Manufacturing driving recovery in Spokane

Manufacturers are hiring in Spokane and selling goods across the globe, igniting hopes of an economic recovery.

From airplane parts to medical devices, cookware, pharmaceuticals and mining equipment, factories across the region are collecting contracts that square with the national trend of burgeoning productivity.

“We’re proof that the notion that America doesn’t make anything anymore is wrong,” said John Crow, owner of Lloyd Industries, which produces baking pans and cookware.

Even though manufacturers rely more and more upon automation and greater productivity from every worker, hiring is on the rise. In Spokane, for example, there were 15,325 people employed by manufacturing firms in December, the most since late 2009.

Across the state, manufacturing jobs grew by 17,600 in just the past year.

The modest gains have not necessarily dented the stubborn unemployment rate, which in Spokane County climbed back to 9 percent in December as government and retailers shed workers.

The new jobs, however, are seen as a symbol of something more: work that creates tangible goods and new wealth.

The manufacturing uptick in Spokane reflects new export opportunities, the embrace of “Made in America,” and continued investment in new equipment and must-have upgrades for the industrial sector.

These are not necessarily products found on store shelves but the parts, machinery and supplies required by some of the world’s largest industries – aerospace, medicine and mining.

The gains follow a rough decade. The past two recessions hit Spokane’s manufacturing sector hard. The decline was especially poignant in Liberty Lake, where electronics companies such as Agilent Technologies and Telect Inc. and their suppliers were forced into deep cutbacks and layoffs in the early 2000s.

The downturn dovetailed with the permanent closure of Kaiser Aluminum’s massive smelter at Mead, a legacy employer that had helped define Spokane as a blue-collar town since World War II.

From December 2000 to December 2002, Spokane lost 5,000 manufacturing jobs.

Those companies that survived had to weather yet another downturn, which began in 2007 and worsened through 2009.

“If they made it through both recessions, they bounced back stronger and more diversified,” said Doug Tweedy, the state’s regional labor economist in Spokane. “I believe a trend is emerging. Our manufacturers are mature, lean and efficient, which may have eliminated some jobs even though output has increased.”

Many manufacturers have cast their future on exports.

Greg Tenold, owner of Spokane Industries, said the company is having one of its best years ever and that employment has climbed to 285 after falling to 160 during the depths of the global recession.

The company produces heavy machinery for international mining concerns and oil companies, armor plating for the Army’s Bradley Fighting Vehicle and even periscope covers for Navy submarines.

On the other end of the spectrum, the local company has for decades catered to the wine industry, making stainless steel wine fermentation tanks.

The new jobs are welcome news for hundreds of thousands of returning Iraq and Afghanistan war veterans.

James McIntosh, who in 2008 left the Marines where he worked on helicopters as an avionics technician, came home from the military “surge” in Iraq right into the jaws of the country’s worst economic downturn since the Great Depression.

Job prospects were abysmal. He went to school in hopes of training for a job as a federal border control agent, then quickly decided that wasn’t his calling.

So McIntosh worked on the 2010 U.S. census, and when that stint was up he was left with few opportunities. He ended up washing cars for a local dealership, and that was when Hotstart Inc. called.

“Best thing that could’ve happened,” McIntosh said.

Hotstart, maker of diesel engine preheaters, has added about two dozen employees in the past year, said chief executive Terry Judge.

The firm, founded 70 years ago by Stan Power and Wayne Kimberlin, has adopted a global sales mentality rooted in the concept that customers want to buy the best, most reliable, innovative products.

“We build our products right here in America, and that’s a selling point,” Judge said.

“The general public and people who aren’t close to manufacturing think it’s a dying smokestack industry and we’ll never manufacture anything in the United States again.

“They’re wrong.”

The company has opened sales offices in Germany and Japan to help it compete for and win contracts that result in profits and job security for Spokane.

Hotstart’s board of directors, made up of six members of the Power family, has repeatedly dismissed suggestions from consultants and other solicitors to move production to China or elsewhere.

“I don’t even return those phone calls,” Judge said. “What we have here is something special. The board doesn’t even want us messing around with that stuff.”

In fact, sometimes the China trend works in reverse. Judge and others point to the repatriation of manufacturing plants to the United States.

While the most prominent example is GE’s decision to bring a water heater production line from China to Louisville, Ky., Spokane has its own “on-shoring” example.

Pyrotek Inc. last summer decided to return a production line to Spokane from Mexico. The Spokane company used some state funds to help hire and train about 20 workers to make specialized filters for industrial metal companies.

Pyrotek has been at work overseas for many years. The company last summer reported that it has 60 facilities in 31 countries.

