Knoxville News-Sentinel (Tennessee)
BYLINE: Ed Marcum
Mike Russell, president of Steel Plate Fabricators, lifts a stack of advertising fliers from his desk and frowns.
It’s a thick stack – about 6 inches – and each flier advertises an auction to liquidate the equipment of a failed manufacturing firm. Russell says he gets these in the mail all the time.
“This is my motivation,”he says.
Motivation to stay “hunkered down,” as Russell says; to buy only equipment and materials with existing funds, to avoid debt and to continue trying to “reinvent” the Knoxville company. Doing these things has helped the business survive and grow. The company has doubled its workforce over the last few years.
Steel Plate Fabricators’ success is part of a resurgent Knoxville manufacturing sector. According to a recent Brookings Institution report – “Locating American Manufacturing: Trends in the Geography of Production” – manufacturing jobs in the Knoxville metropolitan area increased 9.9 percent from 2010 through 2011 to 29,367.
Knoxville lost thousands of manufacturing jobs during the Great Recession, but it is recovering at a faster pace than most metro areas.
The 9.9 percent gain in the past two years is more than three times faster the 2.7 percent national average and places Knoxville in the No. 6 spot in the nation for manufacturing job growth.
Brookings, a nonprofit think tank based in Washington, D.C., studied manufacturing trends in the nation’s 366 metro areas.
Knoxville also is at odds with a general trend noted in the Brookings report that shows manufacturing job growth moving from the South to the Midwest. Doug Lawyer, vice president of economic development with the Knoxville Chamber, said he believes a couple of things are behind job growth in the Knoxville area. Some companies are doing major expansions. Republic Plastics is adding 100 jobs, Goodson Brothers Coffee is adding 20 jobs, Holston Gases is adding 30 and Green Mountain Coffee Roasters is now up to about 900 employees, Lawyer said.
But most of the growth is piecemeal.
“I think this is a lot of smaller manufacturers adding one, two and three jobs here and there, but it is not making the headlines,” he said.
That would describe Steel Plate Fabricators, which has gone from nine employees to about 20, Russell said. The privately owned company on Papermill Drive fabricates metal parts and equipment for industries ranging from automotive to mining to nuclear.
The recession forced the company to make some radical changes, Russell said. Until the economy collapsed, Steel Plate Fabricators mostly relied on a small number of major accounts such as Alcoa Inc. As the large customers scaled back, the company developed a niche doing smaller, custom jobs. Since 2009, it has handled jobs ranging from building the smokestacks on the Titanic Museum in Pigeon Forge to duplicating a sword for a Civil War re-enactor.
This was a big adjustment for the company’s workers, as they transitioned from handling a few large projects at a time to many smaller ones. The company reworked a lot of its processes for maximum efficiency so it could turn out more product with fewer people.
“And the way we did that was to cross-train our people,” Russell said. “We have a variety of machinery, and for a while we were specialized. One guy did this, and another guy did that. Now, instead of one job going through six or seven guys, one guy is taking care of that entire job.”
The workload grew as new customers were added and it became necessary to add staff, Russell said. Steel Plate Fabricators went from about nine employees working 30hour weeks in 2009 to 20 people working overtime every week.
According to the Brookings study, metal fabricating companies make up the single largest block of manufacturing jobs in the Knoxville area – about 25 percent, followed by automotive parts suppliers at 16 percent and primary metals production at 6.5 percent.
One of the area’s major automotive parts makers, DENSO Manufacturing Tennessee Inc., announced recently that it plans to hire about 75 people at its Maryville plant over the next two years as it begins producing a new type of starter meant to improve fuel efficiency.
DENSO also has a plant in Athens, Tenn. Jack Helmboldt, senior vice president of DENSO’s Electronic Products Division, said each site serves a diverse customer base, including major manufacturers such as Ford, General Motors, Toyota, Honda, Chrysler, Hyundai and Nissan. Owned by DENSO Corp. of Japan, DENSO produces automotive electronics, ignition systems, powertrain control and other equipment. This diverse customer base and diverse range of products have helped DENSO maintain steady year-to-year growth, except during the recent recession and the earthquake and tsunami that struck Japan, Helmboldt said. However, cost-cutting actions, many of them identified by employees, have helped keep the company stable, he said.
DENSO hires a mix of production and skilled trades workers plus engineers and other production support people. The company anticipates it will have an increasing need for production workers with high technical aptitudes and skills, Helmboldt said in an email.
Legend Fitness is another Knoxville company adding jobs. Todd Black, marketing manager, said Legend Fitness, which primarily makes fitness equipment for schools and athletic teams, will add about 30 workers in the near term. These are needed to staff a new production facility the company opened a few weeks ago on Middlebrook Pike.
The recession did not hit Legend Fitness as hard as it did other companies.
“One thing the recession has shown us is there is always money for sports,” he said. “Most of our sales are for high school and collegiate weight rooms and whether it is through fundraising drives or boosters, they always find ways to buy equipment,” Black said.
The company, which has been around since the 1970s, also launched a major marketing effort in 2007.
“We have really pushed our marketing into areas that we have never done before. There are people who are just now finding out about us and we have made some good partnerships with equipment manufacturers that are allowing us to grow,” Black said. Aside from welders, the company does not rely on a highly skilled workforce for production, Black said. This fits with some of the findings in the Brookings study.
Compared to other cities, Knoxville has a higher proportion of manufacturing jobs (8.9 percent compared with 8.5 percent nationally) but a lower proportion of those are highly skilled jobs. The percentage of very hightech manufacturing jobs in Knoxville was 6.6 percent, compared with 16.1 percent nationally. The average annual wage paid for very high-tech manufacturing in Knoxville was $40,567 compared with a national average of about $90,000, according to the study.
The Knoxville Chamber considers education the key to boosting prospects for drawing more highpaying manufacturing jobs to Knoxville. The organization pursues a number of education efforts with schools and employers.
“I think there is a need for skilled workers and that will be crucial moving forward,” Lawyer said. The Brookings study says manufacturing has made somewhat of a comeback in the last two years and remains “a key part of the economic base in many metropolitan areas.”
But the manufacturing sector faces challenges, including local zoning restrictions and states that poach manufacturing from other states, the report says.
Whatever trends develop in the future, Russell wants to make sure Steel Plate Fabricators adapts.
“It’s been a roller coaster these last five years, and I’m not taking my seat belt off,” he said.
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