|
Manufacturing production output and new orders to factories dropped nationally last month, and some factory workers in the Rockbridge area have found themselves jobless because of it.
Two local companies, Modine Manufacturing Co. in Buena Vista and Power Systems International (PSI) in Natural Bridge Station, have announced a round of layoffs. Twenty-two people were laid off from PSI last week, and this week The News-Gazette reported that Modine is laying off 29 workers.
PSI plant manager Rob Hodges attributed the layoffs to administrative and budget issues in the military. PSI manufactures a range of products used by the military for operations in harsh environments, with the Department of Defense as its main customer.
A slowdown in orders from the company’s defense contractors in Philadelphia forced the company to lay off workers. Hodges said the plant foresees no more layoffs, but the company’s situation depends on what happens in Washington.
“There’s talk about surges in Afghanistan, stimulus money, but right now it would be pure speculation,” said Hodges. “We’re in such a transition.”
Modine, which is located in Buena Vista, manufactures commercial and industrial heating, ventilation and air conditioning products.
“It’s very, very, devastating,” Buena Vista Mayor Mike Clements said of the layoffs. “We have a wonderful workforce with a great work ethic …. There’s nothing wrong with [our] workers.” Clements said he was confident the national economy would improve, but for his city, it was “the wrong place at the wrong time.”
Modine officials could not be reached Thursday.
Virginia’s unemployment rate climbed to 5.2 percent in December, according to statistics released by the Virginia Employment Commission Thursday.
Unemployment in the Rockbridge area rose to 6 percent in November, according to Michael Webb, director of the Rockbridge Partnership, an organization that promotes economic development in Rockbridge County. Webb said lower manufacturing production has influenced unemployment figures for the area.
On Jan. 16, the Federal Reserve Board released its December report on national industrial production. Manufacturing production, which accounts for most of the volatility in the economy, was hit hard. Production dropped 2 percent from November’s figure and 7.8 percent from December 2007.
New orders to U.S. factories fell 4.6 percent in November, according to the latest U.S. Census Bureau Factory Orders report. That marked the fourth month in a row that new orders have decreased.
Rockbridge County has at least 25 factories manufacturing a diverse range of goods. While the recent layoffs at Modine and PSI show that area manufacturing is vulnerable, some companies seem to be more insulated.
Des Champs Technologies in Buena Vista manufactures industrial and commercial air treatment equipment and employs about 200 workers. Regional sales manager Mike Herwald said despite the recent lull in new orders, the company is stacked with backlogged orders from 2008.
“We are working every hour available to us through May or June,” Herwald said.
Des Champs, which is owned by Swedish company Munters, produces machines that were in high demand by petrochemical companies during the summer’s oil price spike. Herwald said high oil prices led oil companies to expand their refinery infrastructure and order more equipment.
Sales in Des Champs’ commercial division, however, have been hurt by slowed expansion from Wal-Mart, one of Munters’ biggest customers, according to Munters’ online report. New Wal-Mart and Sam’s Club stores install several Des Champs-built units on each roof for air-conditioning and refrigeration.
Herwald said the company is closely following news about the new presidential administration’s infrastructure development proposals. Investment in education would help the company, because it makes equipment that is used in air-conditioning school buildings. Other government incentives for new construction would also benefit Des Champs, Herwald said.
According to Webb, many local factories are cutting workdays even if they aren’t laying off.
At Barr Marine, a Natural Bridge Station factory that produces engine components for recreational boats, general manager Michael Gibbs said that his plant has been able to avoid cutting workers’ weekly hours, too – partly because he closed Barr Marine for an extended period during the Thanksgiving and Christmas holidays.
“Our trends are down,” Gibbs said. “They’re not cataclysmically down – but down for our industry.”
Gibbs said business has been bolstered by stable demand in Europe and the fact that company earnings do not depend on people buying new boats.
“Most of our business is aftermarket repairs, so we’re not as badly hurt as new builders,” he said.
The most important economic indicator from Gibbs’ perspective is the unemployment rate. He believes that as long as people stay employed, they will continue to protect their investments in the boats they already own.
John Blackburn, the plant manager for Mundet-Hermetite in Buena Vista, voiced an unusually positive outlook.
“We’re still holding our own,” said Blackburn, whose company has not had any recent layoffs because of the economy.
Mundet-Hermetite is part of Mundet Inc., a Richmond-based company that manufactures tipping paper – the strip that attaches the filter – for cigarettes.
Blackburn said the Buena Vista plant is not seeing a decline. In fact, he said that during 2008, the plant had its highest output ever. But Blackburn acknowledged a downside existed. The plant’s domestic paper supplier went out of business, forcing the plant had to import more expensive paper from Brazil or Finland.
Produced by
Washington and Lee
journalism students.
Lead Supervisors:
Prof. Brian
Richardson
Prof. Indira Somani
Editing supervisor:
Prof. Lisa Tracy
Technical supervisor: Michael Todd