Despite a Shifting Global Economy, Manufacturing Remains a (Changing) Force
In the early 2000s, Wright Manufacturing decided to adopt the Toyota-originated “lean” processes to its operation on English Muffin Way.
Lean is an industry buzzword that calls for the elimination of any waste in production that does not create value for the customer. Imagine taking the time to think about ways to reorganize a kitchen after considering the steps that are vital to making a meal. In a much more complex fashion, that’s what Wright did. As a result, the manufacturer’s production area shrunk from 121,000 square feet to 80,000 square feet.
Last year, John Deere Tractor Co. selected Wright to supply its entire commercial stand-on mower line, which supplies commercial landscapers with a fleet of diverse mower types. The contract is now about a quarter of Wright’s business, but no new plant space was necessary. “We’re able to double our workforce and volume in the same footprint because of lean,” says Shawn Wolf, chief operating officer at Wright.
“Leaning” operations—the practice of cutting the cost of processes, inventory, payroll and other facets of an organization—and re-inventing product lines have been key to the resilience of Frederick County manufacturers that made it through the recession. Plus, a crop of new manufacturers piggybacking on the growth of the I-270 corridor have kept the manufacturing sector in play in Frederick County, even with the jettison of some major players.
And that’s important, because manufacturing means manufacturing jobs. According to Frederick County officials, manufacturing salaries average 30 percent higher than other private sector work, at about $58,000 a year. Nearly 5,000 people worked in manufacturing jobs last year at 170 workplaces.
New Businesses, New Customers
But what a machine operator or welder is doing in 2013 at a successful local plant is probably different from what they were doing in 2006, as is their customer. A tour of several plants in Frederick County bears that out.
In Point of Rocks, Canam Steel has taken a traditional joist fabrication business, which serves commercial construction clients, and expanded it into bridge manufacturing as a means of diversifying its business, says Michel Cyr, plant general manager. Canam suffered when commercial construction tanked in 2007. Yet, finding a new niche allowed the company to add 100 jobs to the plant after layoffs in the past few years. Now, Canam managers say they have flexibility to respond to the market cycles that hit different markets at different times. “For times when there is a lull [in one product line], many of our employees are cross-trained and able to work on all of the product lines,” Cyr says. “With this flexibility, we are able to meet the demands of the market and keep our employees working.”
Travel on I-70, slightly east of Tilco Drive, and you arrive at Stulz Air Technology Systems. Its successful ride through the recession was due to its products’ affiliation with the high-tech industry, which never really slowed down, says David Joy, vice president of sales and marketing. “Major companies continued to invest into automation, which requires additional … technology,” Joy says.
Stulz Air Technology Systems arrived in the area as a manufacturer in 2001, having previously sold its products in the region. It now has 350 people manufacturing all its North American market products here. It includes V-frame evaporator coil designs, an advanced microprocessor controller and electronically commutated fans.
Head north on U.S. 15, and get off on Thomas Johnson Drive—better known for being the home to many doctors’ offices—and you’ll find a large and neat building housing one of Frederick’s longtime manufacturers: EDCO, best known for manufacturing equipment that repairs and finishes concrete surfaces. This company got serious about lean and turned it into an opportunity to reinvent itself into a new line of business by fabricating for other manufacturers. Examples of products range from custom toolboxes and holders to switch boxes and even metal firewood holders.
“We always knew we had capacity, we just didn’t know where it was,” says James Lehman, who spearheaded EDCO’s lean effort. “Two years ago is when we seriously took a look at this [new division]. We had outsourced a lot of stuff, and it got to the point where we brought it all back in house and did the things we had outsourced ourselves, and we found we still had time and capacity available. We produced some materials for other Frederick manufacturers, and this began to look like a feasible idea.”
Green is another way of going lean, says Bob McCutcheon Jr., of McCutcheon’s Apple Products. McCutcheon’s recently installed 546 solar panels, which generate 100 kilowatts of power for its plant, providing 70 percent of its annual electric use.
Jeff Fuchs, executive director of the Maryland World Class Consortium, says his organization has worked with about 12 companies in Frederick County in recent years to create cultures of continuous improvement, including lean manufacturing training. “Frederick manufacturers have been a foresighted group, and many have been with us for years,” he says, including Wright Manufacturing, EDCO, Akonni Biosystems, Xerxes Corporation and Stulz.
Frederick and Bioscience
With more than 70 bioscience companies, Frederick County has the second largest cluster of these firms in Maryland, according to the Maryland Department of Economic and Business Development. Companies like Medimmune, Life Technologies and Lonza (formerly Cambrex) which is one of the county’s top employers with 524 people, have settled here.
