Manufacturing Changing Gears, Seeing Some Growth
NEAL CONAN, host:
This is TALK OF THE NATION. Im Neal Conan from Studio 4 at the Idea Center at Playhouse Square in downtown Cleveland from member station WCPN.
After long months of bleak economic news and sobering unemployment figures, some shafts of light are breaking through the gloom. Manufacturing, the engine of the American economy, ain't dead yet.
While everything from door handles to paint to X-ray machines now seems to come from overseas, American factories are beginning to crank out more products of late and here in Northeast Ohio, in particular.
A Brookings Institution study ranked greater Cleveland second in manufacturing job growth in the second quarter of this year, just behind the nearby city of Youngstown. Products include auto parts, wind turbine bolts and medical imaging supplies.
But while those factories are hiring, they are looking for people with greater skills, which often leaves out workers who lost their jobs over the past few years.
Manufacturers, factory workers, both past and present, call and tell us your story, 800-989-8255. Email us, firstname.lastname@example.org. You can also join the conversation at our website. Thats at npr.org. Click on TALK OF THE NATION.
Later in the program, new uses for abandoned property in smaller Midwest cities. But first, the new face of manufacturing. And we begin with John Grabner, president and CEO of Cardinal Fastener and Specialty Company in Bedford Heights, Ohio, which is just outside of Cleveland. He joins us today by phone from Las Vegas, where he's attending a trade show. And John Grabner, thanks very much for being with us.
Mr. JOHN GRABNER (President and Chief Executive Officer, Cardinal Fastener and Specialty Company): Thank you, Neal. Thanks for having me on your show.
CONAN: And I know that Cardinal has made bolts for the auto industry for several decades. When did you start to make the transition over to wind turbine bolts?
Mr. GRABNER: Well, actually, our bolts are larger than most of the automotive companies would use. So in the past, we have made product for construction industry, for heavy equipment, off-road equipment and steel mill equipment and things like that.
And about three years ago, we started manufacturing product for the wind turbine industry, to construct the big wind turbines.
CONAN: And did this look to you like a bit of a lifeline?
Mr. GRABNER: Well, at the time, I have to be honest with you, I didn't even know what a wind turbine was. But one of our foundations is a thing that I call intellectual curiosity. And we started to check out the industry and found it to be a very exciting industry and an emerging new market in our country.
CONAN: And has that led to a bit of a recovery at Cardinal.
Mr. GRABNER: That's a significant recovery, Neal. This year alone, in a three-month timeframe, we increased our employment 47 percent. And that's just to keep up with the demand of supplying the product for construction of the new wind turbines.
CONAN: And does this look sustainable to you?
Mr. GRABNER: It does. We have had a bumpy road. The current our president has been terrific in really pushing renewable energy. And it is a very popular platform for Americans. Eighty-seven percent of the Americans support renewable energy.
But we'd like to see the federal government support a renewable electricity standard, which would mandate utilities to purchase a certain percentage of their electricity from renewable sources. And that would give it more sustainability.
CONAN: You mentioned the president. President Obama has, in fact, visited your factory.
Mr. GRABNER: Yeah, that was quite a thrill, June 16, 2009. We got a call. He was on his way to his inauguration and wanted to kick off his stimulus package and do it with the backdrop of a company that's changed how they manufacture and do things.
And so he chose Cardinal because we have changed how we've run our company over the past.
CONAN: Two questions emerged from that, one of which was: In this past election, I know you heard a lot of criticism of the stimulus as something that had not generated new jobs.
Mr. GRABNER: Well, I find that interesting because the wind industry alone, there's 84,000 new jobs generated from some of the programs the president has backed, a 1603 tax credit and some other things like that.
So we have benefitted, of course, as I said from that, and there are a lot of other companies I know have benefitted. Recently, a company by the name of Nordex opened a factory in Jonesboro, Arkansas, and started out with about 80 people, and it's going to grow up to 650 people employed there.
CONAN: The other is you're saying you're in a new kind of business, doing business in a new way. Does that mean you need a new kind of worker?
Mr. GRABNER: You know, that's a really good question, Neal, and what I try to encourage companies, manufacturers as well as service companies, is to be innovative and look differently at how they've been doing things.
