Outlook not so rosy for many Wisconsin factories
As Wisconsin’s overall economy rebounds in the second half of 2003, the state’s manufacturers may be left behind, gasping for air. The state’s manufacturing sector has lost more than 75,000 factory jobs since the first quarter of 2001, according to the Wisconsin Department of Revenue.
Among manufacturers surveyed by the Metropolitan Milwaukee Chamber of Commerce (MMAC), 43% foresee declines in their employment in the third quarter, compared with the same period a year ago, while only 19% expect to hire more employees.
While 65% of the region’s non-manufacturers expect quarterly sales increases compared with a year ago, only 57% of manufacturers project such increases.
"The difference on the part of manufacturers to non-manufacturers is significant. The non-manufacturing sector is more likely to be optimistic than the manufacturing sector," said Bret Mayborne, the MMAC’s economic research director.
In fact, the difference in the economic outlooks between manufacturing and non-manufacturing companies is becoming so steep, that the MMAC may some day have to leave manufacturing in a separate survey category, one that is plagued with more problems than the rest of the economy, Mayborne said.
"We might get to that point. There’s a chance that we won’t recover the (manufacturing) jobs we’ve lost in this recession," Mayborne said. "It’s probably premature to say that, but there might be a point in this calendar year, where we just realize that the manufacturing sector is in a different state."
At best, that state is disarray. Increasingly, it’s becoming desperation.
Many in the region’s manufacturing sector point to some obvious culprits for their demise: The recession, price pressures from original equipment manufacturers in a deflated economy and America’s trade imbalance with China.
That equation sparked two local manufacturers to form a Wisconsin chapter of Save American Manufacturing (SAM) earlier this year.
The movement has created a grassroots groundswell of activism across the nation. SAM chapters have been formed in 15 states.
US Sen. Ernest "Fritz" Hollings (D-S.C.) has introduced the Save American Manufacturing bill, calling for a level playing field for tariffs and enforcement of patent violation laws by foreign companies.
US Sen. Russ Feingold (D-Wis.) and Wisconsin Republican Reps. F. James Sensenbrenner and Mark Green also are on record supporting the SAM movement.
Amy Croen, co-president and principal of Geneva Capital Management Ltd., a Milwaukee-based investment firm, says the plight of the American manufacturer is complex.
"It’s a whole cycle, certainly on the publicly traded side. Companies have to answer to their shareholders, and shareholders demand good earnings. And if these companies feel they can get better earnings with cheaper labor, they will move. It’s very difficult for the manufacturing base in the United States. Very difficult," Croen said.
"Tariffs are not necessary the good thing. You increase tariffs, and tariffs are usually inflationary, and that’s not necessarily good for the economy as a whole, either," Croen said. "It’s difficult."
One bright spot on the American manufacturing horizon may be the falling value of the US dollar, which could help bolster revenues for companies that export to foreign nations, Croen said.
July 11, 2003 Small Business Times, Milwaukee
