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Jobs, plants fading away

Modified: Thursday, October 22, 2009, 6:00am CDT

Jobs, plants fading away

Leaner landscape on manufacturing horizon

Nashville Business Journal – by Jim Wojciechowski Contributing Writer

Greater Nashville has lost nearly one out of every four of its manufacturing jobs in the past three years.

And further losses are anticipated through 2010, with no sustainable employment gains expected as the economy improves.

“I don’t think we’re ever going to recover to the levels of manufacturing employment that we had before this recession started,” said Matthew Murray, an economist with the University of Tennessee’s Center for Business and Economic Research.

“We have not created a net new job in manufacturing in this state or this country dating back to I believe 1997 or 1998. So, what you’ve got with this recession is really a game-changer.”

The Nashville metropolitan statistical area has lost nearly 25 percent of its manufacturing jobs since October 2006, according to the U.S. Bureau of Labor Statistics. About 9,000 jobs were eliminated in the past year, reducing the total to 64,800. The 10-year-high was 95,900 in April 2000.

The August unemployment rate for the Nashville MSA was 9.8 percent, or 66 percent higher than it was a year ago, according to the bureau.

“The road’s pretty bumpy right now, but I think we have to be optimistic for the future,” said Paul Jennings, executive director of UT’s Center for Industrial Services. “… Manufacturing is going to continue to change over the next several years.

“If you look at the things that are going on with the polysilicon industry and hopefully the automotive industry makes necessary changes, then the future’s going to be brighter.”

Murray said “virtually every sector of manufacturing” has been affected by job cuts, notably transportation equipment and durable goods dependent on commercial and residential construction, such as wood products and furniture.

Light vehicle sales in the United States are down 27.4 percent from last year, according to Bridgestone Firestone North American Tire LLC laid off more than 800 employees from its La Vergne manufacturing plant in the past 10 months, including 385 when its consumer tire division ceased operations.

Summertime layoffs included 111 at Quality Industries of La Vergne, a metal parts supplier for Peterbilt Motors Co., and 125 at Unipres USA Inc., a maker of metal-stamped car parts in Portland.

The biggest blow will come in November when the General Motors Corp. plant in Spring Hill stops production and eliminates about 2,500 jobs. Two Maury County companies affiliated with GM, Penske Logistics and Johnson Controls Inc. will lay off almost 650 employees at that time.

“Almost 25 percent of the counties (in) Tennessee are listed in the federal government’s identification of automotive restructuring job losses so that’s a pretty hefty amount,” said Ken Currie, director of the Center for Manufacturing Research at Tennessee Tech University.

Maury County shuttered 31 non-resident manufacturing facilities, while opening 11, from 2005 to 2007, according to Murat Arik, associate director of the Business and Economic Research Center at Middle Tennessee State University.

“The overall landscape is not so favorable,” Arik said. “There are all kinds of companies going through those things.”

Currie is “not real optimistic” about the state of manufacturing based on the diminished value of the U.S. dollar. The exchange rate for one euro has been around $1.47.

“If we don’t improve the standing of the dollar then we’re not going to be able to have any kind of manufacturing base,” Currie said. “That’s where all of the job creation and wealth creation in the country is, in manufacturing.”

Murray added, “Certainly there will be opportunities in manufacturing but it’s going to be a much leaner kind of environment. We’ve been losing jobs. We’ve been losing manufacturing plants. I will note that despite that, up to the recession, our manufacturing sector in Tennessee has produced more and more manufacturing output.

“So we are doing more with less, and it’s not alchemy. It’s simply a productivity change from using more skilled workers and more advanced technologies in production processes.”

Currie said there are areas of opportunity in energy, information technology and communications products.

“Our real hope lies in trying to be more efficient in product deliveries and product innovations,” he said.

Two major projects in the works promise high-paying jobs for skilled workers and growth opportunities.

The Hemlock Semiconductor Group plant in Clarksville is scheduled to open in 2012 with 500 employees. The work force could nearly double in five to seven years.

At the same time, Nissan North America’s facility in Smyrna plans to begin production on electric cars and lithium-ion batteries, which could entail 1,300 jobs.

“(When) a major company moves into the area … then you can look at how their communities take advantage of that opportunity in terms of attracting supply-chain companies,” Arik said.

Improving the quality of the work force through education and training is key to reviving the manufacturing sector, according to the experts.

“They need to learn the tricks of doing business in the 21st century,” Arik said. “Advanced computer education and some high-tech stuff, they need to move in that direction. Many of the manufacturing workers, they started working with those traditional manufacturing companies about 20 years ago (and) once those companies left the area they don’t have flexible skills to move into other areas, and that’s creating a big problem.

“The local leaders and stakeholders need to emphasize that issue.”

One example is the Tennessee Department of Labor and Workplace Development working with Tennessee Tech on submitting an application this month for $6 million to $8 million in federal funds for green-related job training.

“What you’re going to find more and more manufacturers do,” Murray said, “particularly the ones that rely on more advanced production processes, they’re going to look to young workers and look to workers who are fresh out of a community college or a vo-tech program, if not a four-year degree program.”


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