In June, 1998, we adopted the philosophies of what we call lean thinking, also kind of known as the Toyota Production System. So that kind of catapulted us into the wind turbine industry because we were able to supply parts faster than anyone for a situation they had where they didn't have parts from their normal European supplier.
So lean has given us the ability to respond quickly, improve quality levels and lower costs of manufacturing.
CONAN: It also means you're taking lessons from places around the world, lessons that, well, a lot of American manufacturers might have shrugged off just a few years ago.
Mr. GRABNER: Yeah, that's right, you know, and that's what I tell folks is you've got to be open-minded about this to begin with and never think that you are in the position where you cannot improve your company.
We are constantly searching for best practices and constantly changing how we do things. I think we have moved equipment, oh, about 150 times in the last 12 years to always tweak it and make it a smoother and lower-cost, higher-quality operation. So yeah, we've learned from a lot of folks all over the world.
CONAN: John Grabner, you mentioned at the beginning that you're at a trade show there in Las Vegas. Are other manufacturers at that trade show doing as well as you are?
Mr. GRABNER: Well, you know, it's interesting you ask that because it's the Fastener Trade Show, and it's been going on for about 10 years here. And there was a time when you wouldn't find an Asian manufacturer of fasteners here. And now there are 50 percent of the exhibitors are from Asia, which means not only are they definitely a part of our economy, our own global economy, it also means that we as manufacturers in this country have got to find ways to compete.
And so I have my fellow manufacturers out here of fasteners, some of them are changing, some of them are not changing. And I tell them, you need to learn how to change and innovate if you want to compete with the guys coming in from overseas.
CONAN: John Grabner, thanks very much for your time today, and good luck with Cardinal Fastener.
Mr. GRABNER: Thanks very much, Neal, enjoyed the time with you.
CONAN: John Grabner, president and CEO of Cardinal, and he joined us, as we mentioned, on the phone from Las Vegas, where he's attending a trade show.
We want to hear from manufacturers and, well, factory workers both past and present. Are things getting better, things getting worse? 800-989-8255. Email us, email@example.com. And we're going to start with Paul(ph). Paul's on the line with us from Kansas City.
PAUL (Caller): Hi, Neal, thanks for taking my call.
PAUL: I'm an industrial real estate broker in Kansas City. And what I've seen in 2010 is the expansion of industrial real estate users led by manufacturers, which has not typically been the case. Manufacturing has usually lagged behind other forms of industrial users: distributers and repair people and things like that.
But what we're seeing is industrial expansion leading the way in the industrial market in Kansas City.
CONAN: In what kind of sectors? What kind of manufacturers are you talking about?
PAUL: You know, the industrial real estate is odd because it can be everything from people bending metal and forging things to chemical companies and HVAC manufacturers.
I sold a building this year to a company that makes it's a chemical company that makes the bait which goes into the roach motel. And for some reason, they had a vast need to expand and tripled their square footage in an otherwise very, very quiet industrial real estate market.
CONAN: Please let us know where that is so we will not move in next door.
(Soundbite of laughter)
PAUL: Well, I'm trying to sell the building next door, too. So I can't guarantee that.
CONAN: Well, good luck with that. We appreciate the phone call.
PAUL: Thanks, Neal.
CONAN: Bye-bye. Joining us now is Micheline Maynard, the senior editor for Changing Gears, a reporting project of Michigan Radio, WBEZ Chicago and WCPN, Idea Stream here in Cleveland. She's been covering the transition of America's manufacturing belt and joins us today from member station WBEZ Chicago. And Mickey, nice to have you back on TALK OF THE NATION.
Ms. MICHELINE MAYNARD (Senior Editor, Changing Gears): Neal, it's a real pleasure. Thanks for having me.
CONAN: And how we can't overlook the seriousness of the unemployment situation throughout the industrial heartland, what's now known as the rust belt. But there do seem to be some green shoots.
Ms. MAYNARD: There do. I think this is going to be a real period of transition because over the last couple of years, we've seen just a horrible decline in manufacturing jobs.
I think Michigan lost something like 400,000 alone, and really, it had dropped so low that it really has no place to go but up. But as it's going up, we're seeing a rethinking of what wages are, what benefits are and what products these factories are going to build.
