The local manufacturing sector is expected to grow next year, albeit at a sluggish pace, according to a recent economic forecast by Chapman University in Orange.
The three segments of the manufacturing sector—durable goods, non-durable goods and high-tech—are likely to combine for a less-than-1% increase in the number of jobs, with fewer than 1,000 new hires bringing the sector’s total to about 156,000.
The tepid outlook on employment in manufacturing looks to stem in part from what industry experts call a “skills gap” that has companies struggling to find qualified workers.
The skills gap appears to hit OC’s traditional manufacturers of durable goods more than the local high-tech segment, which ranges from medical devices to aerospace components and digital cameras.
“I keep hearing from associations and meetings—they’re all talking about the skills gap,” said Garrett LeVan, project manager at Fountain Valley-based Genie Scientific.
Genie Scientific makes and installs custom steel furniture and laboratory casework. Its products are used by other manufacturers and their research units involved in product testing. The company had about $5 million in sales last year and operates with about 20 employees in OC, with another similar-sized facility in Michigan.
“Manufacturers are having a hard time finding qualified employees,” LeVan said. “We’ve felt that a little bit, too, for things like programmers for our [computer numerical control] machines.”
Some companies have prepared to fill the gap on their own. Sweden-based metalworking-tools maker Sandvik Coromant opened a training center in Cypress for manufacturers and students here earlier this year. It is a subsidiary of Sweden-based Sandvik AB, an engineering group with business in more than 130 countries. The parent company had 50,000 employees and saw revenue of more than $14 billion last year across five divisions.
The training center in Cypress—dubbed the Sandvik Coromant Productivity Center—is the company’s third in the U.S. and 25th around the world. It opened its doors in February as manufacturing saw a pickup in work here and nationwide, driven by higher transportation costs, among other factors.
The skills gap likely wasn’t the only reason for a falloff in manufacturing growth in recent months—the slow economic recovery is another consideration.
Exports
Offsetting those factors has been a statewide increase in exports by manufacturers. San Juan Capistrano-based Seychelle Environmental Technologies Inc., which makes water purifiers, offers an example of smaller OC companies that have joined that trend. Seychelle recently signed distribution deals in Mexico, Saudi Arabia and Japan, according to President Carl Palmer.
Company sales rose 15% to $5.1 million in 12 months through February.
It pulled back on distribution for a couple of quarters this year to develop marketable products and get ready for entry into new international markets, Palmer said.
Person to Watch: Mark Wetterau
We’ll be watching how Mark Wetterau navigates the business landscape in China, as he leads Golden State Foods Corp.’s bid to establish a base there.
Wetterau is chief executive of the Irvine-based food processor and distributor, which saw $5.4 billion in revenue last year and currently is the third-largest private company based in OC.
Golden State Foods services more than 25,000 stores in 50 countries. Its customers include McDonald’s Corp., Starbucks Corp., Yum! Brands Inc. and Chick-fil-A Inc.
Wetterau recently oversaw the company’s acquisition of a controlling stake in KanPak China, the Asia arm of Wichita, Kan.-based KanPak LLC. KanPak makes dairy-based products, such as ice cream, smoothies and frozen desserts, and caters to the quick-service restaurant industry.
“Our recent joint venture partnership with KanPak China … will help us meet the needs of fast-growing international markets,” Wetterau said. Initial production will be done through KanPak’s existing facilities in China, but Wetterau has said his company is looking to build manufacturing capabilities there.
—Jane Yu
Company to Watch: American Vanguard
Newport Beach-based American Vanguard Corp., a maker of pesticides and other agricultural products, is wrapping up a strong 2012 and heads into a planting season that’s likely to boost business.
Farmers will have a lot of catching up to do in 2013 as they come off a worst-in-a-generation drought that severely affected this year’s crops in the Midwest and other parts of the U.S., hitting harvests for corn and soybeans particularly hard.
American Vanguard saw a 63% increase in profit for the first nine months of this year, at $25.6 million. It also had a 20% growth in sales for the same span to $262.8 million.
Those totals already reflect heightened demand for American Vanguard’s products for next year, including initial shipments of soil insecticides “in response to grower demand ahead of the 2013 planting season,” Chief Executive Eric Wintemute said.
American Vanguard recently moved to bolster the international sales and marketing efforts of subsidiary Amvac Chemical Corp., forming a Netherlands-based unit and appointing agriculture industry veteran Ad de Jong as director to replace retiring international sales director Alfredo Pelaez.
—Jane Yu
