Manufacturing continues its comeback.
2006 is expected to see a slight gain in local manufacturing jobs. And that’s on the heels of 2005’s results,the first gain since 2000.
It’s unclear whether the growth is part of a long-term trend. But it’s welcome news for a sector that’s seen massive job losses from the previous economic downturn, global competition and rising productivity.
There have been more than 30,000 manufacturing job losses since 2000 in Orange County.
Manufacturing’s recent gain largely is a result of skilled workers hired by technology, medical device and aerospace makers.
“We may have hit bottom,” said Anil Puri, co-director of the Institute for Economic and Environmental Studies at California State University, Fullerton.
About 12% of all OC workers are in manufacturing. That puts the county at No. 10 nationally among metropolitan areas,up from No. 12 in 1999.
Puri’s forecast calls for the total number of manufacturing jobs to climb by 800 to 185,000 in 2006. The forecast calls for 900 manufacturing jobs to be added this year.
Those aren’t huge gains and don’t necessarily reflect a lasting rebound, Puri said.
Chapman University’s Orange County Composite Index may slide a bit in 2006 as growth in the economy slows, said Raymond Sfeir, professor of economics at the university’s George L. Argyos School of Business in Orange.
But the index, which is a sort of a localized version of one compiled by the national Institute of Supply Management, posted a score of 61.1 in the third quarter. Any number above 50 means the manufacturing sector is expanding. Sfeir said he expects the survey to stay higher than 50 next year.
Manufacturers face challenges. Land and housing are expensive. The state’s workers’ compensation insurance costs still are high despite recent reform. Rising energy prices are a factor.
Last month, Lake Wales, Fla.-based orange juice maker Citrus World Inc. said it’s closing its Fullerton plant and laying off dozens of workers. The high cost of doing business here was one of the factors in closing.
A bright spot for manufacturing: technology. The sector is expected to grow 1.1% to 56,318 manufacturing jobs in 2006, according to Chapman’s economic forecast.
Pittsburgh-based Alcoa Inc.’s plant in Fullerton is in the process of hiring dozens of people, including manufacturing workers, to help make the fastening systems that go on big airliners.
Orange-based Data Aire Inc. also is hiring to meet growing demand for its temperature and environmental control systems for the technology industry.
_________________________________________________________
COMPANY TO WATCH: ST. JOHN KNITS
Expect more changes to play out on the manufacturing front at Irvine-based St. John Knits International Inc. in 2006.
Chief Executive Richard Cohen, who came onboard in 2004, is reinventing St. John with the founding Gray family mostly out of the picture.
Cohen, former head of the U.S. arm of Italy’s Gruppo Ermenegildo Zegna, has sought to reverse a sales and profit slump while livening up St. John, best known for outfitting politicians and socialites.
He is bringing a big fashion feel to the apparel maker. Cohen, a British native, will look to boost sales and profits in 2006 from handbags, wallets and other accessories.
But the company is on the Business Journal’s manufacturing watch list because of its Orange County operation.
The company employs some 4,900 people, including about 2,700 in OC. It’s one of the few OC apparel makers that still makes clothes in the county.
St. John, with annual sales of about $400 million, has been streamlining its local manufacturing operations. Last year, the company closed a jewelry plant in Santa Ana.
Whether St. John makes a bigger move to shutter more of its manufacturing operations remains to be seen. Many clothing makers have shifted production overseas to tap cheaper labor. The challenge: keeping up quality.
,Jennifer Bellantonio