CONAN: Because one of the principles of the old manufacturing economy was you could get out of high school and get a good job and stay on the production line, well, for 30 years and retire.
Ms. MAYNARD: Well, that's right. Our reporter, Dan Bobkoff, who's based there in Cleveland, actually did a story about Sandusky, Ohio. And there literally was a manufacturing plant across the street from the high school, and you could just graduate one day, start the next.
Now, people need to go to college, at least community college, and that raises a conundrum here because this isn't a region where people sort of naturally went to college.
I think Michigan, Illinois - it's only about 25 percent of people who do. So what do you do with folks who get a high school degree and then want to work in manufacturing?
CONAN: And more to the point, what do you do with the people who only got a high school degree, and that was 15, 25 years ago.
Ms. MAYNARD: Right. We're following one worker as part of our Changing Gears series, Joseph Arducan, who took a buyout from Chrysler last year because he just saw the handwriting on the wall.
And as we know, Chrysler's had a terrible time. They were one of the companies that went through bankruptcy sponsored by the U.S. government. He is going to school at the University of Michigan Dearborn. He's considering a couple of different careers.
One of the things he's finding, though, Neal, is he's 43. This time around, he's got to do his studies through a computer. He's got all kinds of assignments to do.
He was working a skilled trade. So he's certainly somebody who had to do a lot of thinking on the assembly line, but he never had to work daily with computers, do PowerPoints, do things like that.
So and there's an emotional sort of aspect to this, as well. This is someone who made a very good living wage, got wonderful benefits. Now he's a college student, and he's got a family, and he's got to think about what's going to be best for him and for his family.
CONAN: Stay with us if you would, Mickey. We're in Cleveland, Ohio, talking about the future of U.S. manufacturers. Right now, there are some bright spots in that economy. So manufacturers, factory workers, call and tell us your story. Are things getting better? Are things getting worse? 800-989-8255. Email us, firstname.lastname@example.org. You can also join the conversation on our website. Go to npr.org. Click on TALK OF THE NATION.
Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.
(Soundbite of music)
CONAN: This is TALK OF THE NATION, from NPR News. I'm Neal Conan, broadcasting from the studios of member station WCPN in Cleveland.
The engine of the U.S. economy, manufacturing, may soon depend as much on wind turbines and electronics as it does on cars and trucks. And as factories change, so do the jobs that are available there.
Manufacturers, factory workers past and present, call and tell us your story. Are things better or worse? 800-989-8255. Email us, email@example.com. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.
Our guest is Mickey Maynard, the senior editor of Changing Gears: Remaking the Manufacturing Belt. She's head of a reporting project at Michigan Radio in Ann Arbor, WBEZ Chicago and Idea Stream here in Cleveland.
And let's bring another voice into the conversation, Edward Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University, chair of the national advisory board of the Manufacturing Extension Partnership. He's here with us in Studio 4, at WCPN. Nice to have you with us today.
Mr. EDWARD HILL (Dean, Professor, Maxine Goodman Levin College of Urban Affairs, Cleveland State University): Thank you, Neal, pleasure to be here.
CONAN: And I know that you've seen manufacturing a bit on the rebound. Is this sustainable?
Mr. HILL: It's sustainable. What you're seeing is a rebound partially driven by inventory, partially driven by auto sales because they have picked up a little bit, and but the long-term sustainability for a lot of the plants that I've been visiting really depends on the value of the dollar.
CONAN: And that's been low, and so American exports are looking pretty attractive.
Mr. HILL: They are. In fact, exports coupled with filling domestic inventory really has powered the rebound. We began to see it in the numbers in June. And it has been sustaining. It's not huge numbers, but it's positive.
CONAN: And when you talk about inventory, 2009, 2010, everybody spent everything down. They weren't buying anything. Things were absolutely awful. So to have any stock in the stores, well, they need to make some...
Mr. HILL: Well, even more than in the stores, in the plants themselves. John Grabner was talking about how at Cardinal Fastener, they've adopted lean manufacturing techniques. And that really does mean keeping inventories to a minimum, very low waste.
CONAN: Isn't that what we used to call just in time?
Mr. HILL: Yeah, I'm an academic, which means it's almost late. But no, it's just in time.
