EXPERTS SAY CLARK COUNTY IS IN BETTER SHAPE FOR JOB GROWTH

America's manufacturing glory days may be over, but Clark County appears to be better positioned for industrial growth than most of the rest of the nation. Manufacturers here have been adding jobs for the past year, new manufacturers are moving in, and there's more readily available land in Clark County for new industrial development than can be found in much of the rest of the Portland area. The manufacturing sector is growing, but today's uptick follows years of steady decline.

Vanalco's aluminum smelter closed in 2000, Boise Cascade laid off its last Vancouver paper workers in 2005, Georgia-Pacific is whittling its once robust work force to 500, and Frieghtliner's layoffs in Portland will affect at least 200 Clark County residents directly and an unknown number who work for the truck-maker's suppliers. These cuts matter. Manufacturing contributes trillions of dollars to the U.S. economy and millions to the local economy. Workers involved in making things earn more money and have more stable jobs than their non-manufacturing peers. As manufacturing jobs disappear, average wages decline. B2B takes a look at where things stand now for Clark County's manufacturing sector, and what businesses and economists expect in the years ahead.

Economic relevance
Local manufacturers build semiconductors used to power cell phones and computers, they make packaging material for cross-country food shipments, they contribute to construction of bridges and roads, they make pallet-loading machines and produce products sold in the U.S., Asia, Europe and around the world. But the sector shrank significantly in the past seven years before rebounding. There were 17,300 local manufacturing jobs in 2000. That number started dropping the next year, and bottomed out at 13,200 in 2003. Although the total number of local manufacturing jobs has since grown to 13,900, manufacturing is now a much smaller share of the total job market. From nearly 15 percent of all jobs in 2000, manufacturing now contributes 10.7 percent of total employment.

The workers who have stayed in the sector are better off than their peers at large, however. The average Clark County wage is $36,700. For those working in manufacturing, that average is $45,600, a substantial premium, said state labor economist Scott Bailey.

The recession that began in mid-2000, hit manufacturers hard across many sectors, but those that survived say they are stronger and well positioned for growth. "During the downturn, probably 50% of the business that would be in our same space went out of business," said Frank Nichols, president of Silicon Forest Electronics, which makes custom electronic circuit card assemblies for medical, military and industrial buyers. Vancouver-based Silicon Forest survived by cutting back -- employment dropped from 98 to 70 -- and by boosting productivity. "We were just trying to avoid the pieces of the sky that were falling," Nichols said. When the economy rebounded, Silicon Forest stepped into niches left open by competitors that did not survive. "What was left is now being shared by 50 percent fewer manufacturers," Nichols said. "Ultimately, there's still competition, but it's less difficult than it was before." After growing roughly 30 percent in 2006, Silicon Forest now has 115 employees. The company projects 25 to 35 percent growth this year.

Vancouver-based Thompson Metal Fab experienced a similar industry shakeout, but unlike high-tech manufacturers, custom heavy metal manufacturing had been experiencing a steady decline for years. "There were a lot more competitors when I started, especially in the small and mid-range market, for custom fabrication and custom manufacturing," said John Rudi, president of Thompson Metal, who has 17 years in the industry. "A lot of those businesses have either financially gone out of business or the owners have retired. There was a big wave of people that grew up in manufacturing from the baby boomer generation. As those people get closer to retirement, there are fewer people to take their place." When the economy started to pick up post-recession, companies that remained, including Thompson Metal, benefited. "The current market can better support the remaining players," Rudi said, and work has been steady.

Adding jobs at SEH America
Among other manufacturers that have increased post-recession hiring is SEH America, which has been adding workers as it expands silicon wafer manufacturing at its Orchards plant in Vancouver. Permanent employment there stands at 750, but the company also has hired dozens of temporary workers to get through the expansion.

