Economic Development Council Policy Review
July Edition 2008
Recession? What recession?
Industrial Distribution’s Big 50 distributorships took various paths to increased sales in ’07 and with the exception of the construction market; most said the economic downturn hasn’t severely affected their businesses. Steve Cloud of IBT states that they aren’t seeing the softness everyone keeps talking about. Jim Timble of Bearing Headquarters says that the recession talk is election-oriented if anything and that the downturn won’t affect the industrial sector. Many other executives described 2007 and the start of 2008 as a “solid year” and “very satisfied”. Coo of FCx Performance Russ Frazee says that “business is there, you’ve just got to go get it. The businesses we serve are up and down every year, but if you pay attention and you know where the business is growing, then you can focus your efforts on those areas.” Ron Mager of Machinery Systems states that any manufacturing that isn’t housing or automotive isn’t in a recession. The weak dollar is driving exports and certain segments of the industry are solid.
Those in the construction market view things differently. Big 50 companies such as HD Supply, Wolseley, Carlson Holdings and WinWholesome are hoping for a turnaround. Many saw substantial layoffs, a drop-off in sales expectations and a sharp decline in homebuilding. Many of these caused by the sub-prime mortgage mess, tight credit market and overbuilding of housing units. Wolseley expects conditions to become even more challenging with more “rigorous cost management” strategies. Meaning: more layoffs. The U.S. housing market is likely to continue to deteriorate with the commercial and industrial market to remain stable for a few more months but then softening.
Many Big 50 companies are relying on expanding internationally while other acquired competitors, opened branches, expanded geographically or added product lines. Edgen Murray has seen its company go from being North American-based four years ago to 60% North American, 40% international. Others have used the increase in technology, mainly the internet. Several have planned online stores. Those that have enhanced their Web site and link to vendors so that customers can get all the information needed tomake a purchase claim it has helped their bottom line.
Recession? What Recession?
Transforming Inner-City Kids into Tomorrow’s Workforce
After going to the Chicago public schools for help in reviving manufacturing, Dan Swinney left with a different idea: design a new high school to train the workers to help in the revival. Mr. Swinney opened Austin Polytechnical Academy last fall with the hope of a turnaround in manufacturing. Swinney states that American manufacturing is adapting to globalization by shifting to higher-value products. With baby boomers retiring, the education system isn’t giving manufacturers the workers they need to take over highly skilled jobs. Training poor students to fill these positions can “address deep social problems,” while giving industry the work force it needs. Swinney had previously setup the Center for Labor and Community Research in 1982 to study why manufacturing jobs were in decline. One study showed that Chicago-area manufacturers have 10,500 openings each year with the schools providing only 5,000 people qualified to fill them.
Many inner-city school systems throughout the country are experimenting with smaller, more specificically-oriented schools. Much of these schools are funded by private groups such as the Bill and Melinda Gates Foundation. The goal of these schools is to create a variety of attractive options for students and let them choose what works best for them. The Polytech students take double periods of math and English to help bring students up to their appropriate grade-level skills as well as heavy doses of science and computer training. Students complete four years of pre-engineering and can be certified in metalworking skills and complete internships.
Transforming Inner-City Schools to Train Tomorrow’s Workforce
New Multi-Million Dollar Siemens Plant for Wind Turbine Industry
Siemens Energy & Automation, Inc. announced that due to the increasing demands for alternative and renewable energy sources, that it would be investing more than $20 million to develop a second plant in Elgin for its Drives Technologies business. Siemens is the largest producer of wind turbine gear drives in the U.S. and the expansion will increase production, enabling the company to meet the expectations of its customers. Siemens designs and manufacturers mechanical gear drives for the wind industry as well as for the cement, coal and minerals, and oil and gas industries. The new plant is expected to be completed by March 2009 and will create approximately 300 new jobs in production and 55 new office jobs over the next 3-4 years. The plant in Elgin currently employs 150 people.
The State of Illinois and the City of Elgin provided numerous incentives to Siemens to help secure the investment; including a Wind Energy Development Grant and Employer Training Investment Program job training funds. Siemens is investing more than $20 in building infrastructure to support the new plant for production as well as the cost of a 15-year lease for the new site. The new plant will be used for the assembly and testing of mechanical gear drives. The existing plant will be maintained by Siemens to manufacture the gears and components that will be assembled and tested in the new plant. It will also house the services and repairs business. Siemens companies employ approximately 7,000 people in 40 locations throughout Illinois.
New Multi-Million Dollar Siemens Plant Will Increase Production of Mechanical Drives for Wind Turbine Industry
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