Manufacturing outlook: shaky but optimistic

• Alexandria Extrusion

Echo Press photo by Mike Enright Manufacturing employees worked in the machine shop Wednesday afternoon at Alexandria Extrusion Company, located at 401 County Road 22 Northwest.
• Alexandria Extrusion

Echo Press photo by Mike Enright Workers, such as Matt Stier, use high-tech machinery to create parts for a variety of products, from medical equipment to fishing boats.

Talk about it

A majority of Minnesota manufacturers say they expect the recession to last through 2009.

Even more say they are confident in their company’s ability to survive – and succeed – the economic slump.

That’s according to a recently released December survey of 400 manufacturing executives from across the state, gauging how they feel their companies are faring in today’s financial climate.

Gathered together Tuesday at Douglas Machine to discuss the poll’s results, a number of local manufacturers expressed a similar confidence in the future of their individual businesses, and for the Alexandria area.

It’s not that Alexandria manufacturers aren’t feeling the economic pinch – they are. Many say December and January have been especially tough.

Following statewide trends, Douglas County’s unemployment rate spiked to 6.4 percent in December, up from 5.3 percent in November and 4.9 percent a year earlier.

Minnesota cut 2,900 manufacturing jobs in December, and lost 15,600 jobs throughout 2008.

Locally, a lack of business has also forced some manufacturers to temporarily cut back production, and in some cases, workers, but despite the difficulties, many say they are optimistic.

Here are five snapshots of how Alexandria manufacturers are handling the economic downturn.

Rick Paulsen – Douglas Machine

I think in the last two months since the survey was completed, things have further deteriorated in terms of economics, which has heightened some of the concerns we all have as manufacturers.

Our customers are Fortune 100 food and beverage companies, and when their earnings are down, their capital expenditures are cut, which impacts a company like Douglas [Machine].

It’s kind of a mixed bag [right now]. We had one customer that wanted a machine in six weeks, which is a very short delivery. The next day another customer said a project was being delayed six months.

We haven’t had any workforce reductions. For the most part we are going to be very busy for the first half of 2009, so the uncertainty for us is what’s going to happen the last half of the year.

We think it’s going to be a fairly flat year, revenue-wise. We don’t expect to contract very much, or at all, but we don’t expect to grow either.

Tom Schabel – Alexandria Extrusion

Most of our customers are not local, so we do get a feel for what’s going on at the national level. Some of the markets we serve are starting to feel [the slowdown], primarily in segments where discretionary income would be the influencer – recreation products, specifically.

In light of all the downturn and the impact we still see significant opportunities. Other opportunities exist for good, strong companies.

We’re cautiously optimistic, yet we’re in a down economy right now, and we’re feeling it. We had a great 2008 up through October, and then toward the last two months things started to fall off.

We do have some people on layoff right now, as of a week ago. We probably let go about 25 people.

That would be my impression, that [Alexandria] is doing better than most [areas]. It certainly feels stronger.

We belong to a national organization of aluminum producers, and we’re seeing in the Midwest that the [recession’s] impact is taking longer to hit, and there is some indication that it may not be as deep.

Dave Lambert – 3M

We are also seeing a downturn in business right now, a softening of business.

For us at the [Alexandria] plant site, with the new expansion that has helped to minimize any disruption of employment here. That is still going strong.

We haven’t had to lay anybody off. We have had to do some restricted hours for February [going to a four-day work week].

We decided that [locally], based on the volume going through our plant. That was a decision by plant management.

Our biggest customers are industrial companies, and we’ve been hearing in the news every day how they’re doing.

Last week, 3M’s corporate office released its fourth-quarter earnings results for 2008. Sales in its “Industrial and Transportation” sector were down 11.3 percent.

Shaynen Schmidt – Pro-Tainer, Inc.

The last two years, 2007 and 2008 were the best years we’ve ever had. And 2009 is looking pretty good.

Of course, recycling over the last few years keeps getting bigger and bigger. We sell to a lot of cities and counties, and government contracts have been strong.

We do sell some garbage and refuse disposal equipment to the private sector and that has slowed down.

We’re a bit concerned looking ahead to 2010 because of our heavy emphasis on government contracts. With the state deficit and proposed budget cuts, it could have some negative effects if local cities and counties lose out and have to trim down their expenditures.

[The downturn] has goods and bads to it. We’re looking at it as an opportunity. We did just buy out one of our competitors in January.

Don Wilkins – Alexandria Pro-Fab

We had a really good year last year. Since then [business] has dropped off considerably.

There is a lot of work still out there, but customers are pushing stuff back. A lot of projects aren’t getting going until March or April, instead of January.

We will probably be down 20 percent to 25 percent for the whole year just because of the late start.

We had to let a few people go. It’s been about 60 layoffs. Last fall we were up to 106 employees.

We’re going to be OK; this is just a little bit of a setback. We’ve been through it before. We just have to tighten our belts a little.

Tags: manufacturing, outlook, layoffs, cutbacks