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VOL. 121 | NO. 107 | Monday, May 22, 2006

Walking the (Assembly) Line

Manufacturing employees feel pinch from tech advances and overseas workforce

By Andrew Ashby

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Shelby County's reliance on manufacturing jobs to employ its citizens has decreased over the past few years, but this is just part of a larger trend happening in West Tennessee and across the country.

Since January 2003, 71 manufacturing companies either closed or executed large layoffs in West Tennessee, according to the state's Department of Labor and Workforce Development. This accounted for the loss of 5,220 manufacturing jobs.

In Shelby County, 14 manufacturing companies have closed or reduced their workforce since January 2003, causing 1,240 jobs to be lost in the area.

Manufacturing companies that have reduced employees since 2003 include Great Dane LP, 1095 Harbor Ave., 327 employees; Communications Test Design Inc., 640 Massman Drive, 191 employees; Memphis Hardwood Flooring Co., 1551 Thomas St., 112 employees; and Coors Brewing Co., 5151 East Raines Road, 98 employees.

"Companies are being squeezed to do better, work harder and so on," said Bob Trainor, principal consultant of the productivity improvement consulting firm Trainor & Associates. "One of the alternatives that they've chosen is to cut the jobs and move some of their work, or close completely and move all of the jobs."

The grand scheme

While the numbers look bad for the local economy, Jeff Wallace, a senior research associate with the Sparks Bureau of Business and Economic Research at the University of Memphis, pointed out that manufacturing jobs account for less than 10 percent of Shelby County's total employment sector. Government accounts for 15 percent of Memphis' employment, while business and health services account for 12 percent each, according to a report by the Memphis Regional Chamber. Leisure and hospitality takes up 11 percent of the pie, as does the retail industry. The transportation and warehousing industries account for 10 percent each.

The percentage of jobs attributed to manufacturing has been falling since the early 1980s in Shelby County and across the country because of technological advances that put workers at a disadvantage.

"During times of politics and election years, we become more aware of it because it becomes a hot-button issue," Wallace said. "Certainly, when people lose their jobs, it's very hard on the individual. But in the grand scheme of things, this is nothing unusual. It's to be expected and it's going to continue."

Hot button

Advances in computers and assembly line machinery are one reason for the decline in manufacturing jobs. Better technology means increases in productivity and, consequently, fewer people are needed to do the same amount of work.

Wallace compared the drop in manufacturing jobs to a similar decline in agricultural work in the early 1900s. At the turn of the 20th century, a large percentage of America's population was involved in farm work. Today, a much smaller percentage of Americans works on farms, yet crop production is much higher than it was 100 years ago because of advances in machinery, pesticides, herbicides and other innovations.

"During times of politics and election years, we become more aware of (job losses in the manufacturing sector) because it becomes a hot button issue. Certainly, when people lose their jobs, it's very hard on the individual. But in the grand scheme of things, this is nothing unusual, it's to be expected and it's going to continue."
- Jeff Wallace
Senior research associate with the Sparks Bureau of Business and Economic Research at the University of Memphis

Another reason for the decrease in manufacturing jobs in Shelby County could be attributed to work being sent to other parts of America as well as out of the country. As international trade has grown and trade restrictions have diminished, companies are more likely to look elsewhere for cheap labor. A recent example of this is how other English-speaking countries are taking away service and professional jobs, Trainor said.

"Engineering and accounting jobs have gone to India and Canada because the labor is not as expensive," he said. "If you call the 1-800 number about your Hewlett Packer printer, you'll probably be talking to someone in India."

When countries participate in free trade, another country almost always can provide cheaper labor - and profit-driven businesses often take advantage of that.

"Political boundaries and countries' boundaries don't mean much any more in terms of manufacturing," Wallace said. "Companies are always looking for the least costly way of producing their goods in order to maximize profits."

Trainor sees many manufacturing jobs moving to countries such as Mexico or China. The proof is in the local shopping aisles.

"Just take a walk through Wal-Mart and try to find an American-made product," he said. "You'd be hard-pressed to find a toy, a razor, a piece of luggage that was made in the United States."

Made in the U.S.A.

Locally, manufacturing companies are pressed to increase production to stay competitive.

"You can look at the number of plant closings and major layoffs that have occurred in West Tennessee and it's a pretty significant number," Trainor said.

Companies can improve their manufacturing processes to make them more efficient and, therefore, more competitive, he added.

"Generally speaking, a lot of manufacturing companies haven't pursued current initiatives to remove the waste from the work process, the things the customer would not be willing to pay for and the inefficiencies that exist within a work process," he said.

A potential relief for the decline of Memphis' manufacturing workforce could be a switch to other fields, such as hospitality or medical work, Wallace said.

"Memphis already has a service-based economy," he said. "Transportation and distribution is our forte. That's what we do here and we do it quite well."

Small-town blues

While large cities such as Memphis can absorb manufacturing job losses, some smaller towns in West Tennessee might feel the pinch more. If a major manufacturing company closed its operations in Union City, Tenn., for example, it would have a larger effect on the local economy than it would if the same company closed in Memphis.

"If there are not a lot of other options for employment in those smaller communities, then many of those individuals will have to move and find a job elsewhere," Wallace said.

No matter how large or small the city, Wallace said local governments can lessen the flow of manufacturing job losses. While other cities and countries can offer cheaper labor, West Tennessee cities could cultivate a more educated and better trained workforce to justify the cost differences to manufacturers.

Southwest Tennessee Community College has a program that allows Memphis-area high school juniors and seniors to take college courses in technology, engineering and the sciences.

"The young person has the chance to learn more about the sciences before they leave their high school campus," Trainor said. "I like the program, and I think that should be broadened and strengthened."

PROPERTY SALES 124 481 17,865
MORTGAGES 127 530 20,565
BUILDING PERMITS 195 891 36,836
BANKRUPTCIES 52 262 11,426