Washington Labs, an equipment testing firm that expanded into Frederick County from Gaithersburg in 2008, has watched the evolution of manufacturing in the region from behind its order book.
“We’ve been thriving in the I-270 corridor where medical manufacturers and products come into play,” Steve Ferguson, the company’s vice president says. He shows a home blood-pressure monitor being tested for what he hopes will become a major worldwide market sector for the business. Washington Labs’ customers have found the company’s accuracy level is more precise than European and Asian competitors. A mislabeled test result or certification can cost a company hundreds of thousands of dollars, which his lab can prevent, he says.
“Home medical is a growing market, and it’s important because we’re testing for the things that happen in everyday use—humidity in showers and bathrooms, dropping items, cables that could have strangling issues,” Ferguson explains.
Mattress Tech, another company new to Frederick, opened a mattress manufacturing location in the spring employing 15 people. They also have a facility in Thomasville, N.C. “I knew about Frederick because I have lived in Northern Virginia for many years, and Frederick is not only a centrally located area for servicing area retailers, but it is an up-and-coming outer suburb of the Washington metro area,” says company president Lee Tappman. “Also, the access to a wide diversity of employee types surrounding Frederick County was one of the attractions of the location.”
Making Manufacturers Happy
Even with the ways Frederick County’s strongest manufacturers have weathered the economic storm, challenges of drawing manufacturers that provide high wages remain. Washington County economic officials note that their manufacturing job-to-population ratio is higher than Frederick County’s, with companies like Volvo Powertrain providing union wages. Washington County has 6,656 employees, or 10.5 percent of its workforce, in manufacturing jobs, compared to Frederick County’s 5.2 percent.
What makes a company take a second look at Frederick County—and making sure they stay here—is an art that includes data, political tax structure, demographics and relationships, says Jodie Bollinger, specialist with Frederick County Business Retention and Development. “We had one [company] president who chose Frederick because his wife loved to shop here. You have to ask the business questions, but you still have to delve into those personal relationships.” And often, factors bigger than shopping come into play.
“My main purpose was the corridor—the junction point of U.S. 15, 340 and 70,” Washington Labs’ Ferguson says. The company originally located in Montgomery County because “the greater Washington Metropolitan area has a lot of tech talent available.” But when it looked at whether to expand in Gaithersburg, the math just didn’t add up, given Montgomery County’s higher tax rates.
Canam’s Cyr agrees that location, location, location continues to make sense for the company to keep its presence in Point of Rocks. “Canam is situated in a great location to reach the entire Mid-Atlantic region,” he says. “We are not far from many of our suppliers, and within minutes to the major highways.”
Even with the frequent sniping the business sector makes about Maryland’s tax and regulatory demands making it one of the least business-friendly environments in the region, local manufacturers continue to bring high praise. The county’s support for manufacturing never wavered during the tech bubble, the bio-research boom or changes in the political landscape, local company heads say.
“We are privileged to be in a pro-manufacturing state,” says Cyr. “Frederick County has a history of being friendly to manufacturing; it’s always been a priority here no matter who was [in political leadership],” says Frank Stanczyk, co-president of EDCO. Mike Galiazzo of the Regional Manufacturing Institute says, “The manufacturers in Frederick County reflect the county itself, and its forward thinking. The manufacturers there are progressive, and advancing their own ideas.”
The Bad News
Even with the bright spots in manufacturing, the losses occur with companies that either change markets or can’t keep pace with the need to re-invent or change process.
In 2005, longtime clothing manufacturer H.L. Hartz, the last holdout in a number of textile closures during recent decades, shut its doors. This was due to moves of the world textile market overseas.
In 2012, BP Solar shuttered its Frederick plant that manufactured solar panels, resulting in the loss of 400 jobs. The company, originally known as Solarex, was losing business to low-cost solar manufacturers overseas. The disappearance of the three-decade display of solar panels facing I-70 that were symbolic of manufacturing was a large blow, both economically and psychologically.
The biggest loss was Alcoa Eastalco Works, which closed its aluminum manufacturing operation in Adamstown in 2005. The shut down cost about 600 longtime union manufacturing jobs. The company, like BP Solar, competed with low-cost overseas manufacturers, and could not reach an agreement about the cost of its power supply with Allegheny Power.
Earl Robbins, a now-retired veteran of the area’s manufacturing community as a longtime lobbyist for Eastalco, was one who was known for his patient struggle to find an energy solution for the company. He says the surviving manufacturing companies will always be those with an open enough mind to watch the way the industry, and the world, are changing. “We always knew from the beginning manufacturing would be a small percentage of the business in the entire state,” he says. “To stick around, it’s always required us as manufacturers to be creative but also united so we could continue to survive.”