Manufacturing in America may never again approach its pinnacle, reached in the late 1970s. However, even a small resurgence is cause to celebrate.

President Barack Obama called for tax breaks, worker training programs and tougher trade enforcement rules to bolster new hiring in his State of the Union address last month.

The number of U.S. manufacturing jobs has risen by 333,000 in the past two years, according to the U.S. Department of Labor. Still, there are fewer today than when Obama took office in January 2009.

He’s not alone, though.

Manufacturing employment declined by 1 percent during Bill Clinton’s second term in the latter half of the go-go 1990s.

In the wake of 9/11, manufacturing employment tumbled 17 percent during the first term of the George W. Bush administration, and 12 percent during his second term.

Today, the number of manufacturing jobs in the U.S. stands at 11.8 million, down from a peak of 19.6 million in 1979, according to the Congressional Budget Office. The 30 years of job declines trailed the growth of stores stuffed with cheap goods from China and other Asian countries.

At Lloyd Industries, Crow revels in the story of how his pizza-pan company outfoxed Chinese competitors in late December and seized its largest-ever contract to make and deliver 700,000 pans to the Domino’s Pizza restaurant chain in Australia. It all happened during his honeymoon.

The scenario unfolded in part because of timing. The Chinese New Year fell on Jan. 23 – right when deliveries of pizza pans were crucial.

The celebrations mean workers return home to be with family as companies slip into a holiday lull. It was during that week that Domino’s needed the first shipments of pizza pans delivered, as marketing and production plans took shape.

“We’re rockin’,” Crow said from his factory’s floor in the Spokane Industrial Park off Sullivan Road. “By the time the Chinese put together a quote and production schedule, we had already made thousands of pans. It fit right into one of our mottos: ‘We Love Procrastinators.’ ”

The company has hired about 20 temporary employees to help ensure the big order is completed by the deadline. Production lines are running day and night, six days a week, Crow said.

While the size of the order is an anomaly, he said, the company is poised to grow.

In response to the recession, Lloyd Industries launched a household line of its anodized aluminum cookware and is now also selling baker’s pans. Sales were largely dependent on the opening of new pizza restaurants. Until 2008, the trend held that several thousand pizza restaurants would close but several thousand new ones would open every year.

After the economic and credit collapse, about 8,000 pizza restaurants closed in the span of two years, and just 1,000 new ones opened.

The losses spurred Lloyd to chase new business lines.

Now Crow’s confidence runs so strong that he wants to manufacture woks in Spokane and sell them in China.

He notes that wages among Chinese workers are rising and leading to a massive new middle class that’s already larger than the entire U.S. population. On top of that, Chinese currency continues to make gains against the dollar. Add higher shipping prices and U.S. manufacturers say the cost of doing business is leveling out when compared with China.

“They are not stupid,” Crow said. “They now watch television and they see all of the stuff we have, and they want it, too.”

The leftover aluminum from the Lloyd factory is sold to another growing Spokane manufacturer.

Dan Garske, vice president of Travis Pattern & Foundry, said the diversified company now has more than 400 employees. The company keeps a low profile in Spokane and shuns attention, Garske said. But it’s participating in the production uptick by producing aluminum castings and other industrial goods.

The 90-year-old company expanded in the 1970s by producing irrigation products. Travis has continued to grow into one of the region’s largest private employers and is now affiliated with seven other firms controlled by the Garske family.

Other companies, such as MacKay Manufacturing, are content to zero in on sales to American companies. MacKay produces precision surgical instruments made of stainless steel, aluminum and titanium.

The company has been hiring people with specialized machining skills and now employs 117, said vice president Katie MacKay. The firm escaped the worst of the recession, she said, growing each year. MacKay Manufacturing anticipates sales of $22 million this year as it doubles its production floor footprint.

As smaller manufacturing plants rally with new contracts and increased hiring, the larger firms at work in Spokane County have been growing, too, said Viktoriya Reed, executive director of the International Trade Alliance, a Spokane nonprofit group that promotes exports for regional businesses.

Triumph Composite Systems Inc. has boosted hiring by about 100 employees over the past year and now has more than 550 workers in Spokane as the Pennsylvania-based aerospace supplier continues to earn contracts with Boeing Co. and European aircraft maker Airbus.

Kaiser Aluminum Corp. employs more than 800 at its Trentwood rolling mill, and executives of the firm have told stock analysts that aircraft makers are placing large orders and financial results should remain strong.

“I’ll offer this: I think there’s a renaissance going on in manufacturing across the country,” said Judge, the Hotstart executive. “The world is excited to buy our products.”