What “Manufacturing Slump”?
What “Manufacturing Slump”? Many upper Pioneer Valley precision machining companies are moving, building and growing – the MSI program meets their demand for machinists with grant-funded CNC Operator training at GCC
) A slew of recent reports in the national media about the slump in manufacturing production over the first two quarters of this year raised concerns about recession and layoffs. The reporting also raised some eyebrows among local precision machining company owners. The local precision machining industry – which is both one of the Pioneer Valley’s oldest and most modern manufacturing sectors – appears to be thriving, in contrast to reported global trends. What accounts for a national dip and local growth in the world of manufacturing?
The machining sector in the upper Pioneer Valley looks like a pyramid with two large companies at the top – the L.S. Starrett Co. in Athol, which makes precision measuring equipment, and G.S. Precision, an aerospace parts producer with plants in Brattleboro, VT and Keene, NH. Each of these firms has about 500 employees working locally. Mid-range machining companies – those with 60 – 180 employees working in this region – include BETE Fog Nozzle, Kennametal, and VSS, Inc., all located in Greenfield. The upper Valley is also home to more than 20 smaller machine shops, each with 5 to 30 employees. The lower Valley boasts more than 60 machine shops in Hampden County, with Smith & Wesson (now American Outdoor Brands) at the peak with 1,200 workers.
VSS, Inc., which completed a new 18,500 square foot building in 2019 (bringing total square footage to 45,000) and is filling it with over $3 million in new advanced CNC (computer-numerical-control) equipment, exemplifies the growth in Franklin County machining. VSS President and owner, Steve Capshaw, expains the manufacturing slump discrepancy this way: “It’s all sector based. If you are in aerospace, like us, then it couldn’t be hotter. If you are in autos, then the current cyclical downturn is not good.” He adds, “I don’t see any evidence of a slump whatsoever. All I see is the severe shortage of skilled workers available to hire. That is my only problem.”
Eric Hagopian, owner and President of Pilot Precision Products in South Deerfield, recently completed construction on a new 25,000 square foot building which brings together four companies and the two main Global suppliers of broach tooling he acquired under one roof – the duMont Company, Hassay Savage, GMauvais and Magafor – a $7 million investment in new building and equipment. Broaches are cutting tools made for varied manufacturing industries from original equipment manufacturers (OEM) to maintenance, repair and overhaul (MRO) providers. Hagopian argues that the media has failed to report the growth of manufacturing sectors like his in its focus on tariffs and the trade war. He elaborates on the trend-line differences between the automotive and aerospace manufacturing sectors: “Automobile companies are focusing on the future of electric vehicles (EV) over internal combustion … When you think about all the
mechanical components in an internal combustion engine, one can understand the slump. EV has many fewer parts which are also significantly less expensive in production.” He adds, “Aerospace is absolutely off the hook because of the proliferation of more fuel, emission and noise-reducing programs that have been fully developed and now in full rate production. The aircraft operators can no longer kick the can down the road in terms of new machinery as the fuel savings and regulatory requirements on emissions (both noise and pollution) are forcing their hands to buy new, expensive and much more efficient aircraft. The pipeline for aircraft orders is filled for the foreseeable future.” Decker Machine Works, another small machine shop, recently moved from Ashfield to a new and expanded space near the Fairgrounds in Greenfield. And G.S. Precision, just over the border in Brattleboro, VT, is a year into a three-year plan to add 100 new employees to its large aerospace parts operation.
Tom Fitch, President of BETE Fog Nozzle, reports: “We have been experiencing extraordinary growth over the past couple of years. We have added shifts and machines and have more expansion plans in the works. Overall, our business is up tremendously.” He adds, “We source domestically and we really have not had a material adverse impact on the cost of raw materials. The major impact of the trade war with China is that our export business takes longer to get across the border getting into China and the delays are problematic for our customers.” However, Fitch notes that fog nozzles are diversified across many markets, some increasing while others are decreasing. “In the spray industry we have contact with just about every manufacturing industry as they all use nozzles in some way or fashion. Our core niche markets have grown significantly. The growth in different markets has been for different reasons. For example, pollution control markets have grown due to different global legislative factors. Other markets are softer as they are in a cyclical downturn.”
The 139-year-old L.S. Starrett Company in Athol perhaps best represents the kind of American company that straddles the divide between exposure to national and international trends and strong local performance. In his first quarter report to stockholders, company President, Douglas Starrett writes: “Geo-political concerns significantly dampened manufacturing activity and corresponding reaction in the Company’s distribution channels negatively impacted orders.” The Starrett company has factories in Brazil, Scotland and China. However, Starrett went on to add, “Despite flat sales, gross margins improved $1.0 million to 34% of sales in fiscal 2020, compared to 32.1% of sales in fiscal 2019. The key drivers for better performance were the Company’s North American-based metrology businesses offset by weaker international performance.” By “metrology businesses” Starrett is referring to the precision measuring tools the company makes in Athol, MA and Mount Airy, NC – calipers, micrometers, gage blocks and others. From this brief survey, it appears that local precision machining remains strong in the face of national and international downtrends in manufacturing overall, and that individual companies experience varying exposure to those trends depending on how they source raw materials and what markets they serve.
To meet the ongoing need for new skilled workers in the precision machining sector, the Manufacturing Skills Initiative (MSI) program – a job training partnership between the MassHire Franklin Hampshire Workforce Board and Career Center, Greenfield Community College and local manufacturing companies – continues to operate a 4-week Foundational Manufacturing classroom training, which can lead to a hands-on 8-week evening CNC Operator training at the Franklin County Tech School machine shop for unemployed and under-employed adults seeking to learn computer-numerical-control machining skills.
The MSI program offers state and federal job training funds to qualified applicants to pay the full cost of the $6,000 CNC Operator training. After six years, the CNC Operator training program has graduated over 150 adult participants, only one of whom has had to pay part of the training cost. The program maintains a 95% completion rate and an 85% job placement rate. Graduates have found jobs at over 20 local companies. The most recent class of CNC Operator graduates began employment last Spring at an average starting wage of $18.45 an hour on 1st, 2nd and 3rd shifts. The next Foundational Manufacturing 4-week training begins on January 27, 2020. Those interested in applying can attend a monthly 1-hour Manufacturing Training Information & Application session at the Franklin Hampshire Career Center on Monday, December 2 or Monday, January 6 at 3pm. To sign up for the Info Session, call the Career Center at (413) 774-4361 or register online at https://gcc.mass.edu/manufacturing
For more information, contact Andrew Baker at the Franklin Hampshire Workforce Board: (413) 774-4361 ext. 375 or abaker@masshirefhwb.org