Spokanes manufacturing industry, which took a nosedive near the start of this decade, is storming back. Experts say they expect this year will bring more strong growth in the sector, despite a number of challenges employers are facing.


In the 1990s, manufacturing was a dominant industry in Spokane County, comprising about 12 percent of the countys total work force, says the Washington state Employment Security Department. The closure of Kaiser Aluminum Corp.s Mead plant in 2000, coupled with the technology bust that throttled Telect Inc., marked a rapid deterioration of employment in the industry, leading some to believe the sector would never fully recover.


People have paid a lot of attention in this town to manufacturing, says Jeff Zahir, the Employment Security Departments Spokane-based regional labor economist. When Kaiser (Mead) was shutting its doors, and the price of electricity was skyrocketing, everybodys conclusion was that this is not your dads Spokane anymore.


In 2000, there were 21,900 manufacturing jobs in Spokane County. Three years later, the number of jobs plummeted to 17,100. While manufacturing employment hasnt rebounded completely yet, its gains over the last few years, particularly in 2006, indicate a shift in that direction, Zahir says.


Jobs started climbing, albeit slowly, in 2004. That year, the sector gained 100 jobs to 17,200. In 2005, manufacturing employment climbed by almost 3 percent to 17,600. Last year, the growth pace quickened, with jobs rising 4.5 percent to 18,400.


Over the past four years, manufacturing has made up 8.6 percent of all jobs in Spokane, Zahir says. He says that might seem like a small percentage compared with the industrys former dominance, but actually is a good sign considering the countys overall employment has been growing briskly.


That tells me that in the boom of the last two years, manufacturing has fully participated, he says. Employers have taken advantage of every opportunity they could to expand their labor force and recover from the downfall of 2001.


Proof that the industry indeed is growing here:


Spokane Industries Inc., a longtime foundry and manufacturer in Spokane Valley, reported that it had nearly 300 employees last October, up from roughly 230 a year earlier. In 2005 alone, it hired 90 employees.


Hollister-Stier Laboratories LLC, a Spokane drug manufacturer, hired 70 employees last year, giving it 417, nearly double the number of people it employed six years ago.


Triumph Composite Systems Inc., of Spokane, won a contract from Boeing Co. worth an estimated $49 million a few months ago, and said it plans to hire nearly 60 employees as a result of that work and other contracts its lining up. Triumph currently employs roughly 445 people.


Travis Pattern & Foundry Inc., of Spokane, employs about 400 people, up from 350 last October and roughly 290 in 2005. President and CEO Travis W. Garske says the company might hire as many as 25 more employees on a seasonal basis this year.


Weve been busy for the last four years, Garske says. Last year was busy, and this year could be a little busier.


Travis Pattern & Foundrys growth has been due to increased demand from its current client base in the agricultural and electrical industries, as well as gaining new clients in those sectors, he says. Higher commodity prices for agricultural crops and increased demands on the U.S. electrical grid system in particular have contributed to the growth.


Lee Tate, president and founder of Tate Technology Inc., a Spokane contract manufacturer of electronics, expects that his company this year will have the strongest growth it has seen since it was hit hard by the technology bust in 2000. Tate Technology employed 165 people that year, compared with 23 workers last year.


The electronics industry is in the seventh year of its recession and Tate says he expects it will be about three more years before it recovers to its former levels. Still, he now sees enough opportunities in the marketplace that hes willing to invest money in seeking new business.


Im very optimistic about 2007, and I think manufacturing will be strong here, Tate says. New products and new customers will be driving that.


Construction activity


In Spokane, several factors have been contributing to the manufacturing industrys resurgence, including vigorous construction activity and a diverse customer base, Zahir says. Statewide, durable goods, particularly transportation-equipment manufacturing, have accounted for much of the sectors growth.


Were not like King County, where aerospace dominates the scene, he says. We have manufacturers that are very broadly based and are a really strong engine for growth in Spokane County because of the diversified and wide markets that they serve.


The countys numerous small, or niche, manufacturers have played a big role in the industrys revival here, Zahir says. He researched the manufacturing landscape here in 2004 when he participated in the Advanced Manufacturing Workforce Initiative (AMWI) led by what was then the Spokane Regional Chamber of Commerce. Zahir says he was encouraged to discover how many niche manufacturers operate here. A report issued by the panel in 2005 said that about 95 percent of the manufacturers here employ fewer than 100 employees.


When I analyzed the sector, I realized that this is an underrated stock; this is something thats golden, he says. One or two (small manufacturers) is not a big deal, but when you combine them all, thats a powerhouse.


Challenges


Zahir says he expects the manufacturing industry, along with the rest of Spokanes economy, will make solid gains again this year, but not at quite the same rapid pace as in 2006. Zahir points to factors such as the burgeoning federal deficit and uncertainty about interest rates as reasons behind his prediction.


The tightening labor market is a concern to manufacturers, since it lengthens the time it takes for an employer to find new workers, he says. The rising minimum wage and increases in the producer price index (PPI) pose even greater challenges. The PPI measures average changes in prices that domestic producers receive for their goods and servicesand conversely what buyers payand is calculated monthly by the U.S. Bureau of Labor Statistics.


Manufacturing jobs consistently rank among the highest in Spokane in terms of pay and benefits, Zahir says. Manufacturers want to retain their best employees and attract new workers, and often use incentives such as health-care benefits and retirement plans to do so. As the PPI increases, however, employers, who must pay higher prices for goods, scrutinize more closely what they can afford to offer employees. They also try to figure out whether to keep up with increased customer demand by hiring new employees, expanding their facilities, or investing in new equipment and technology.


(The PPI) is the number thats pushing everybody against the wall right now, Zahir says. When were talking about the long-term costs of having an employee, that weighs pretty heavily, and when youre talking about skilled trades, you want long-term employees, Zahir says.


Tom Droz, owner of Spokanes Manpower personnel agencies, says skilled-trade workers of any type are difficult to find. Manufacturers, in particular, are having trouble finding workers who have the versatility required for todays manufacturing positions.


The job has changed; it requires more flexibility and computer skills, Droz says. The manufacturing job isnt slogging through the grease necessarily anymore.


The chambers AMWI skill panel report said manufacturers need help from government entities as well as educational and training resources to meet the challenge of finding skilled workers. The panels recommendations, released in 2005, included bolstering applied math, science, and language skills programs; implementing core-competency training; creating a lean manufacturing certification program; updating and promoting machinist training programs; and increasing awareness of manufacturing jobs.


Efforts to implement those recommendations are under way. For instance, this week, several of Spokanes public school districts, Washington State University at Spokane, Eastern Washington University, and Community Colleges of Spokane (CCS) signed a math-science partnership agreement to work toward improvements in math and science programs.


Meanwhile, CCS will start offering a Work Readiness Credential test next month, which measures core-competency skills, says Amy Johnson, interim director of public policy at Greater Spokane Incorporated, the new organization formed by the merger of Spokanes chamber and EDC. This spring, Spokane Community College and Washington Manufacturing Services, of Spokane, will offer a lean manufacturing certificate program.


Greater Spokane Incorporated is distributing a booklet to students in Spokanes public schools that provides information about manufacturing careers and training programs here, Johnson says.


Contact Emily Brandler at (509) 344-1265 or via e-mail at emilyb@spokanejournal.com.