U.S. Manufacturing Keeps Expanding

For Immediate Release:

April 4, 2011

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Justin Lahart
Wall Street Journal

Manufacturers continued adding jobs last month as the sector showed momentum largely unhindered—at least for now—by rising oil prices and the Japanese crisis.

The Labor Department said Friday that factories added 17,000 jobs in March, while a separate report by the Institute for Supply Management showed manufacturing grew at a slightly slower pace in the period.

The institute's index of factory activity stood at 61.2, compared with 61.4 in February. A reading over 50 indicates growth. There were some dark clouds, however: The report showed a sharp decline in exports as well as a drop in new orders. An index of prices paid by manufacturers jumped, reflecting a surge in commodity and energy prices.

Norbert Ore, chairman of the institute's manufacturing survey, said there was nothing in the March report to indicate Japan's woes have dented manufacturing. However, he added that many producers were still trying to assess the impact.

Manufacturers such as Rockford Toolcraft Inc. are grappling with a sharp upturn in business. The Rockford, Ill., company, which makes steel frames used in tractors, trucks and industrial equipment, is the busiest it has been in its 35-year history, president Jerry Busse said.

"Our workers have been working over 70 hours a week," he said. "We can't do that too long—they'll be worn out." Mr. Busse didn't lay off workers during the downturn and has hired 20 people so far this year, bringing the total headcount to 250.

Mr. Busse said he hadn't seen any indications so far that supply shortages in Japan were leading to order cutbacks by customers of the heavy-equipment makers he supplies.

"It looks miserable over there, but I don't know that it's going to affect us much," he said.

Bank of America Merrill Lynch economist Ethan Harris said the combination of supply-chain problems and higher energy prices are bound to slow manufacturing growth in the months to come. Particularly at risk are auto makers and electronics firms.

But manufacturing's declining share of the U.S. economy over recent decades has reduced the pool of skilled workers available to fill jobs.

"In the U.S. market, there's not a lot of people left doing heavy machining," said Mark Pringle, director of operations at a Siemens Industry Inc. plant in Charlotte, N.C., that builds gas turbines.

Mr. Pringle has hired 200 people so far this year and expects to hire another 400 mostly blue-collar workers before the year is out. The company has turned to the local community college to help train employees.

"We're not going to find a lot of people off the street that know how to do what we need," Mr. Pringle said.