(Soundbite of laughter)
CONAN: And Mickey Maynard, as you do the reporting project around the Great Lakes states, well, as Ned was mentioning, the car business is back.
Ms. MAYNARD: Well, the car business is definitely coming back. One of the stories that we recently did was on the Chevrolet Cruise, which is built in Lordstown, Ohio, maybe an hour or so from where you're sitting right now.
And the Cruise some people think is more important to General Motors than the electric Volt that we've been hearing about for so long because GM needs to be able to compete with companies like Honda and Toyota and Ford, and all of those companies are building small cars here in North America. So GM...
Mr. HILL: I'd also like to point out something for most people think of us a Ford-GM-Chrysler region. But we make three-quarters-of-a-million Hondas in this state, and the Honda supply chain reaches way up into the north. And Honda is every bit is probably more important right now than the other three.
CONAN: Let's get another caller in on the conversation. Let's go to Aaron(ph), Aaron with us from Detroit.
AARON (Caller): Good afternoon, Neal. Thank you for having me on the show.
AARON: Yeah, I just wanted to call in. I work in advanced manufacturing and automation. And over the past three years, we've lost a ton of different customers, but we've actually grown.
And I'm always confused by the kind of term the loss of jobs in manufacturing because there's just as many jobs, there's just different tools doing the jobs now.
And what's driven our growth is that the future of manufacturing is through automation. And Michigan especially doesn't we don't make things anymore, per se, but we're the North American Mecca of systems engineering. So we make things that make things.
And for instance and most of this we're actually exporting to other countries. Pretty much, I would say 70 percent of my work over the past two years has gone overseas, you know.
And going into green technology, I've made a lot of solar panel assembly lines and assembly line equipment, but it's not, it's not being kept within the country. And a better use of the energy dollars that we have, instead of buying light bulbs and insulation from China, is if we to get a check written out to cover all government buildings with American-made solar panels, that would put the Midwest back to work this year, you know, making those systems. And I'll take comments off the air, thank you.
CONAN: All right, thanks very much for the call, appreciate it. And how much of this transition, Mickey Maynard, is, from your vantage point, the old manufacturing industry - the cars - and how much of it is new things like Aaron was talking about?
Ms. MAYNARD: Well, if you think about the old auto industry, you know, back when I started writing about the UAW in about 1990 or so, there were over a half-a-million people in this country who worked for the Detroit automakers building cars. There are now, I believe, fewer than 200,000, and we're still seeing the car companies close those big factories.
We are definitely seeing an opening of this new green technology sector. So there's a new solar panel plant that I visited on the South Side of Chicago. There's a whole raft of companies in Michigan that are competing to build batteries for electric vehicles.
But, you know, those are going to be 100 jobs, 200 jobs, 800 jobs. They're not going to be 2,000, 4,000, 5,000. It's a new way of approaching manufacturing.
CONAN: And Ned Hill, that means that given the fact that I think Ohio also lost 400,000 manufacturing jobs, as well as Michigan, it's going to be a long, hard slog to will it ever come back?
Mr. HILL: Well, it's never going to come back to the old numbers. But we, frankly, spend a lot of time measuring manufacturing by the value of product that's produced rather than the number of people in the plants.
There's a couple real problems we've got with the numbers right now. Most manufacturers we know do their hiring through temporary help agencies. Those don't show up in the statistics as manufacturing workers. They show up as service workers.
The other thing that we see is that throughout this entire recession, productivity increased and new capital equipment kept on going into plants. So they're doing a lot more with fewer people.
In Pennsylvania, we're doing a lot of work in Pennsylvania right now, we've seen productivity go up by the value of the product go up by 20 percent and employment go down.
And so it's really quite interesting looking at that mix. So it is a well, we have to blunt about it. Manufacturing is no longer America's anti-poverty program.
CONAN: And there is also Mickey, you've been talking about differences, complete restructuring of the relationship between workers and employers.
Ms. MAYNARD: That's right. When the car companies got in so much trouble a couple of years ago, as part of the bailout from the Obama administration to General Motors and Chrysler, there were some significant changes in the UAW contract.
And one of the things that has come about not so much because of the bailout but over the last few years was something called two-tier workers. We did a story on workers who are earning about 14 to $16 an hour working alongside people who are getting paid $28 an hour, the veteran workers, right on the same assembly line, sometimes in the same family.
