2007 Industry Report: Manufacturing
TREND: High-tech, low-labor manufacturers are replacing labor-intensive traditional industries such as textiles.
OUTLOOK: New jobs will offset some losses, but don't expect much, if any, rebound in factory jobs soon.
Barry Matherly lives in the future. As executive director of the Lincoln Economic Development Association, he scouts the globe for prospects. The result of his efforts is a mosaic of what manufacturing might become in North Carolina.
An Australian licorice maker moved into Lincoln County. So did a Brazilian producer of automotive gaskets and a Japanese company that makes the guts of catalytic converters. Also arriving: a drug plant, a tortilla factory, a plate-glass manufacturer and kitchen-cabinet builder. "The last three years have been record years for us in new investment in manufacturing and distribution," Matherly says. "Last year was double our best year ever, which was the year before."
What economists have been saying for years - that North Carolina manufacturing needs to move beyond its traditional mainstays of textiles, tobacco and furniture - is happening here and in other parts of the state. There's a catch: Many of the new manufacturers use technology that requires higher-paid workers - but fewer of them - than industries of old. "You are not going to see the thousand-person textile mills coming back anytime soon," Matherly says. "What we are seeing is higher-tech manufacturing, more sophisticated machinery and equipment. You might have 50 to 100 people in a large facility."
Other parts of the state have been able to lure new plants or expansions in fields such as drugs, auto parts, electronics and food processing. But despite hefty investments, the manufacturing work force has not rebounded from the job drain that shuttered many of the state's largest factories. "Most of the layoffs are behind us," Wachovia economist Mark Vitner says. "But there is not likely to be much of a recovery in jobs."
In fact, the state is still bleeding factory jobs. The losses began in 1995 and peaked in 2001, when it lost more than 80,000 - 11% - of its factory jobs. In 2005, manufacturing employment shrank 1.7%, shedding about 10,000 jobs. More were to follow. In November, manufacturing employment was down to 550,700, a decrease of 14,700 - 2.6% - from the end of 2005.
The biggest loser last year was textiles. By November, Tar Heel mills had eliminated 11.6% of their jobs, employing only about 46,000. Maiden-based Carolina Mills, which had 2,600 workers six years ago, announced in May that it was getting out of domestic yarn manufacturing by closing plants in its hometown, Lincolnton and Statesville - its last three - and eliminating 311 jobs.
Apparel employment fell 11.2% to about 20,600, and furniture jobs fell 7% to 50,600. In the first half of 2006, Chicago-based food and clothing maker Sara Lee said it would cut about 175 jobs at a factory in Eden and close one in Statesville, eliminating about 140 jobs. Then in September, it spun off its branded-apparel division as Winston-Salem-based Hanesbrands. Two weeks later, Hanesbrands said it would shutter a 260-employee plant in Lumberton. Lenoir-based Broyhill Furniture Industries, part of St. Louis-based Furniture Brands International, planned to close its last U.S. wood-furniture factory this month, laying off 390. Thomasville Furniture Industries shut a 278-job factory in its namesake.
The news for old-line industries wasn't all bad. Linwood Furniture, formed to make a popular line designed by artist Bob Timberlake, announced in March it was taking over a shuttered furniture plant in Lexington and hiring 200.
Not all manufacturing sectors lost jobs. Transportation equipment grew 4.9% to 38,800 through November, the highest percentage growth in the state, and it appears poised for more expansion. Though it's far from the sea, Kings Mountain became home to a Chris-Craft yacht factory that is expected to grow to 655 workers in five years. Chris-Craft is based in Sarasota, Fla. Indian Motorcycle, which had shut down in California, was revived by new owners who planned to move its headquarters and production to Kings Mountain, bringing 167 jobs.
One issue that continues to frustrate Tar Heel manufacturers is low-cost foreign competition, particularly from Asia. China is a big worry, but so is Vietnam, which is seeking normal trade relations with the U.S. Some Tar Heel textile and apparel companies seeking protections from Chinese manufacturers spent much of 2006 lobbying Congress to block Vietnam's bid. But North Carolina companies don't uniformly oppose Asian competition. Greensboro-based VF and Hanesbrands, for example, say they have benefited by moving production to low-wage countries.