ago when manufacturing workers more often were hired for their brawn than their brains.
"Utah’s manufacturing sector is no longer dominated by turn-of-the-century, rust belt-type jobs," said Tom Bingham, president of the Utah Manufacturers Association. "Even our foundries are computerized these days, and we have a fair amount of robotics in place on our production lines."
For many factory workers, that means the skills of the past no longer guarantee secure, high-paying jobs that support families and provide the opportunity for a secure retirement. New skills are required to make it in the modern manufacturing world.
At first glance, Isou Toribau of Interactive Rides of Logan appears a typical welder as he joins two pieces of metal together using an acetylene torch at the amusement park ride manufacturer’s Logan plant.
Toribau, though, recently completed work on a welding and engineering degree from Utah State University that required familiarity with chemistry and metallurgy. His work at Interactive Rides requires him to apply that knowledge along with reading the intricate specifications on blueprints spread out on a desk nearby.
"They give us the blueprints and say build this," said Toribau, a former shipyard worker from Fiji. "It has to be exactly right. The joints you weld are inspected, X-rayed and reinspected. With people’s lives at stake, we cannot afford for them not to be perfect."
Autoliv plant manager Mark Jenkins, who oversees the company’s module manufacturing facility in Ogden, said that company’s workers routinely deal with high-tech machinery used in the production of automobile air bags that are responsible for protecting and saving the lives of countless motorists.
"Our employees didn’t just fall off the turnip truck," Jenkins said. "They’re highly trained workers and the skills they have and their productivity have helped us keep this facility operating in Utah even though we may be able to lower our labor costs by moving elsewhere."
Bingham of the Utah Manufacturers Association suggests such skills may play in the state’s favor when manufacturers must decide whether to seek cheap labor offshore or leave their work forces in place and rely on productivity to make up the difference.
"A lot of the jobs we’ve been seeing move offshore to countries like China, Mexico and Thailand do not require specialized skills," Bingham said. "They are jobs that frequently involve the production of inexpensive products where a lot of labor is involved."
Merit Medical Systems Chief Executive Fred Lampropoulos doubts a move offshore would result in lower manufacturing costs for his South Jordan-based maker of disposable medical products.
"We would have a hard time duplicating our labor force overseas," he said. "Our production has doubled over the past three years but we’ve done that with fewer employees, and it wasn’t just automation. A lot of it was the commitment that our employees brought to the job."
When manufacturing jobs are lost, they are hard to replace, Bingham said. On average, they are among the best-paying jobs in Utah.
Pointing to the 2003 Economic Report to the Governor, Bingham notes the average monthly wage paid a manufacturing worker in Utah stood at $3,020 a month in 2001, the most recent year for which figures are available. Manufacturing compensation compares favorably with the $2,253 in monthly wages paid in the education and health services arena, the $1,021 average monthly wage in the leisure and hospitality industry and the $2,836 a month that providers of professional and business services earn on average.
"They are not only among the best-paying jobs but every new manufacturing job created will lead to the formation of three to four new jobs," at businesses that support manufacturers, he said. "That is why it is sometimes hard to understand why we see such emphasis in Utah on the creation of service jobs" — such as those provided by telephone call centers.
Bingham said Utah needs to provide tax breaks and other incentives to encourage existing manufacturing companies to expand. He suggested the political and economic turmoil in California may provide an opening to lure additional companies to locate facilities in Utah.
"There are a lot of companies in California that are unhappy with what it costs them to operate in that state," Bingham said. "We can provide them with a much lower cost alternative. Our tax structure is better and our workers compensation costs are about 10 times lower than in California."
Bingham noted that several areas of the state, in particular Iron and Washington counties, have been successful over the past several years in recruiting out-of-state manufacturing concerns to bring new jobs to the state.
Just this month, Lozier Corp. said it will take over a vacant plant in Cedar City and employ 100 making retail store fixtures.
"We did see some layoffs over the past three years but at the same time there were a number of new facilities that opened. It improved the job picture considerably," said Lecia Parks Langston, a Utah Department of Workforce Services economist in Southern Utah.
From mid-2000 to the first quarter of this year, Washington County saw its manufacturing labor pool increase by 80 jobs, or about 3 percent. Over the past 12 months, Iron County, which was hit particularly hard during the early months of the recession, lost only seven jobs, she said.
© Copyright 2003, The Salt Lake Tribune.
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