STATE DOWN BUT NOT OUT

by Wally Northway

Published: March 16,2009

Earlier this month, Joe Norwood made a painful announcement. The plant manager at the La-Z-Boy facility in Leland reported the layoff of nearly a tenth of his employees.

“The area has been good to us and we have excellent employees,” Norwood said. “The company held off as long as they could with the layoff, but Leland Manufacturing had to take into consideration the long-term effect and what was in the best interest of the company and its staff.”

The news was not all bad out of Leland. Norwood said that two-thirds of the laid off workers were indirect support personnel, and the plant retained “a skilled workforce to maintain daily production.”

And, there has been more good news as of late from Mississippi’s manufacturing sector. In February, Alliant Techsystems Inc. (ATK) announced a major expansion at its Iuka plant, retaining the 176 jobs already there with plans to grow the payroll to 800 workers over the next eight years. Additionally, Haworth Inc., the parent company of United Chair, unveiled plans for an expansion at the United Chair plant in Bruce that would add will add 125 jobs, almost doubling employment there.

However, these successes have been more than offset by workforce reductions and plant closings statewide. The most recent unemployment figures from the Mississippi Department of Employment Security (MDES) show the state’s jobless rate in January was 9.2 percent, and the hardest hit was manufacturing-heavy North Mississippi. MDES said the manufacturing industry led all sectors in job loss.

The loss of manufacturing jobs in Mississippi since the latter part of 2008 has, indeed, been significant. According to the Bureau of Labor Statistics, there were 162,800 workers employed by goods-makers in August 2008. In December 2008, that number had decreased to 157,300 workers. Compared to December 2007, that represented a 6.2 percent drop in sector employment.

And, projections do not show any relief in the near term. MDES is projecting the state’s manufacturers will employ 160,530 workers in 2014.

While the outlook is far from promising, manufacturers are not ready to concede defeat. According to Jay Moon, president and CEO of the Mississippi Manufacturers Association, goods-producers are running as lean as possible and are looking for any advantage to keep the production lines moving.

“I would say the mood is a combination of concern and surprise. A year ago if you would have told people the shape the stock market is in today, they wouldn’t have believed it,” Moon said.

Moon said that some of his members actually have opportunities to expand, but the crisis in the financial market is a barrier to growth. Manufacturers generally operate on credit — someone approaches them with a project, and the companies go to a lender to get a loan, paying it back when the project is complete and they get paid. However, lenders are reluctant to make the loan due to lack of growth. And, manufacturers cannot grow without the loan.

In the interim, goods-producers are getting creative, looking for anything they can cut without losing their skilled workforce. To keep the workers on the payroll, some manufacturers have gone to a 30-hour workweek. They are also furloughing workers, having employees work, say, three weeks a month, and stay home the other week. Trimming benefits is another common strategy.

One of the key ways to cut costs is through consolidation of operations. This new dynamic has economic developers working hard to retain jobs. Specifically, as companies look to consolidate operations to cut costs, developers are doing everything they can to make sure the plant or plants to close are not in their state.

“There’s no way to sugar-coat it, the competition is somewhat brutal,” said Chandler Russ, head of the Mississippi Development Authority’s (MDA’s) Existing Industry and Business Division. “We are doing everything humanly possible within program guidelines.”

MDA has been a key player on teams that have successfully kept Mississippi manufacturing facilities. Good examples of this successful team approach are ATK and Cooper Tire in Tupelo.

Russ said generally the MDA is using tools “off the shelf” — programs already in place that do not require legislative action. He said a main focus has been simply making sure that manufacturers know what is available to them, programs that could offer relief.

However, there are some new tools and more in the works. Russ said there is current bill in the Legislature that would create a $70-million revolving loan fund for existing business and industry as well as flexibility on existing loan programs.

There is the job rebate program for existing manufacturers. This program offers a 3.5 percent rebate on the payroll tax. It will sunset next year.

“We can’t help everybody,” Russ said. “But, we can, so to speak, lay the MDA screen over a company and see if we can offer help.

“It’s really tough, but there are some bright spots. There is good news.”

Moon agreed, pointing out that manufacturing is not monolithic. It is diverse, and while some manufacturing sectors may be consolidating, others may be growing.

“News of companies laying off hundreds or thousands of workers overshadows the fact that companies such as Nissan in Canton and Holly Performance in Aberdeen are adding jobs,” he said.

Contact MBJ staff writer Wally Northway at wally.northway@msbusiness.com.

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