Des Moines Register
10-21-07
Factories in Iowa see four years of growth
But the shutdown of Maytag points out the vulnerability of jobs in manufacturing,
an industry that the state heavily relies on.
BY WILLIAM RYBERG AND DONNELLE ELLER
REGISTER BUSINESS WRITERS
Newton gets hit with the full force of the Maytag factory closing this week, which
could prompt Iowans to wonder who's next.
"You never know what's going to be around that corner. You've got to be
prepared," said Maytag factory worker Mike Jackson, one of 550 employees
looking ahead to their last day later this week.
Iowa manufacturing in 2007 is a mix of successes and failures. A new industry making wind turbines that produce electricity - is creating hundreds of jobs. Big
employers such as Rockwell Collins and three of five Deere & Co. factories are
hiring, while Mount Pleasant, Centerville and other cities have lost plants.
Despite Iowa's ups and downs, the state has added about 11,600 factory jobs
over the past four years. Minus a national economic upset, those job increases
should continue, led by growth in renewable fuels and wind energy, said Michael
Tramontina, the state's economic development director.
The Newton closing points out the vulnerability of factory jobs. Global
competition, poor management, practical business decisions, new technology or
fat incentives from another job-hungry state can put Iowans in the unemployment
line and leave a community struggling to rebuild its economy.
"This is a free market, and businesses succeed and some don't. But we need to
build a foundation that helps them succeed," said Gov. Chet Culver.
The economy of only one other state - Indiana - is more reliant on manufacturing,
according to Iowa State University research.
"Manufacturing is the backbone of the Iowa economy, and has been for 50
years," Tramontina said. "More than it's a farm state, more than it's an insurance
state, Iowa is a manufacturing state."
State hasn't finished economic road map
A two-year-old blueprint for preserving Iowa's manufacturing base has yet to be
built into a final plan. The state paid a half-million dollars to a consultant, the
Battelle Memorial Institute in Columbus, Ohio, to chart a course for
manufacturing, technology and biotechnology in Iowa.
Business and government leaders say Iowa is making progress. The state is
spending $5.2 million to implement the manufacturing recommendations,
although that falls short of the $16 million the consultant recommended for the
first five years.
Among the action: The state earmarked money for college internships, career
awareness campaigns and other programs to attract workers, identifying a
shortage as a major threat to manufacturing as baby boomers retire. Lawmakers
provided $2.5 million in matching grants to help small manufacturers develop
new products.
Culver points to community college programs that train students in skills needed
by employers. The Iowa Values Fund, the Iowa Power Fund and tax policies
have made Iowa a more attractive place to do business, Culver said.
"We have to be agile. We have to be flexible. This is a new 21st-century
economy. It's very fluid," Culver said.
The Values Fund, a $50 million annual economic development program, provides
incentives such as grants, loans and tax breaks to growing companies in Iowa.
The Power Fund is a four-year, $100 million program designed to spark
development of the next generation of energy technology.
Two plants making components for wind turbines now employ 450 workers in
Cedar Rapids and Fort Madison. Proposed plants in Keokuk and West Branch
would provide nearly 500 jobs. Newton hopes to land a factory that would employ
several hundred.
But David Swenson, an economist at Iowa State University, said some
industries remain at risk.
Appliance manufacturing continues to shift to low-cost-labor countries such as
China and Mexico.
Even with Maytag gone, hundreds of Iowans still work at plants that could be
vulnerable. Swenson points to factories that make Whirlpool refrigerators in
Amana, Lennox air conditioners in Marshalltown, and Electrolux washers and
dryers in Webster City, where job cuts have been announced.
Also threatened, he said, are dozens of small plastics companies that served
appliance makers - as well as the auto industry.
Iowa also has several strong manufacturing industries that are growing or
performing better than their peers nationally. In fact, Iowa has a stable
manufacturing base that's adding production.
