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Manufacturing Shows Growth but New Jobs Lag
YOUNGSTOWN, Ohio -- The Mahoning Valley isn’t necessarily experiencing a manufacturing renaissance in the traditional sense – that is, the rebirth of large-scale factories and industries that employ thousands of people under their roofs.
Instead, the region is undergoing an industrial transformation and resurgence that is heavily reliant upon smaller producers and new technology – suppliers, machine shops, fabricators, aluminum extrusion operations – that collectively employ tens of thousands in the area and who remain competitive by investing in high-end machinery to enhance productivity.
It’s these employers who are helping to shape the future of manufacturing in northeastern Ohio and western Pennsylvania.
Large-scale projects such as Vallourec Star’s $1 billion fine quality mill in Youngstown helped bring more than 350 new jobs to the Mahoning Valley, but also introduced some of the most sophisticated production equipment on the market today. Other companies also are investing in high-end technology to make their operations more competitive.
“We’re upbeat,” observes William Orbach, president of Ohio Star Forge.
Orbach’s company recently completed a $20 million expansion of its plant in Champion, consisting of a 33,000-square-foot addition to house new forging equipment that could double processing capacity to 36,000 tons a year. The company manufactures products such as wheel bearings, gear blanks, and hubs for the automotive market, as well as fasteners and fittings for industrial and energy applications.
“The automotive sector is looking at a 16 million-unit build rate,” Orbach says, which means additional business for Ohio Star Forge this year. “We’re a little concerned about the industrial sector, but automotive is growing, expanding and adding a surge to the GDP.”
Orbach anticipates his company’s business to increase by 10% this year versus 2013.
Beginning in our February print edition, The Business Journal initiates a year-long series of stories that examines emerging trends in manufacturing. These stories highlight the diversity of industrial production in the region, advanced and traditional manufacturing methods, employment opportunities in manufacturing, workforce development and training, challenges facing producers today, and the many products made here in the Mahoning and Shenango Valleys.
According to statistics compiled by the Youngstown/Warren Regional Chamber, which are based on data from the companies the organization has assisted, in 2013 manufacturing concerns spent at least $285.8 million on various expansion projects, creating 266 jobs and retaining 549 positions.
Those numbers are a major improvement from 2009, when the Valley saw just $65.8 million in new manufacturing investment, the chamber reports.
In 2010, that number skyrocketed to $684.8 million in spending, 636 new jobs, and 416 jobs retained. Another $206.2 million was pumped into new projects in 2011, creating 817 jobs and retaining 1,670 positions.
The trend toward new investment continued in 2012 as manufacturers spent $330.4 million on new expansion projects, adding 266 jobs and 549 positions retained.
Over that five-year period, the chamber reports that it assisted with 116 manufacturing projects that leveraged a total of $1.5 billion worth of new investment. In addition, the chamber reports these projects brought with them 2,196 new jobs and 7,866 jobs retained.
Despite an overall sense of optimism that the economy is improving, and it is, there’s also evidence that the Mahoning Valley’s manufacturing sector, much like the rest of the country, is still slowly clawing its way back from the Great Recession of 2008-2009.
That is, at least, in terms of net job growth.
According to the most recent data provided by the U.S. Department of Labor’s Bureau of Labor Statistics, employment in the Youngstown-Warren-Boardman metropolitan statistical area’s manufacturing sector stood at 31,000 in December 2013. This accounts for 12.6% of the employed workforce.
By comparison, in July 2009, the region’s manufacturing payrolls contracted to 24,600.
Still, December’s employment numbers in manufacturing fall well short of pre-recession levels, these statistics show. In 2006, for example, the number of workers employed in various forms of manufacturing in the Youngstown region averaged 40,100, and in June of that year hit 41,000, according to the Bureau of Labor Statistics. In 2008, as the economy began to falter, employment in the manufacturing sector averaged 34,800 and hit a peak of 35,500 employed that year.
Nevertheless, several pockets of the region’s manufacturing economy are enjoying robust years. Those tied to the automotive industry and oil and gas exploration, for example, have turned in solid numbers and are looking at expansion in the Mahoning or Shenango valleys.
“Automotive is growing across our industry, so we’ve taken advantage of that and we’ll definitely continue to invest in this area,” says Dave Riebe, president of Pennex Aluminum Co., which plans to invest about $33 million to expand its plant at the Leetonia World Trade Park in Columbiana County. Pennex produces aluminum extrusions that are formed by manufacturers into products used by the auto industry.
The proposed expansion would add 170,000 square-feet to the 90,000-square-foot Leetonia plant, Riebe says. The addition would make room to accommodate a new, highly advanced extrusion press and a new specialized fabrication and machine shop, he notes. “We’ll be adding about 65 people over the course of three years.”
Projects last year associated with oil and gas production in the Utica and Marcellus shale plays in eastern Ohio and Pennsylvania confirm that manufacturers are interested in setting up shop in this region. Texas-based Legacy Measurement Solutions, the largest gas measurement company in the United States, announced plans to expand its manufacturing footprint in Brookfield with a 73,000-square-foot plant. And Brilex Industries of Youngstown cut the ribbon on a joint venture with Houston-based Valerus, a supplier of oil and gas production equipment. The partnership led to the opening of a 50,000-square-foot plant on Andrews Avenue.
The Shenango Valley has also witnessed an uptick in attracting new companies tied to the oil and gas supply chain. In January, Noise Solutions Inc., based in Calgary, Canada, opened its new plant in Sharon, Pa. The company selected this region because of its access to oil and gas producers drilling in the Utica and Marcellus plays.
“At this facility, we’ll be eventually manufacturing the complete gamut of Noise Solutions products,” says Scott MacDonald, Noise Solutions’ president and CEO. The company manufactures noise-suppression equipment for industry – especially for the oil and gas industry – and purchased and renovated a former Winner International warehouse where it operates its fabricating facility.
The new plant began operations in November and employs 35 people, but those numbers are likely to increase as demand for Noise Solutions’ products grows with the growing oil and gas market, MacDonald reports.
The company CEO says the goal is to employ about 125 within the next three years.
If things keep going the way we anticipate, then we’ll trump that, hopefully,” MacDonald says. “Roughly 65% of our business came out of this area last year. I really see this area as ripe for explosive growth.”
EDITOR'S NOTE: This story first appeared in The Business Journal's February edition, in subscribers' mailboxes this week.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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