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Manufacturing momentum

January 17, 2012

Regional industry leaders are assembling pieces to rebuild a machine that once powered western North Carolina's economy —manufacturing.

A growing list of manufacturers have brought jobs and an economic boost to Catawba County in the past two years, and economic development officials hope to continue that trend.

"First off, the recognition that manufacturing is not dead is very important," said Scott Millar, president of the Catawba County Economic Development Corp. (CCEDC). "If people think it's dead, then they're not going to go out and plan to have a manufacturing future. I think we should remember that manufacturing is not dead, and therefore we shouldn't give up on it."

Bruce Cochrane hasn't given up.

Cochrane left his job as president of Cochrane Furniture in Lincolnton in 1996 after the company was sold. For more than a decade, he watched manufacturers, their money and their jobs leave the region and the nation to locate in Asian nations like China, where labor was cheap and plentiful.

The Chinese hired millions of people each month, which eventually caused labor shortages and created an opportunity for American manufacturing businesses, Cochrane told members of the Newton-Conover Rotary Club on Tuesday.

Cochrane started Lincolnton Furniture last year, and the company plans to begin shipping solid wood bedroom furniture this month from the old Cochrane Furniture plant in Lincolnton. The plant employs about 75 workers, with plans for a workforce of 130 by the end of 2012.

The combination of Chinese labor issues and American advances in state-of-the-art manufacturing technology make this the time for the United States to reclaim the lead in manufacturing production, Cochrane said.

"We have an opportunity to bring jobs back to America," he said. "They really are going to come back. People don't realize how productive Americans are. We're producing two and a half times the products in the United States that we did in 1970. We're doing it with fewer people and production is soaring."

Skilled workers remain
Cochrane said state-of-the-art machinery that is allowing his plant to produce solid oak, maple and cherry furniture. He said one machine can now saw, grout, drill and sand the components to assemble a dresser, whereas that product once required the work of 18 machines.

"State-of-the-art machinery is a real game-changer," he said. "The machine takes five seconds to set up and a half a day to learn to run. Made in the USA means more than it ever has."

Cochrane said western North Carolina maintains a strong base of skilled workers who can run the machines. But many of those people lost their jobs when manufacturing jobs relocated. They also lost their confidence, but not their abilities, he said.

Skilled workers and industry leaders must regain confidence in the manufacturing industry, Millar said.

"People must realize the skills they have in making things are attractive no matter what they were making," he continued. "Often, skills of doing one thing are often adaptable to doing another thing. We think if you're able to run a furniture machine, you'll be able to run a fiberoptic machine or a metal lathe or something like that."

Fighting for the future
The Boston Consulting Group (BCG), a worldwide business advising and consulting company, recently reported that manufacturing will return to the United States.

BCG's report concluded that within five years, rising Chinese wages, higher U.S. productivity and a weaker dollar, among other factors, will close the cost gap between the U.S. and China for many goods Americans use.

For years, China has offered U.S. manufacturers a combination of extremely cheap labor (less than $1 an hour), a growing pool of engineers, a fixed currency and local governments willing to offer inexpensive land, free infrastructure and big incentives, according to the report. As a result of that, the U.S. has lost about 6 million manufacturing jobs and closed tens of thousands of factories over the past decade.

Now, however, BCG reports that the tide is turning.

According to the report, Chinese wages are increasing at a rate of 15-20 percent per year, while land and shipping costs are also on the rise, making the country less appealing to U.S. manufacturers trying to cut costs.

Meanwhile, U.S. wages have declined or are rising only moderately. The workforce is becoming more flexible, and productivity growth continues.

By sometime around 2015 — for many goods destined for North American consumers — manufacturing in some parts of the U.S. will be just as economical as manufacturing in China, according to the report.

Millar said CCEDC continues to recruit manufacturers.

"The mindset is this area is still perfect for manufacturing," he said.

"We're still a leader in the nation for workforce involvement in manufacturing."

He referenced an increase in manufacturing traffic in the past several years in Catawba County.

Sarstedt, a plastic medical device manufacturer, brought 20 jobs to Newton in 2011. LEE Industries, an upholstered furniture manufacturer in Newton, expanded to Conover and created 75 jobs. Fairmont designs, another upholstered manufacturer, brought 200 jobs to Hickory.

"Certainly there are going to be opportunities in the resurgence of manufacturing," Millar said. "Is it China? Is it economic recovery from the recession? What is it? As long as it provides jobs, I don't care as much.

The better opportunities we provide, the better we're going to be. We're going to keep fighting for our share."

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