Showing strength: metal processing manufacturers such as IPSCO, North Star
Steel and Alcoa, all in eastern Iowa; wood product manufacturers such as Pella
Corp.; farm and construction machinery manufacturing that includes Deere &
Co., Kinze Manufacturing near Williamsburg, and Vermeer in Pella; and office
and home furnishings companies such as HNI Corp. in Muscatine.
Deere, Iowa's largest manufacturing employer, for example, has increased its
Iowa manufacturing work force from 5,600 five years ago to 6,350 this year. The
company recently laid off 45 workers in Dubuque, but continues to do limited
hiring at factories in Ankeny, Waterloo and Ottumwa. Deere also has a factory in
Davenport.
Firestone, the maker of agricultural tires in Des Moines, should remain strong
because of its ties to the manufacture of farm machinery and other equipment in
Iowa, Swenson said. The plant is Polk County's largest manufacturing employer.
Winnebago Industries, the Forest City maker of motor home recreational
vehicles, has stayed in Iowa and prospered. It celebrates the 50th anniversary of
its founding next year.
The company has built five new plants or factory additions in the past 10 years in
Forest City, Charles City and Hampton, said Bruce Hertzke, Winnebago
chairman and chief executive.
"Some of the states around - South Dakota, Nebraska - actually had some very
good incentive programs that we looked at," Hertzke said.
Winnebago stayed in Iowa mainly because of the quality of the labor force in
northern Iowa, but also because Iowa offered financial incentives, too, Hertzke
said.
The state should continue to offer help to existing businesses as well as new
ones, Hertzke said.
Even Winnebago closed a small plant, a 46-employee operation in Lorimor, a
southern Iowa town of 425, in 2006. The work was moved to Forest City and
Charles City to reduce transportation expenses, Hertzke said.
Mike Ralston, president of the Iowa Association of Business and Industry, gives
Iowa mostly good marks for creating a favorable business environment with its
tax structure, noncumbersome regulation, worker training and right-to-work
policy.
Iowa's "right to work" law says people do not have to join a labor union to work in
a union-represented factory; the law is a sore point with unions.
Mark Smith, president of the Iowa Federation of Labor, noted that Iowa still hasn't
regained most of the jobs lost in the recession, and new ones that have been
created come with lower wages and fewer benefits.
"It's pretty dismal in terms of wages," Smith said.
He said a national policy to encourage manufacturing is needed because states
can't deal with issues such as trade polices.
New ways to work could save jobs
High-skill, high-tech practices - often referred to as advanced manufacturing often make companies less vulnerable to foreign competition.
Advanced manufacturing helps keep businesses competitive by reducing costs
for each item produced and creating jobs that require higher skill levels, making
them less likely to be shipped to countries with lower wages.
Cedar Rapids-based Rockwell Collins, a maker of communications equipment
and aviation electronics, thrives on advanced manufacturing practices.
Innovations include computer programs that simulate a production line, complete
with computer-generated workers on the screen, said Jack Harris, Rockwell's
director of advanced manufacturing technology.
The computer simulation can help spot ways to improve efficiency.
The Iowa Advanced Manufacturing Council, a group of business leaders, has
focused on ways to spike student interest in modern factories and avoid what
could be the biggest threat to Iowa manufacturing: a future shortage of workers.
Experts estimate Iowa will be short about 90,000 manufacturing workers over the
next eight years.
The council is providing college internships at small manufacturers; launching
education programs like "Lead the Way" that emphasize practical applications of
math and science in middle and high schools; and focusing on starting
manufacturing businesses in Iowa as a way to attract graduating college
students.
Tramontina, who leads the state's economic development agency, said a
statewide assessment of workforce - and skills - should help the state set a plan
of attack. The study is expected early next year.
But even advanced manufacturing is no guarantee against job loss, said Ron
Cox, director of Iowa State University's Center for Industrial Research and
Service.
"Maytag was considered an advanced manufacturer," Cox said.
Reporter William Ryberg can be reached at (515) 284-8104 or
bryberg@dmreg.com