For manufacturing, outlook brightens

January 02, 1994|By Ted Shelsby | Ted Shelsby,Staff Writer

The double whammy of the recession and Pentagon budget cuts hit J. Alexander Doyle's small manufacturing company hard -- real hard.

"Our employment and sales fell 30 and 35 percent, respectively, during the past year and a half," said Mr. Doyle, the owner of Micro Machining Inc., a precision-tool manufacturer in Woodlawn that employs 34 workers and grossed about $2.25 million last year.

His company is hardly the only manufacturer in the state that has suffered in recent years. Mr. Doyle, president of the Maryland Manufacturers Association, a division of the Maryland Chamber of Commerce, said a lot of other factories -- big and small -- have been struggling.

"AAI has cut back," Mr. Doyle noted. "Martin Marietta has cut back at Middle River. A number of machining companies have cut back. Some have gone out of business."

For those manufacturers that have survived, the future looks better than the past, according to Mr. Doyle and other industry observers.

Mr. Doyle said most manufacturers have done a good job of reducing their costs, improving productivity and adopting new technology, all moves that should help stabilize their work forces in the year ahead.

Employment at factories around the state "should at least hold steady in 1994 and will probably increase," he said. "I think things are getting better. The defense market should hold firm in 1994 and maybe grow a little bit, and the general economy seems to be getting better."

"Manufacturing will do better next year," said Michael Conte, head of the University of Baltimore's Regional Economic Studies Program. "But that doesn't mean it will be doing well."

Mr. Conte said the state lost 2.5 percent of its manufacturing employment base last year. "That's a significant decline," he said. "We estimate another decline of between 1 percent and 2 percent next year."

"The bad news," he added, "is that we will continue to lose jobs. The good news: We will not lose as many."

As for segments of manufacturing that are expected to do well this year, Mr. Conte said, "shipbuilding and repairs is one of the real bright spots."

Telecommunications, van production at the General Motors Corp. plant in Southeast Baltimore and printing and publishing should also do well in 1994, he said.

On the negative side, he said, production of search and detection equipment, such as radars made by the Westinghouse Electric Corp. plant in Linthicum, will probably continue to decline.

One of the most encouraging signs -- one on which Mr. Doyle and others are basing much of their optimism -- is the growth in the average factory workweek. In Maryland, it has edged up the past year to 42 hours, its longest since the state began keeping such statistics in 1972.

That is a sign that factories are on the verge of hiring workers or are calling back some who have been laid off, according to Mr. Doyle. "Companies have gone as far as they can with part-time workers and overtime," he said.

Joel Lee, deputy secretary of the Maryland Department of Economic and Employment Development, sees the lengthening workweek as a good sign but believes that it may have to go even higher before "we see any real aggressive moves to bring on new employees."

Bethlehem Steel Corp.'s Sparrows Point steel mill, one of the state's largest manufacturers, posted a major financial turnaround last year and should fare much better in 1994, said Robert J. Carle, general manager of marketing.

Mr. Carle believes that 1994 will be the first full year for the mill to reap the benefits of a $400 million investment to upgrade its steel-making capabilities. "We'll have a better year in '94 than we had in '93," he said.

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