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Looming recession is not dimming Northeast Ohio manufacturers' bright outlook

CNC machines on the shop floor of Midway Swiss Turn’s Wooster headquarters.
Midway Swiss Turn
CNC machines on the shop floor of Midway Swiss Turn’s Wooster headquarters.

It’s logical to assume that when a recession looms, businesses will look to tighten belts, cut costs and ride out the storm

And it appears a recession could, in fact, be looming. A recent survey from the nonprofit Conference Board indicated that 93% of chief executive officers are preparing for a downturn over the next 12 to 18 months.

But preparing for a downturn doesn’t necessarily mean cutting back. A number of local manufacturers see this as a time for optimism.

Midway Swiss Turn Chief Executive Officer Jayme Rahz
Midway Swiss Turn
A diverse client portfolio ensures that Midway Swiss Turn is never hamstrung by downturns in any one marketplace, noted Chief Executive Officer Jayme Rahz.

Wooster-based Midway Swiss Turn business – which builds components for sectors including healthcare and aerospace – has a long history of preparing for change. A diverse client portfolio, for example, ensures the 11-person shop is never hamstrung by drops in any one marketplace, said Chief Executive Officer Jayme Rahz.

“If automotive tanks like it did during COVID, you don’t want to be heavily invested,” said Rahz. “But when the industry is doing well, then that work is good.”

Midway enjoyed $1.3 million in sales in 2022, a best-ever figure that the company expects to exceed this year. A traditionally conservative outlook has helped float Midway through the pandemic slowdown and other crises.

Specifically, the business will tighten spending at the start of a new election cycle, both on the hiring side and in investment of new equipment, Rahz said.

“What we generally see anytime we have a slowdown in our sector is that when things pick up again, our competitors don’t weather the storm,” said Rahz. “We’ve been able to capture new business on the backside of recession events, whether COVID or any recession that would affect our industry.”

Rahz’s optimism is at odds with a report from professional services firm Sikich LLP, which interviewed 120 manufacturing and distribution executives in October 2022 about their current hopes and concerns. About 51% of officials were uncertain about their business prospects over the first half of 2023, citing the pending recession, along with increasing interest rates and ongoing supply chain issues.

Then there is US Lighting Group, which has pivoted production from vehicle electronics to molded fiberglass campers, prefabricated homes and high-performance boats. Motivated by a pandemic boom where more than 11 million households owned a recreational vehicle - according to RV Industry Association figures - the business identified a sector where it could still make a significant impact, said President and Chief Executive Officer Anthony Corpora.

 A shift to ultralight campers has US Lighting prepared for an economic slowdown, said US Lighting Group President and Chief Executive Officer Anthony Corpora.
US Lighting Group
A shift to ultralight campers has US Lighting prepared for an economic slowdown, said US Lighting Group President and Chief Executive Officer Anthony Corpora.

“We had our best quarter ever this year despite a downturn in the RV industry,” Corpora said. “We’ve been building our dealer network and driving retail leads through marketing.”

Keeping a growth mindset

Innovation is the watchword as US Lighting enters the second half of 2023, said Corpora. A focus on ultralight fiberglass technology has the company leader motivated for the coming months even with the specter of an economic slowdown.

US Lighting Group President and Chief Executive Officer Anthony Corpora
US Lighting Group
“We had our best quarter ever this year despite a downturn in the RV industry,” said US Lighting Group President and Chief Executive Officer Anthony Corpora.

As a small recreational manufacturer, Corpora does not expect to keep pace with RV giants such as Winnebago and Thor. However, having a niche product can put the company in the realm of a long-time industry innovator like Airstream, he said.

“I have the mindset that we are the 21st-century version of Airstream,” said Corpora. “I don’t want to beat them, I want to join them. Our patents are accelerating us to the next level.”

A good indicator of US Lighting’s growth is an expected expansion of its dealer network from 35 to 100 locations by fall. Corpora is not expecting to cut costs. On the contrary, a forecasted uptick in production will likely have him hiring new workers and equipment.

“The opportunity and potential is exciting,” Corpora said. “We’re continuing this growth pattern while filing new patents in the EU, because that market is as big as the U.S.”

A feeling of ‘cautious pessimism’

Meanwhile, area companies including Midway are safeguarding their online networks for a lucrative new revenue stream. Forthcoming Cybersecurity Maturity Model Certification (CMMC) - an accreditation driven by the Department of Defense – will clear Midway to handle sensitive data when doing government jobs, said Rahz, the CEO.

Midway is not traveling this path alone, said Rahz. The business receives guidance from Cleveland’s Manufacturing Advocacy and Growth Network (MAGNET), with the industry support group shepherding officials along the certification path, as well as providing funding connections for the costly CMMC integration process.

MAGNET President and CEO Ethan Karp
Manufacturers are integrating technology such as robotics and data monitoring into their businesses, said MAGNET President and CEO Ethan Karp.

MAGNET President and CEO Ethan Karp said that, overall, many manufacturers are doubling down on the technology front, a push consisting of collaborative robotics integration and real-time data monitoring.

“(These companies) are flush with cash after some good production months and years now,” said Karp. “People are not hunkering down and saying I won’t spend anything now that the recession is coming.”

Wide-eyed positivity may not be the norm in the face of possible recession, but company leaders are at least “cautiously pessimistic” about their outlook for the months ahead, said Karp. Businesses continue to test digital tools to make workers’ lives easier, even cross-training employees so as not to dip into the temporary labor force during higher production periods.

Supply chain disruptions have smoothed as well, particularly as companies find workarounds or second suppliers to get the raw materials they need, Karp said.

“We are on the repair route of supply chain issues, which will take a while to work through,” said Karp. “But the pain of companies looking for different input products and being late by weeks has gone away.”

Midway’s lead time for parts and components has almost doubled since the start of the pandemic, said Rahz. Still, Midway is still cultivating relationships with vendors to ensure the good vibes continue even when the next crisis hits.

“When the lean times come, we want to retain employees and keep them happy,” Rahz said. “So when we’re busy, I’m running as efficiently as possible so I’m not burning people out.”

Douglas J. Guth is a freelance journalist based in Cleveland Heights. His focus is on business, with bylines in publications including Crain's Cleveland Business and Middle Market Growth.