Business

Some factories stable amid downturn

At a business park off Carowinds Boulevard just north of the state line, a plastic-molded part two feet high sits on the end of a U-shaped assembly line.

A minute later, a team of men and women have installed cushions, straps and buckles. At the other end of the U, the car seat is complete – one of roughly 3,000 a day that Britax Child Safety assembles and ships to stores across North America.

While unemployment in the Charlotte area is up this year, a glimmer of hope could lie in manufacturing – long seen as a drain on the region's otherwise robust jobs growth.

Although overall employment continues to decline, some types of manufacturing – from wood products to medical equipment to household furniture – have remained steady this decade and even added jobs, an Observer analysis of federal labor data shows.

Sales at the privately-held Britax grew by 25 percent last year, company president Jon Chamberlain said, and it now has more than 200 employees, up 10 percent from 2007.

About 120 of those – most hired locally – work in assembly, Chamberlain said, and Britax can add more lines and shifts at its 150,000-square-foot building if demand for its car seats grows.

Britax is targeting North America for sales growth, but other companies are taking advantage of global interest in specific or specialized products.

“You have demand coming from overseas for a lot of the niche industries,” said Noel Greis, director of the Center for Logistics and Digital Strategy at the UNC Chapel Hill's Kenan-Flagler Business School.

While large corporations have built new plants in other countries, many smaller, private companies are more limited in their ability to expand overseas, and would rather be closer to their U.S. customer base anyway, said Stanley Mandel, director of the Angell Center for Entrepreneurship at Wake Forest University's Babcock Graduate School of Management.

“They tend to look at their market as regional or domestic vs. international,” said Mandel, whose center provides assistance for closely-held and family firms. “That could explain some of the stability” with certain manufacturing jobs.

While privately-owned, Mandel said, many such companies still have hundreds of employees and play a vital role in the regional economy.

“We're not talking about mom-and-pop,” he said.

Big picture still dim

To be sure, the overall manufacturing picture still isn't good. The total number of jobs plunged by 20 percent from 2001 to 2007, mostly due to an exodus of textile and related employment.

While losses have leveled off somewhat in recent years, area manufacturing jobs remain on the decline during the recent downturn. Employment slipped below 80,000 this summer, down 2 percent from a year earlier. By comparison, most other industries saw job growth from summer 2007, with total employment for the region up almost 2 percent.

Manufacturing jobs were more than 15 percent of all area jobs in 2001 but only about 11 percent last year, according an analysis of Bureau of Labor Statistics data for the Charlotte metro area. In addition, China and other countries loom as a threat to attract jobs as workers in those nations add skills and education, manufacturers and professors say.

But in a survey of 89 N.C. companies this spring by RSM McGladrey, an accounting and consulting firm, only 15 percent said they are moving some or all production offshore this year, a drop from 26 percent in 2007. Industries such as textiles have shifted overseas, but some more specialized manufacturing has yet to follow, with companies instead adding workers in the Charlotte region:

In Rock Hill, Atlas Copco Compressors – which makes air compressors and pneumatic connection systems – has grown from 50 workers to about 320 in the past year, following the move of the company's North American headquarters from Massachusetts last October.

Off Carowinds Boulevard, Celgard last month celebrated its $18 million expansion. The company, which supplies material for lithium-ion batteries, has added 112,000 square feet and 32 employees in the past year.

With a $5 million defense contract, North Safety Equipment will make 335,000 pairs of chemical protective gloves, requiring more than 40 new workers at plants in Clover, S.C., and Maiden.

Other Charlotte-area companies also have been boosted by defense contracts, as well as an uptick in exports due to the dollar's weakness – until recently – against other currency. In addition, foreign-owned companies hoping to capture more of the U.S. market have ramped up operations in the region.

Seat of prosperity

Down the street from Celgard, Britax is the U.S. arm of London-based Britax Childcare. Other companies may save on wages by building plants overseas, said Chamberlain, the company's president, but Britax's biggest cost is materials. Any savings on pay in another country would be offset by the cost of shipping seats to the U.S., he said.

In addition, Britax can't quickly react to changes in demand if it has to wait five weeks for seats to arrive from China, said Jim Funk, vice president, supply chain management. “We're building to order here,” he said.

For workers on the plant floor, pay ranges from $10-$12 an hour to start to $20 an hour for some line leaders. Employees vary in age, and 70 percent are women.

Lynette Lindenbaum, 48, joined Britax 11 years ago, when making 200 seats was a good production day.

Now in the company's production control office, Lindenbaum worked in Baltimore medical lab before moving to Charlotte and knew nothing about car seats before starting on the assembly floor.

“I have no kids,” she said. “I was, like, ‘What's a harness?'”

Shawn Harrison, 25, is studying electrical engineering at UNC Charlotte and has worked at Britax for about a year, most recently in product testing. He previously was a sales associate at Radio Shack and didn't know about Britax until a staffing company arranged a temporary job there.

“It turned into more than I thought,” he said.

Positive ripple effect

Beyond offering jobs, companies such as Britax help prop up area suppliers. About 60 percent of Britax car seat components come from two dozen Carolinas suppliers, the company said, including more than a dozen in Charlotte area.

Such networks can be crucial for keeping companies in the region. “It's one thing to have a manufacturing plant” in another country, Mandel said, “but it's another to have all the support systems that need to be in place.

“That might be a reason why we are retaining some of our manufacturing,” he said. “It's much more complex than the wages are cheaper in China or India.”

But as the overseas workforce becomes more mature, Mandel said, China could become more attractive to the holdouts against a move, mainly because “you don't have the bureaucracy that we have here in the U.S.”

One key to the Charlotte regions remaining competitive is innovation, Mandel said. The U.S. is one of the best countries for small businesses and entrepreneurs, he said, adding that he has seen more graduate business students in recent years voice interest in launching their own companies or developing new products.

“It's not just job creation,” he said. “It's new industry formations.”

Back at Britax, Funk said the current downturn has caused some softer sales of more expensive car seats, but it also has meant lower costs for some materials. Britax also is working with retailers on promotions for new products, he said, and expects to maintain current employment and production levels next year.

Based on the company's success so far, Chamberlain said he doesn't foresee any immediate threat to its current location – through either building another U.S. plant or moving work overseas.

“We like it here,” he said. “It's not even a consideration for us, leaving Charlotte.”

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