Venture: All eyes on manufacturing

The sector had been leading the U.S. economy out of the doldrums - until recently.

June 27, 2011

By Ashley Gross and Tony Arnold

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(WBEZ/Ashley Gross)
P-K Tool on Chicago's West side says business with Japanese carmakers is just starting to recover from the March tsunami.

This week, we'll find out whether factories are starting to hum again after huge disruptions caused by the Japanese disaster. Manufacturing had been one sector helping to pull the U.S. economy out of its slump. But at least one auto-parts maker on Chicago's West Side says it's hopeful things are starting to turn around.

These days, Chicago's abuzz with dot-com fever, but we're still a city that makes stuff.

Manufacturing employs one in 10 Chicago-area workers.

A lot of them work in nondescript little warehouses like the one owned by P-K Tool and Manufacturing, which has been around since 1944.

ROGER BEHRENS: You know, these are old buildings that are pieced together over many years, things are kind of pieced together... little piece of office here, and a little piece of work area there.

Here, machines spit out metal plates at the rate of about one every second.

They're used in everything from cars to computers.

BEHRENS: Right in here is our press room... 

Roger Behrens is chief financial officer.

BEHRENS: We'd like to have more of them running than there are, but...

See, P-K Tool had been slowly clawing its way back up out of the slump that hit in 2008.

BEHRENS: Gradual recovery. 

But then, the tsunami hit.

BEHRENS: Real slow time here in this second quarter.

And that mirrors the U.S. manufacturing world as a whole.

The sector's recent slowdown has stoked fears the U.S. economy is losing what little steam it had. 

Behrens is hopeful it's temporary. 

He says Japanese carmakers are starting to order again and seem to be ramping back up.

BEHRENS: I see some emails that come through with plant schedules for our Japanese customers, I can see the green boxes instead of the red X's, meaning they're open instead of being shut down.

MICKI MAYNARD: This is a big story in our part of the country because manufacturing is such a large part of the economy here. 

Micki Maynard is senior editor of Changing Gears, a project of WBEZ, Michigan Radio and Ideastream in Cleveland.  They're looking at the future of the Midwest economy.

Twenty-five percent of Indiana's economy comes from manufacturing, 20 percent of Wisconsin's and 13 percent of Illinois's.

Maynard says manufacturing directly tracks how consumers are feeling.

MAYNARD: Cars, for example. Car sales always depend on employment, jobs and housing. And if those things are not lining up, car sales won't go up in any specific way, so what we're seeing is the economy is slowing, consumer confidence is getting a little shaky, and of course the housing market just hasn't come back. 

But even when demand does pick up, Maynard says manufacturing companies may not do much hiring.

MAYNARD: What they've learned through the recession is what they can get by without. So as they ramp up their plants a little bit more, they're saying, you know what: I don't need 10 people on this part of the assembly line, I only need eight and by the way I'm going to pay my new hires less than I paid the veteran workers.

Not all are in that place.

Roger Behrens of P-K Tool says his company has hired back some of the people it laid off.

But their headcount is still lower than a few years ago.

He says before they bring on any more people, sales need to pick up, and for that, they're still waiting.

And now for our Windy Indicator, where we lift the veil on a part of the economy you might not usually think about.

Today – wedding bands.

Not the kind you put on your finger - but the music.

Colby Beserra is band leader for his group - The Party Faithful.

He started the 11-piece band in 2007.

BESERRA: We got a jump on the recession to the point our reputation was good and our visibility was up.

As a result – Beserra’s hitting his booking goals.

They play about every Saturday - about 50 to 60 gigs a year.

Still – it’s been a struggle with the bottom line.

BESERRA: Prices have stayed pretty stagnant and as a result most of us haven’t been able to give our employees raises, either.

Beserra says couples are driving harder bargains these days in an effort to cut their costs.

They’re waiting longer to book a band – willing to take the chance a group will give them a deal.

He’s also seen couples wanting The Party Faithful – but opting for a DJ – paying a fraction of the $12,000 he might charge.

BESERRA: In terms of what I’ve seen people cut back on, it’s things like ceremony music, cocktail music, dinner music. These are things that used to be pretty beefy.

Now – Beserra says a lot of couples have the band just focus on the dancing at the reception.

And he says for that – there’s no replacing the vibe of a live band.

Next week, we’re taking the day off to wish the U.S. a happy 235th birthday. Join us again July 11th.