Diverse industry sector will be engine of future job growth
It has long been my opinion that manufacturing will lead the region out of the current economic recession. Recent announcements of new investments and economic statistics suggest that time is now…
Manufacturing firms and their workers were the victims, not the cause of the past recession. The collapse of the housing bubble and simultaneous credit crisis crimped consumer demand. This, in turn, caused manufacturers churning out everything from microchips to RVs to downsize, furlough or close. Due to the region's concentration in manufacturing as well as the housing sector, the region's economy was hit especially hard – with our area leading the state at one point with over 16,000 of our neighbors out of work.
Despite the continuing gloom, I feel confident that the manufacturing sector will remain strong and be perhaps a foundation for the region's economic recovery. First, from our interaction with Clark County firms, we noted that companies were downsizing, not closing. True, some firms, such as Saint-Gobain, were relocating production to more efficient plants and closing aged facilities. However, these were strategic, not recession-driven decisions. More common were companies using furloughs and creative work sharing to maintain their skilled workforce to survive the downturn. The Southwest Workforce Development Council, Employment Security and the CREDC heavily promoted these creative alternatives to mass layoffs.
Over 50 percent of our (albeit meager) investment cases in 2009 were manufacturers planning expansions or relocations. These companies were planning for recovery, yet would not pull the trigger until consumer access to credit returned.
That time appears to be now. Reports from our microchip manufacturers, the recent announcement of a possible new Vancouver plant for Far West Steel and others underscore that fact.
For well managed firms, recessions simply delay the execution of existing strategy and may even create more opportunities for growth as competitors falter or are acquired. We see that with our clients and expect further announcements this year.
Manufacturing will remain strong due to our region's remarkable economic diversity. From oil field modules and motion control devices, to lasers and high temperature sensors, many of our firms make high value products that are made in few places around the globe. Our source of competitive advantage is both our costs of production and our labor force. The former is critical, but the last is hard to duplicate and remains the source of our competitive advantage.
In short, manufacturing matters simply because the total economic impact of this sector is larger than any other industry. The CREDC conducted an economic impact analysis of the recently-announced Far West Steel expansion at the Port. Our study found that the 225 direct jobs created at full build will support over 900 jobs in the region and a collective payroll of over $29 million. Few other sectors can match that level of economic contribution to the region.
The recovery in manufacturing has just started and I believe it will lead the region out of its "Great Recession."
