Skip to comments.Manufacturing blues -- Recent layoffs underscore weakness of local economy
Posted on 11/25/2002 12:19:23 PM PST by Willie Green
For education and discussion only. Not for commercial use.
STATE COLLEGE - The recent announcements of layoffs and consolidations by three manufacturing companies with significant local operations offer fresh evidence that the sluggish national economy is hammering Centre County.
Two of the companies, C-COR.net Corp. and Atotech USA Inc., are technology firms. SMS Eumuco Inc. is an old-economy heavy-equipment manufacturer. All blame weak business conditions for downsizing their payrolls or pulling their operations into fewer locations.
A fourth company, Corning Asahi Video, which makes glass panels and funnels for cathode-ray television tubes, laid off workers in September. The company's majority owner, Corning Inc., has said sales of conventional video components are "extremely weak" and the company is considering "alternatives" if business continues to slide.
"What (these companies) show is you are never insulated from national and international economies," Penn State economist Stephen Smith said. "Regardless of the area you are in, you are going to be subject to the business cycle."
Underscoring the weakness, some 2,000 Centre County residents were receiving unemployment benefits in September, according to the latest state Department of Labor and Industry figures. That's 11 percent higher than in 2001.
The average length of time someone living in the county received unemployment payments was 16.8 weeks in September, according to the department. By comparison, the figure was 13.8 weeks in September 2001.
Manufacturing on the decline
In the last two years, manufacturing -- which pays well compared with some other industries -- has been the weak link in Centre County's economy, experts say.
While other sectors have been holding steady or creating jobs, manufacturing has dropped 700 jobs since March 2000, when stock markets peaked and the U.S. economy began to fade. The losses do not include the unknown number of layoffs C-COR is planning at its State College headquarters. Nor do they count the loss of 43 jobs at Atotech, which will move its remaining State College operations to South Carolina and Germany, or 50 layoffs at SMS Eumuco.
"Thank goodness for the Chemcut split because that avoided a deeper calamity (at Atotech). We could have lost the entire thing," said Art Heim, vice president of economic development for the Chamber of Business and Industry of Centre County.
Chemcut Corp. was the equipment division of Atotech until May, when Chemcut was sold to a former executive of Restek Corp. and a past operations officer at Atotech.
"We have a lot of high-tech development in that (State College) area, and that's one sector of the economy that hasn't recovered yet. In fact, it will be one of the laggards," said Richard Moody, an economist for Economy.com, a forecasting company in West Chester.
Layoffs have shown up in more conventional manufacturing. In August, brass manufacturer Cerro Metal Products Co. furloughed 29 workers. The Bellefonte company didn't say why.
SMS Eumuco wasn't so tightlipped. It blames the spluttering economy for its decision to wipe out 50 production and office jobs in Bellefonte next month. The remaining 12 jobs at the former Sutton Engineering facility probably will be consolidated at the company's Pittsburgh office next year.
One of Bellefonte's oldest employers, SMS Eumuco makes locomotive-size machines that shape metal for the aluminum and steel industries. With no orders for new machinery, the company plans to exit the production side of its business and focus on service and spare-parts sales.
Education, government still adding jobs
The rest of Centre County's economy, anchored by Penn State, continues to expand, while unemployment, at 3.2 percent, is the lowest among the state's 14 metropolitan areas. According to the Department of Labor and Industry, 3,400 jobs were added between March 2000 and September, despite the manufacturing sector layoffs. Almost half of the new jobs were in state government, the category that counts Penn State employment.
"In general, the Centre Region is on pretty solid ground, certainly because of Penn State, which is stable and growing, and because of a lot of businesses that depend on Penn State and its activities," Smith said.
It's hard to pinpoint exactly how wages and salaries are changing as the economy sheds manufacturing jobs and creates employment in other sectors. The shift from manufacturing to services is changing the types of jobs available and the wages that workers can earn.
"We have a good, strong economy -- probably the strongest in the state," Smith said. "But manufacturing will be weaker, so where do you find the jobs?"
Total employment increased 4.9 percent between March 2000 and September. While state government created the most jobs, followed by retail and services, the rate of job growth was fastest in retail (11.6 percent), followed by services (7.0 percent) and state government (5.3 percent).
"The losses that occurred in the goods-producing side were more than offset by gains in the service-producing side," Charles Spiroff, an industry and business analyst at the Department of Labor and Industry.
Paul Beebe can be reached at 231-4616 or firstname.lastname@example.org.
And the blissful slide towards Socialism continues...
I've got a suggestion. You can spend two years taking an Emergency Medical Technician course in order to be qualified to get an $11/hr job.
In other words, the "government sector" continues to suck up resources that belong in private hands, burdening the productive economy further.
And we wonder why manufacturing is losing jobs?
This is like saying the cow died so we can't produce any more milk, but we can make up the revenue by selling the carcass for hamburger. No wonder we're in trouble, with government thinkers like Mr. Spiroff.
No doubt the economy is poor in this area, but generally speaking, most manufacturing jobs are lost because of companies' attempts to escape unions and "unfriendly" political cimate as relates to business. Ive been involved in two such moves. The minimum wage is blamed in a lot of cases, but with lower labor cost, almost every other cost is higher. (Training, supervision, delivery etc.)
Good observation but it begs to be the "Chicken or the Egg" poser. Every community in Western PA is scrambling to find some way to increase "revenues", a.k.a., taxes, to close the gap on the deficits. Governments became used to the revenue streams in the good times. They seem to want to be exempt now the streams are turning to trickles. Tough luck for them.