Region's companies manufacture a resurgence
By Adam Smeltz
Published: Saturday, Aug. 31, 2013, 10:20 p.m.
Toppled smokestacks, idle blast furnaces and soaring unemployment that recast Western Pennsylvania as a struggling postindustrial landscape left a hidden foundation beneath the despair.
Thirty years on, the work ethic and infrastructure that drove the steel boom are helping entrepreneurs reshape regional manufacturing, this time to make a broader variety of goods in more efficient factories, say scholars and business leaders. Pittsburgh and nearby manufacturers turned a gross regional product of nearly $13 billion in 2011, up 10 percent in one year, according to industry estimates the Tribune-Review obtained just before Labor Day.
Their collective workforce — an estimated 97,000 and climbing in the metropolitan area — remains a fraction of the 279,000 at the height of the manufacturing boom in 1979, but it's ticking up slowly from the Great Recession, federal data show.
“What (national) recovery we are seeing is being led by manufacturing,” said David N. Taylor, executive director of the Pennsylvania Manufacturers Association in Harrisburg. “There's a great industrial legacy that creates opportunity for us to build on.”
The bounce is more nuanced in Western Pennsylvania, where high-profile job growth in health care, higher education and business services overshadows the modest gains made in manufacturing, said Downtown-based management consultant Harold Miller. He said Pittsburgh-area manufacturers restored just a quarter of jobs lost in the 2008 recession, leaving many hands-on workers chronically out of luck.
About 8 percent of the region's workers hold manufacturing jobs, roughly on par with national averages but down from 25 percent when the sector was No. 1 in the late 1970s, according to the Allegheny Conference on Community Development.
“You don't end up suddenly with skills and education in another sector,” said Miller, president of policy consulting firm Future Strategies. “A lot of those people who lost jobs are still out there, unemployed.”
Those who do return to the shop floor won't find the brawn and outsized might of the old steel industry, whose mass-produced beams and other large-scale products once accounted for almost half the regional manufacturing base.The 2,900 remaining manufacturers split into smaller and custom niches, drawing on traditional strengths in skilled labor, supply chains and technology to make high-end specialty products that command a lower public profile.
The diversity should help drive 10 percent growth in manufacturing jobs statewide during the next decade, said C. Alan Walker, secretary of the state's Department of Community and Economic Development. He said inexpensive fuel from natural-gas exploration will be key to attracting manufacturers that need a lot of energy for production.
No single type of manufacturing accounts for more than 5 percent of the overall sector in Pennsylvania, now ranging from processed food to industrial parts, furniture and medical supplies, Walker said.
“I don't think you can run an economy that's a pure service economy,” said Walker, who has advocated for a better-skilled technical workforce under Gov. Tom Corbett. “You have to have some manufacturing to hold your economy together.”
Building on a legacy
Investment and vision helped brothers Christopher and David O'Leary turn around Warrendale-based Kenson Plastics.
When they bought the private company in November 2008, it had no sales force. Sales of its custom plastic parts, largely for medical and electronics groups, happened through word of mouth. Outmoded approaches to quality control tempered the products' appeal to some bigger buyers.
“I'm not sure the business would exist now, had it not been for some of the changes we've made,” said company Vice President David O'Leary, who highlighted his family's investments in quality-control systems and aggressive marketing.
As a result of those and other improvements, Kenson was able to add five workers during the past couple years — bringing the staff to nearly 30 full-time employees — and plans to expand into a new factory. Business is on pace to more than double by 2014, said O'Leary, a Beaver Falls native whose grandfather started a foam molding company.
Such strong family ties in entrepreneurship, along with proximity to high-tech, research and medical sectors in Western Pennsylvania, help position the region for a manufacturing resurgence, industry observers say.
Pittsburgh ranked 19th last year among 388 metropolitan areas nationwide in total manufacturing businesses, according to a report by the Pittsburgh Regional Alliance for Catalyst Connection, an industry advocacy group.
The alliance chronicles movement in manufacturers' gross regional product, which reached $141,365 per worker in 2011. Average wages per worker in the sector topped $57,000, about 17 percent higher than the average job in the area, according to the alliance.
“I'm not sure manufacturing will ever be where it was 10 years ago,” said Catalyst Connection President Petra Mitchell, who cited a 25 percent decline nationwide in the past decade. But, she said, boosts in worker productivity, streamlined efficiency and a proliferation of smaller, closely held businesses will have an economic impact, even if direct manufacturing employment remains limited.
“As one industry declines a little, there are a lot of other industries to grow,” Mitchell said. “It's really a driver of the economy.”
Back to the future
Pennsylvania can restore manufacturing's former prominence in the state economy, said Walker, the economic development secretary.
Other analysts aren't so certain but consider several developments promising, particularly for Western Pennsylvania.
One is a three-year, $45 million federal grant shared by schools, companies and nonprofit groups to advance 3-D printing, a revolutionary manufacturing technique. The approach supported by the National Additive Manufacturing Innovation Institute, established under the grant, binds thin layers of material to form an array of goods.
Conventional manufacturing generally takes a reverse approach, whittling away chunks from raw material.
“Certainly 3-D printing has the potential to be a dramatic change in how physical goods are produced,” said Matthew Sanfilippo, a senior executive director of research at Carnegie Mellon University, a NAMII partner. “I think Western Pennsylvania is extremely well-positioned to take advantage of that.”
Other advantages are more entrenched, such as the state's easy access to major markets and its universities that spin out research and business development, said Taylor, the manufacturing association director.
“This is what sustains our quality of life. The manufacturing employer in communities is the top of the food chain. It's the lion on the savanna or the shark in the ocean,” he said.
“They are the great engines of wealth generation that created family-sustaining jobs and uphold the quality of life. This is why we need to fight to keep what we have.”
Adam Smeltz is a staff writer for Trib Total Media. He can be reached at 412-380-5676 or firstname.lastname@example.org.
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