But these two-tier workers, as they're called, this is the wave of the future. And just as Professor Hill said, it's also the idea of hiring temporary manufacturing workers rather than these permanent employees.
CONAN: Let's go next to Laurie(ph), and Laurie's on the line with us from Dearborn in Michigan.
LAURIE (Caller): Hi, Neal. This is I'm with the Society of Manufacturing Engineers. And we are especially concerned, I know you've mentioned a little bit here, about the upcoming skilled worker shortage.
You've been hearing about all this automation and the advanced manufacturing. That needs a different type of a worker than we've had in the past. You know, you could walk across the street from the high school into the plant.
But now you need to have the computer-operated skills. You need to have math and science. You need to have teamwork and communication skills. But we need the people who can program all these, you know, all this equipment that's on the plant floor.
And one way to look at it and think about it is 100 years ago, you know, I think it was about 90 percent of Americans worked in agriculture. Now, it's down to two percent, and yet we produce far much more food than we did 100 years ago.
And manufacturing is going through that same type of an evolution right now. We're still producing an awful lot, but we just need fewer to do it.
CONAN: And the transition was from the mom-and-pop farm to the industrial farm, which a transition not everybody's happy with. But is that the same transition we're going to have to make in manufacturing, as well?
LAURIE: Well, I think Mickey had it correct before, you know, about the smaller manufacturers. You know, they're not going to be, you know, the GMs and the, you know, the large companies. I don't remember the exact percentage, but I believe it's 95 percent of all manufacturing jobs are in small-to-medium-sized manufacturers.
CONAN: So maybe the other way around, Ned.
Mr. HILL: Well, there's a little statistical problem here in that it's absolutely true that most manufacturers are in small-to-mid-size plants. Many of them are owned by large companies.
So Proctor & Gamble, as an example, has a corporate rule that they try to keep their employment under 250 people in each plant. So they have small plants scattered all over the place.
It is true, especially for the big companies, they're turning themselves into assemblers and having global supply chains with large numbers of smaller companies.
CONAN: And, Micki Maynard, I wanted to pick up on another point Laurie was asking about, and that's the educational requirements. The education system in many of the states around the Great Lakes has been in difficulties already, and the budgets of these states are not exactly booming.
Ms. MAYNARD: Well, that's a good point, Neal. One of the things that I noticed when I visited manufacturing plants across the South is that states like Tennessee, Alabama, Mississippi have been very aggressive in offering up their community colleges and their local colleges as way to train - ways to train workers.
When I visited Honda in Alabama, for example, there's a training center for people who want to work at the plant. They get hired in, and they have to spend a couple of months across the street from the factory learning how to be autoworkers, essentially. And some of those projects are run by the state, some of are run by local colleges.
And so these companies are almost taking it into their own hands to provide the kind of education that their workers will need and then the states are picking up the tab.
CONAN: And, again, back across the street from the factory.
LAURIE: The (unintelligible) engineers is working with both manufacturers and with government and educators in coming up with some of those programs. There's a credentialing system that's being rolled out in various states right now that, you know, verifies that this person has the credentials and the skills to do jobs at a certain level, based on what industry needs. And it starts with the basic (unintelligible) that you'll be able to show up to work on time.
Prof. HILL: But, Neal, there's...
LAURIE: And there's certification for engineers.
CONAN: Ned, quick...
Prof. HILL: There are a couple of things going on here. First, we have to recognize that since the mid-1990s, manufacturers weren't investing in training and weren't hiring. The big exception is in the South and that's the reason why you got they've got those facilities in the South. Up in the North, manufacturers have to relearn how to hire again. They are becoming very dependent on temps for doing some of that. And the performance of community colleges differs state by state. Michigan does a very nice job. Ohio does a nice job. A few of the other states aren't as strong in doing this.
One of the real challenges you have is this myth that everyone should get a BA in order to have a successful economy is actually hurting the ability of people to earn higher, more stable incomes and things like industrial maintenance engineering.
CONAN: Ned Hill is dean and professor at Maxine Goodman Levin College of Urban Affairs at Cleveland State University. Also with us, Micki Maynard, senior editor at Changing Gears.