Despite the recent manufacturing employment growth, not all sectors are doing well. Paper making has been shedding jobs, economist Bailey said. Most recently, Georgia Pacific cut 300 jobs at its Camas paper mill. Portland-based Freightliner is shedding 800 jobs and shifting some truck manufacturing to Mexico. The move will ripple through businesses like Commercial Vehicle Group, with 100 employees in Vancouver, which supplies Freightliner.

Despite cuts and slow post-recession rebound, Pacific Northwest manufacturers have fared better than those in other regions. "If you look at the rest of the country, there's been no recovery in terms of employment in manufacturing," Bailey said. From a peak of 17 million manufacturing jobs, the U.S. dropped to 14 million manufacturing jobs during the recession, with virtually no recovery since then. "The Northwest, compared to the rest of the country, is fairly well-positioned," Bailey said. "Washington state has seen a pretty good increase in manufacturing employment. We're not back to where it was, but we're better than at the bottom of the recession." At the end of 2006, a total of 291,400 workers were employed in manufacturing throughout Washington, up 13,200 jobs for a strong 8.1 percent increase over 2005. During the same period Clark County added 700 manufacturing jobs for a 5.1 percent increase.

Businesses that have chosen to stay in Clark County say that within their niches, it just makes sense to stay here. Manufacturing here allows for quick turnaround and attention to quality. Businesses with local buyers also cite proximity to their clients and lower shipping and transportation costs as advantages. A favorable foreign exchange rate is also good for U.S. manufacturers. A cheaper U.S. dollar makes U.S. goods less expensive and foreign goods more expensive, said Bailey. "It has been working in our favor over the last year and will continue to do so over the next couple of years."

Regional strategy
At Thompson Metal Fab, Rudi predicts that his industry will always have a U.S.-based presence. "There is going to be a certain level that is not going to be economically practical for foreign competition to come in and supply," he said. "You may always need an overpass for a bridge. When you think about rising fuel and shipping costs, you want it timely and cost effectively, it may not make sense for someone to make it in China and ship it here."
Sunrise Washington, a subsidiary of Rancho Cordova, Calif.-based Sunrise Manufacturing, is in Vancouver for strategic reasons. The company, which makes cardboard used to secure loads in railcars and trucks, manufactures its products for national companies. "We can place a bid and do the work closest to where the product is needed," said Dan Morey, general manager, which gives Sunrise an advantage.

"We ship same day, so we have to in-source everything," said Rick Campfield, chief operations officer at Vancouver-based U.S. Digital, which makes the motion control products its engineers design. If the company outsourced the manufacturing, the turnaround time would be too long, Campfield said. Quality control is also easier when manufacturing is kept in house, Campfield said, a sentiment echoed by Nichols of Silicon Forest. "We are a low-volume, high-mix operation of very high quality," Nichols said. "That is a specialty not normally found in China, at least today. They have the technology to do this, but they're looking to exploit their low-cost environment, which means they do a lot of volume." Still, outsourcing has its allure, and has cut deep into local employment. Freightliner first started sending work to Mexico when its Portland plant reached capacity in the late 1990s. C-Tech Industries, which makes pressure washers at its Camas facility, is also growing in Mexico. For manufacturers that plan to stay in Clark County, productivity is key. "Manufacturing has higher productivity growth than many other industries," Bailey predicts. "There are more chances to automate, to become more efficient." As a result, the number of jobs in manufacturing will not grow as quickly as revenues, he said. That's certainly true at U.S. Digital, which has a "MacGuyver team" dedicated to finding creative new ways to automate. The company has used its motion control to automate many steps of the manufacturing process, Campfield said.

Looking Ahead
Looking forward, economist Bailey sees regional expansion in most manufacturing sectors, especially electronics and machinery, with continuing weakness in transportation equipment and paper manufacturing. Heavy manufacturing is often cyclical, and depends on housing and industrial construction as well as road and civic projects for its orders. Some projections from Thompson Metal suggest a minor slowdown may be ahead, perhaps tied to declines in home construction, Rudi said. "I see less projects out for bid than I did six months ago, and we have an internal look that says we don't see as many opportunities going forward," he said. The company has worked to diversify into different markets, and expects to weather any slowdown.

