The Post-Standard
February 8, 2004
By Rick Moriarty
Staff writer
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Martin Sarafin is a Procurement Specialist for JGB
Enterprises in Liverpool - a company in the manufacturing sector that
is growing. It added 30 people to the payroll since October, an achievement
that was all too rare in the sector that shed nearly 20 percent of its
jobs in 13 years. Mr.Sarafin is holding a hose assembly and a valve system.
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As manufacturers across the nation slash jobs, JGB Enterprises in Liverpool
is growing them. The maker of hoses and hose assemblies for petroleum and water
distribution systems has added 30 people to its payroll since October, bringing
its work force to 180 people.
Driven by an increase in sales to the U.S. military, its biggest customer, the company's revenues nearly doubled from about $25 million five years ago to $49 million in 2003, said Jay Bernhardt, the company's founder and president.
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Santiago Castro puts together a dispensing manifold assembly at JGB Enterprises. The company is creating jobs, not cutting them, which is rare for the manufacturing sector. The four-county Syracuse metropolitan area has lost nearly a fifth of the manufacturing jobs it had in 1990.
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JGB Enterprises is not the only Central New York company that has found a way not only to survive the nation's most recent recession, but to grow its business and work force.
The area which consists of Cayuga, Madison, Onondaga and Oswego counties had job increases in each of the first 11 months of 2003, compared with the same months in 2002. December was the only month in which the area had a loss of jobs compared with the same month the year before. It ended a 15-month streak of job gains for the area.
There were an average of 348,441 jobs in the four-county area in 2003 2,741 jobs more than in 2002. The job gains in 2003 represented a relatively modest increase of 0.8 percent. But that was pretty good compared with the job losses the area experienced in 2001 and 2002.
The fact that the area had overall job gains for most of 2003 when factory employment dropped sharply was remarkable, economists say.
In years past, Central New York's economy went up and down with the state of its manufacturing sector. When manufacturers ran into trouble, so did the rest of the area's economy.
But in recent years, that has not held true. While local manufacturers have experienced the same problems as manufacturers throughout the country, most other sectors of the local economy have been growing.
Economists attribute the shift to the changed structure of the area's economy. A steady drop in manufacturing jobs and a steady rise in service-related industries have left the area far less dependent on the fortunes of the manufacturing sector.
"If there is a locale across the I-90 spine of
Upstate New York where economic changes are accelerating, it's Syracuse," said Marc Goloven, senior regional economist and vice president for J.P. Morgan Chase & Co.
Goloven said the Syracuse area lost relatively few jobs in the most recent recession "due to the transformation of an economy dominated by large manufacturers into an economy increasingly reflecting the growth of small- and medium-size businesses, almost all service-providing business."
In December 1990, there were 48,700 manufacturing jobs in the area, 14 percent of all jobs in the area. In December 2003, there were 39,600 factory jobs remaining, 11.3 percent of all jobs.
Nearly one of every five manufacturing jobs that existed at the end of 1990 disappeared by the end of 2003. In that time, the area gained 3,900 jobs overall.
The jobs being created in the region are in private education and health services, leisure and hospitality, and professional and
business services.
Private education and health services a category that includes the area's private colleges, hospitals and nursing facilities employ far more people than do manufacturers. The sector employed 58,900 people in December, up from 43,700 in December 1990. people than do manufacturers. The sector employed 58,900 people in December, up from 43,700 in December 1990.
Professional occupations and companies that provide services to other companies are gaining rapidly on manufacturing. The sector, which includes technology companies, employed 32,800 people in December, up from 29,000 in December 1990.
The leisure and hospitality sector which includes entertainment venues and hotels is gaining on manufacturing, too. It employed 28,800 people in December, up from 26,000 in the same month in 1990.
In 2003, the list of Central New York manufacturers to disappear from the local scene included Marsellus Casket (315 jobs), C-COR.net Corp. (250 jobs) and Nestle Co. (400 jobs).
Then came the really big blow: Carrier Corp. announced plans to end manufacturing of its air conditioning products in DeWitt. The move will slash another 1,200 factory jobs from the area by the middle of this year.
Nevertheless, Economy.com, an economic forecasting company in West Chester, Pa., is predicting modest job growth for the Syracuse area this year.
Matthew Martin, senior economist for the company, said the number of jobs in the area will grow at a pace of up to 1 percent because most sectors other than manufacturing will expand. Even the manufacturing sector could see job gains in the second half of the year, as the national economy
picks up steam and the Carrier layoffs are out of the way, he said.
While layoffs are never good for the workers losing their jobs, the area's diminishing reliance on manufacturing and the greater role of the service sector is a good thing for the economy in the long run, he said.
Some of the manufacturing jobs are being lost overseas or heading to southern states with lower taxes and often lower wages. But many are simply disappearing due to technology and productivity gains that have allowed American companies to produce more goods with fewer workers, Martin said. By diversifying its economy, the area is cushioning itself for inevitable
losses of factory jobs, he said.
David Cordeau, president of the Greater Syracuse Chamber of Commerce, said the economy is doing better than many think. In its annual economic forecast, the chamber said there is optimism in nearly every employment sector, even manufacturing.
Cordeau said sales have started to increase for
manufacturers, as the national economy has picked up some steam. And some manufacturers such as JGB Enterprises, medical equipment maker Welch Allyn Inc. and technology company Sensis Corp. have done well even during the recession, he said.
Some analysts say the service-sector jobs that are replacing manufacturing jobs in the United States are often non-unionized and pay less than the unionized factory jobs that are being lost. But Cordeau said many of the service sector jobs that are being created in the Syracuse area are "high-end" service jobs, not hamburger-flipping jobs that pay minimum wage.
The growth is coming in private education, health care and information technology, he said.
Cordeau said he sees a trend toward entrepreneurship in Central New York. Some of the employees who are losing jobs at manufacturers such as Carrier are expressing interest in starting their own businesses, he
said.
That's a change from the recession of the early 1990s, when laid-off workers left the area for states such as North Carolina.
This time, the job picture is not better and in some cases, a lot worse for manufacturing workers in other states, Cordeau said It's turning out that extremely cost-sensitive companies that moved south in the 1990s made only temporary stops there on their way to low-wage countries such as China, he said.
"Some people will leave, but jobs are being lost elsewhere, too," he said.
To boost entrepreneurship, the chamber has launched an array of programs to support development of new business ventures.
The programs include a Web site with information on how to start a business, a "mentor" network of executives providing advice to start-up businesses, a network of wealthy individuals interested in investing in local businesses and the opening later this year of a downtown incubator
for technology companies.
On Feb. 26, the Metropolitan Development Association, an economic planning and research group, will release an update of its "Vision 2010" blueprint for economic growth. The study will identify industries
that have the most potential for growth in the region, said MDA President Irwin Davis.
Details will not be released until the group's annual meeting, which is scheduled for 11:30 a.m. Feb. 26 at the Onondaga County Convention Center. But Davis said the development of high-technology industries and the training of workers for those industries will be a key to future economic growth in the area.
"For a region to grow, you must have high-tech industries," he said. "But if you don't have the talent, then you're not going to fill those high-technology jobs."
The report will also suggest ways to retain young,
talented people.
The federal Bureau of Labor Statistics predicts that by 2008, there will be 10 million more jobs in the United States than people to fill them, Davis said.
"The communities that have the trained people will get the jobs," he said. "Companies today are going to where the people
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