And you're listening to TALK OF THE NATION from NPR News.
And let's go to Jim, and Jim's on the line from Omaha.
JIM (Caller): Yes.
CONAN: Jim. Go ahead, Jim. You're on the air.
JIM: Okay. I just have a couple of questions. And one is, with all these green jobs that we are creating, how soon are they going to be moved to China and India and Mexico? Because I worked at two different plants and both plants one's over in India and China, and the other one is in Mexico. And I live in Canton, Ohio. Another one has moved - Timken Roller Bearings that moved their bearings to China and India. Now, what's going to stop these corporations, after they get all the technology created and done, to move overseas?
CONAN: And that's a question that a lot of people have had about American manufacturing for some years, Ned Hill.
Prof. HILL: Yeah. We can talk about Timken in particular. Timken has eight facilities in South Carolina. They aren't investing a lot in Ohio right now, just because they're customer basis in here. They are in India, and they are going to China, and the reason is their customers are telling them to go there as being part of their supply chain.
What the folks at Timken will tell you that as they expand globally, it's increasing number of jobs, not on the plant floor in Canton, but in the research and development facilities management. And they're still investing in a plant in Canton. They're following - in a global economy, you follow your customers and you follow growth.
CONAN: And what about Jim's point though. If we start developing, well, the cardinal manufacturing bolts for the wind turbines. A lot of those wind turbines are manufactured in Vietnam and China.
Prof. HILL: They are right now. And here's the problem we have with all the alternative energy. We produce - the industrial rate for energy is five cents a kilowatt-hour. From alternative energy, it's 15 - it's production cost is 15 cents, plus, per kilowatt-hour. The only reason why that market exists is because of set aside in state mandates. In Ohio, I believe, it's 20 percent...
Prof. HILL: ...in tax breaks. As soon as those things go away, then the industry really isn't on firm economic footing. That's the reason why John was asking for bigger set asides. That's industrial policy and we need a conversation about it.
In Ohio, the alternative energy is actually going to come from natural gas from the Marcellus Shale region in Pennsylvania and New York, and in West Virginia and eastern Ohio.
CONAN: But there's a lot of controversy about that on environmental grounds too.
Prof. HILL: We will frack(ph) that conversation forever.
CONAN: Jim, what are you doing now?
JIM: What am I doing? I actually work for a company that - they build transformers - they don't build transformers. They build equipment that drives transformers out. And I travel all over the country now. But...
CONAN: And so...
JIM: ...that's because I lost my job at Diebold Safe and Lock, which found that India was much more profitable to go to, rather than take care of the people in Ohio. And there are many corporations like that, like Hoover, which just moved out two years ago out of North Canton, Ohio. And they moved to Mexico and to China. Now, there's no way that the American people can live on the wages that are being paid in China and India and Mexico. And as long as there is no legislation to help the American people and the workers, they are going to continue to lose all their jobs.
CONAN: Jim, good luck to you. Thanks very much for the call.
JIM: Thank you.
CONAN: And let's see if we can go to one more caller. We'll go to Pamela. Pamela with us from Toledo.
PAMELA (Caller): Hello.
CONAN: Hi, you're on the air. Go ahead, please.
PAMELA: Hi. I work in Toledo for the Jeep supplier park, actually Mobis North America. And we're actually subsidiary of Hyundai. And what I find interesting about our concept is that - right now, we have three different suppliers working for Chrysler, Fiat. And we produce the Jeep Wrangler. Right now, we're working 10-hour shifts, six days a week. And it's wonderful for us. We've - you know, a couple of years ago, we didn't have this kind of income. A lot of us were suffering because of the restructuring of Chrysler necessitated that we were laid off for quite a few weeks out of the year. And this is a wonderful turn around for us.
CONAN: Well, it's nice to end on a positive note. Thanks very much for the call. And we need to thank our guests. Micki Maynard, the senior editor of Changing Gears, which is, of course, a project of Michigan Radio in Ann Arbor, Chicago Public Radio and ideastream in Cleveland. And our thanks also to Ned Hill at Maxine Goodman Levin College of Urban Affairs at Cleveland State University.
When we come back, reusing abandoned property. Stay with us. It's the TALK OF THE NATION from NPR News.
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