Chicago White Metal Casting’s CEO Eric Treiber is leading me onto his factory floor. On the way, we pass a grainy old photo of what the factory looked like when his grandfather started the business.
(Is that what it used to look like? Yeah, that’s from back in the 1930s, we were located on the second floor above the Fulton Street Fish Market)
Chicago White Metal makes aluminum, zinc and magnesium die casting for a variety of industries, from automotive sector to health care. Die casting involves creating small metal parts – in this case, everything from the rearview mirror mount for cars to components for inside a MRI machine or a tractor.
Today, the family-owned company operates further north. Its headquarters and factory are west of O’Hare International Airport. It’s close enough that you hear planes occasionally flying overhead.
Treiber says this year’s been good for the company.
Treiber: Revenues are up over 2010 - and 2010 was up over 2009 which of course was a challenging year for all businesses.
The company is seeing revenue growth on order about 4 percent – which turns out to be fairly typical for the industry.
Strauss: Output according to the Chicago Fed Midwest Manufacturing Index was actually quite strong.
That’s Bill Strauss, a senior economist with the Federal Reserve Bank of Chicago. As measured by the Fed, manufacturing output has had 28 months of growth – at an annualized rate of 6 percent. That’s much better than the rest of the economy.
But there are a few caveats about these good manufacturing numbers. Strauss likes to use a tennis ball as an analogy – meaning the growth numbers look so good because things were so bad before. In other words, the ball bounced pretty low before it went back up. But now..
Strauss: We’re seeing a great demand for some of the machinery that’s made right here in the Midwest, whether it’s from Caterpillar, Deere CNC or Case New Holland um they are doing extremely well, especially for Caterpillar with those heavy mining equipment that they sell.
(Niala: So it’s not just cars?..)
No, absolutely not. We’ve got heavy machinery that’s helping to support the steel industry. I mentioned that heavy mining equipment? Those things - some of them weigh over a million pounds and that’s a lot of steel.
In all, Strauss says about 60 percent of the manufacturing output lost during the downturn has come back.
But when you look at the job numbers, the stories don’t seem to match.
One out of every 4 jobs lost during the recession was in manufacturing – that’s 2.3 million jobs. As of last November, we’ve added back just 308,000 of those jobs.
So why aren’t companies hiring more?
Remember the mantra “produce more with less?”. Many manufacturers practically perfected that during this recession.
Take Chicago White Metal Casting. Treiber says they had to be focused on productivity in order to stay competitive with all the business that was moving out of the country. He estimates they’ve had a 29 percent productivity increase between 2008 and 2010.
And Treiber is actually hiring. But he’s looking for a few people die cast machinists, especially repair men.
And that, in a crux, is the labor market problem right now with manufacturing – the need is for workers who are much more skilled. Remember that numbers gap? Here’s Bill Strauss again:
Strauss: What about those 2 million that lost jobs, can’t you hire those back? And what you find out from people is that even though they were classified as being in manufacturing, many lacked the kind of skills that are required in this more 21st century manufacturing.
And that’s one of the biggest challenges ahead – making sure there are enough workers with the skills manufacturers need.
For Changing Gears, I’m Niala Boodhoo.