Beyond this year, Clark County's manufacturing growth prospects look better than the national long-range outlook, or even than the Portland metro area, Bailey said. "We'll at least hold our own on total employment because we have available industrial land." The Port of Vancouver's planned purchase of dormant Alcoa and Evergreen Aluminum LLC properties will be a boon, Bailey said. "We should attract expansions and new firms -- more than our share in the metro area -- because of that land availability."

THOMPSON METAL FAB • President: John Rudi • Industry: Heavy manufacturing, custom metal fabrication • Employees: 160 • Revenues: N/A • Recent history: Many metal fabs shut down during the recession three years ago while other businesses closed as their owners retired. "When the economy started to pick up, there were fewer suppliers for general contractors and the government to turn to when they needed heavy projects to be built," Rudi said. "That's been very good for us in the Northwest who made it through." • Looking ahead: "Finding skilled labor is a problem," Rudi said. "We're trying to develop a coalition of manufacturers to focus on training to put programs together and introduce kids coming out of high school to the idea that there are good careers in manufacturing." Rudi projects that there will always be a place for manufacturing in the U.S. "You may need an overpass for a bridge," he said. "When you think about rising fuel and shipping costs, you want it timely and cost-effectively. It may not make sense for someone to make it in China and ship it here." Still, the industry is cyclical and there have been a few hints in the past six months of a possible slowdown.

CLARK COUNTY MANUFACTURING JOBS Source: Washington State Employment Security Department SUNRISE WASHINGTON • Industry: Dunnage materials, which are cardboard products used to secure shipping. • General Manager: Dan Morey • Employees: Fewer than 20 •  Revenues: N/A • Recent history: Few changes since locally-owned predecessor was bought by Sunrise Manufacturing. • Looking ahead: Expects gradual growth to meet the growing needs of companies that ship by truck and rail. SILICON FOREST ELECTRONICS • Industry: Computer and elctronics, makes custom-ordered circuit cards. • Employees: 115 • 2006 Revenues: $16.1 million • Recent history: Employment dropped from 98 to 70 during the recession, said president Frank Nichols. While some competitors went out of business, Silicon Forest focused on productivity, and started growing quickly when the market improved. • Looking ahead: "We're expecting anywhere from 26 percent to 35 percent revenue growth per year," Nichols said. "During the downturn, probably 50 percent of the businesses that would be in the same space went out of business. What is left now is being shared by 50 percent fewer manufacturers." Meanwhile, Silicon forest customers are growing, and new businesses are entering the industry.

CLARK COUNTY'S TOP 10 MANUFACTURING EMPLOYERS 1. WaferTech 1,000 employees 5509 N.W. Parker St., Camas Custom semiconductors 2. SEH America 750 employees 411 NE 112th Ave., Vancouver Silicon wafers for computer chips 3. Columbia Machine 600 employees 107 Grand Blvd., Vancouver Heavy equipment including pallet loading robots 4. Georgia Pacific 500 employees 401 NE Adams St., Camas Paper and towel products 5. Christensen Shipyards 450 employees 4400 SE Columbia Way, Vancouver Luxury yachts 6. Tensolite 295 employees 3000 Columbia House Blvd., Vancouver High-tech wires and cables 7. Linear Technology 290 employees 4200 Pacific Rim Blvd., Camas Semicondcutors 8. C-Tech Industries 275 employees 4275 NW Pacific Rim Blvd., Camas Pressure washers 9. Pendleton Woolen Mills 220 employees 217th St, Washougal Woolen apparel, upholstery and fabric 10. Thompson Metal Fab Inc. 160 employees 3000 SE Hidden Way, Vancouver Custom metal fabrications