Spring 2006 Issue
What's UP
Posted: October 15, 2008
In This Issue Welders? Future?
In 1994, who would have thought that the future face of manufacturing in our region might be sweating behind a welder’s shield? Certainly not the experts who gazed into the future back then and saw biotech as a burgeoning force in manufacturing -- and goodness knows, biotech production was off to a sizzling start.
From 1994 through 2001, sales for pharmaceutical products made in our state soared by more than 600 percent to reach the billion dollar mark. But then, the bottom fell out and sales plummeted to $394 million in 2004.
At the same time, jobs with metal fabricating companies in Washington state grew by a modest but steady 9 percent and sales grew by 79 percent. Growth rates were even higher for companies that make machines for construction, farming and other industrial uses. Jobs with machine manufacturers in Washington state grew by 12 percent and their sales climbed by more than 120 percent. Put these two metal-bending sectors together and they now account for nearly 30,000 jobs in Washington that generate more than $6 billion per year in revenue.
Does their success mean the biotech production dream is not worth pursuing? Of course not; it is. But the contrasting experiences of the metal-benders and the pharmaceutical crowd shows it is time to tear down the black crepe paper, put away the hymnals and send back the casket because, once again, the rumored death of manufacturing was, and is, just a wee bit exaggerated.
What We Appreciate
In recognition of Manufacturing Appreciation Week, Seattle Industry conducted a new survey to gauge the health of manufacturing in our state. The findings suggest there are at least five things about it that are well worth appreciating:
1) Manufacturing still packs a mighty economic wallop. Manufacturers in our state reported gross business revenues in 2004 of $95 billion. That was 20 percent of all business revenues reported to the state. In 1994, manufacturers accounted for 21 percent of all business revenues. Some might call that “decline.” We say, “B.S.” That’s a whole lot of money.
2) Manufacturing sales grew faster than the rest of the economy in 2005, up 13 percent to 8 percent for businesses not in manufacturing and with Boeing sales on a dramatic upswing, manufacturing sales should continue to grow quite nicely.
3) Manufacturing jobs in our state fell by 16 percent from 1994 through 2004, but not all sectors lost jobs. In 10 of 21 manufacturing sectors defined by the North American Industrial Classification System, companies recorded job growth during the past decade.
4) Many manufacturing sectors face a long term labor shortage for skilled people from engineers to craftsmen because of the advancing ages of their workers and the small number of young people entering the career pipelines for these fields.
5) We may live in an era where the “world is flat,” but our corner of the globe possesses real strategic advantages, starting with the width of the Pacific Ocean and our proximity to an abundant supply of natural resources. Timber, minerals, seafood, oil, and natural gas are all in high demand around the world, and our manufacturing base is tied into each and every one of them, to say nothing of airplanes, trucks, machines and other capital goods.
A Quarter Million Jobs
Yet, smart, well educated, well connected people in our region now use the past tense to refer to manufacturing, even though it still provides about 270,000 jobs in our state, many of them well paid and connected to some of the most successful manufacturing companies in the world.
Earlier this year, Mark Pigott, the CEO for PACCAR, visited the White House to receive the National Medal of Technology. The medal is awarded to individuals “for their outstanding contributions to the Nation’s economic, environmental and social well-being through the development and commercialization of technology products, processes and concepts; technological innovation; and development of the Nation’s technological manpower.”
PACCAR makes trucks, Kenworths and Peterbilts. Founded in Seattle in 1905, PACCAR celebrated its centennial year in 2005 by earning record net revenues of $1 billion on $14 billion in sales. It’s one of the biggest truck makers in the U.S. and the world. And PACCAR uses welders – lots and lots of welders.
Last year was the 67 th year in a row that PACCAR turned a profit. Now there’s a record to appreciate and the biotech venture capitalists might want to keep it in mind as they try to get one of the few remaining seats at the keynote luncheon June 6th, 2006 for Manufacturing Appreciation Week. (register at www.kentchamber.com.)
