The county’s factories should grow in 2005, but don’t expect a lot of jobs.
Manufacturing employment is seen growing by about 1% to 185,013 workers, up nearly 3,000 jobs from 2004, according to Chapman University’s annual forecast.
That would mark the second year of manufacturing gains after three years of job losses starting in 2001. But, at best, next year’s projected gains stand to bring manufacturing back to 2003 levels, and well short of 2000’s 216,725 jobs.
Technology production is seen leading 2005’s increase with a 3.4% gain to 55,132 workers. Durable goods manufacturing is seen rising nearly 1% to 74,167 workers. Employment making non-durable products also is seen rising 1%, to 55,714 people.
Despite some hiring, manufacturers still are swimming against the tide. Automation gear, the high cost of doing business in California and the lure of overseas factories dampen the outlook for manufacturing job growth.
Reform of workers’ compensation insurance,a big cost for manufacturers,is welcome news.
“We trust the reforms,” said Gino DiCaro, spokesman for the Sacramento-based California Manufacturers & Technology Association. “It was a collaborative effort.”
But the reforms need more time to take hold, DiCaro and others said. Many plant operators are yet to see any reductions in their workers’ compensation premiums.
Some have decided not to hang around.
Regal-Beloit Corp. of Beloit, Wis., is closing its six-decade-old Anaheim plant this month, citing the high cost of doing business here. Nearly 80 workers are losing their jobs at the factory, which makes industrial motors.
The company is one of a handful that has closed plants here or opted to expand elsewhere.
Manufacturers that grow jobs here likely will be defense contractors such as Boeing Co. and Ceradyne Inc.
Chicago-based Boeing, which has operations in Anaheim, Seal Beach, Huntington Beach and Irvine, added 731 workers locally in the past year, a trend that should carry over to 2005.
Costa Mesa-based Ceradyne, which makes armor for soldiers and vehicles, has boosted local hiring 120% in the past year to 729 workers on a steady stream of contracts.
William Axeline, chief operating officer of San Juan Capistrano-based plumbing products maker Fluidmaster Inc., said he doesn’t see 2005 as a “barn burner.” But he said the outlook isn’t gloomy, either.
Fluidmaster expects to grow by acquiring companies next year, according to Axeline. Profits were healthier this year, he said, and that is expected to continue next year.
The company, which employs about 285 people locally, plans to hire a few more people next year in sales and marketing, Axeline said.
Fluidmaster does half of its production at its 100,000-square-foot factory in San Juan Capistrano. The other half is done in Tijuana. Axeline said he doesn’t expect that mix to change for the coming year.
Workers’ compensation premiums are yet to go down for Fluidmaster, according to Axeline. Still, the atmosphere for business in the state is better than it was.
“The governor has some good ideas,” Axeline said.
However tempting a move might be, some manufacturers insist on staying put.
“I wouldn’t even consider taking manufacturing across the border,” said Duncan Moffatt, president of Data Aire Inc. of Orange.
Data Aire makes air conditioners for computer rooms. The company, which has 100 workers, has been in OC for four decades, he said. No one would want to move, he said.
“It’s kind of like deciding to move your residence,” Moffatt said.
That’s left Moffatt to cut costs in other ways. For one, the company doesn’t settle on workers’ comp claims it thinks are fraudulent. Settling only creates word of mouth that your company is easy to soak, he said. Moffatt said he expects his premiums to grow next year but not as much as this past year. He expects sales to grow 15% next year, compared to 20% this year.
For those that already have moved manufacturing to China, they may see prices go up.
“I see inflation happening,” said Dan Bon, chief executive of Fountain Valley-based Nirve Sports Ltd., which makes hip beach cruiser bicycles in China.
China’s manufacturing boom has driven up wages, he said. But manufacturing there still is a bargain, according to Bon.
“It’s a bit of the wild west out there,” he said. “The rule is there are no rules.”
Nirve is optimistic for next year, Bon said. He said he’s projecting 15% to 20% growth in 2005. Nirve has an estimated $15 million in yearly sales.
Company to watch: RAJ MANUFACTURING
Will it or won’t it?
Move production elsewhere, that is.
Tustin-based swimsuit maker Raj Manufactur-ing Inc. is in a manufacturing sector,apparel,hit hard by the state’s high business costs and workers’ compensation.
So it wasn’t surprising a year ago to hear Chief Executive Raj Bathal say he was looking at his options.
“We were actually going to leave right away,” he said in fall 2003.
Then came the election of Gov. Arnold Schwarzenegger. So Bhathal said he decided to wait it out and see how reforms play out.
That could make 2005 a critical year for Raj Manufacturing, which could serve as a touchstone for other manufacturers betting on im-provement. The company employs 400 people in Tustin.
So far, Raj is cautiously heartened by California’s reforms.
“We’ve been somewhat optimistic about the future compared to how it was,” said Alex Bhathal, the company’s vice president and Raj Bhathal’s son. “But there’s still a definite attitude against businesses coming out of Sacramento.”
,Sherri Cruz
