By Austen Hufford and Bob Tita
Factory furloughs across the U.S. are becoming permanent
shutdowns, a sign of the heavy damage the coronavirus pandemic is
exerting on the industrial economy.
Makers of dishware in North Carolina, furniture foam in Oregon
and cutting boards in Michigan are among the companies closing
factories in recent weeks. Caterpillar Inc. said it is considering
closing plants in Germany, and boat-and-motorcycle-maker Polaris
Inc. plans to close a plant in Syracuse, Ind., and tire maker
Goodyear Tire & Rubber Co. plans to close a plant in Gadsden,
Ala.
Those factory shutdowns will further erode an industrial base
that has been shrinking as a share of the overall U.S. economy for
decades. While manufacturing output last year surpassed a previous
peak from 2007, factory employment never returned to levels reached
before the financial crisis.
Michigan Maple Block Co. furloughed most of its 56 workers at
its plant in Petoskey, Mich., when the state implemented a
stay-at-home order on March 24. A month later, the manufacturer of
cutting boards and industrial table tops told employees the plant
would close for good.
A second factory in Pennsylvania will remain open because of
cheaper energy costs, said Ann Dau Conway, president of the company
that her family has owned for generations.
"The hardest decision of my life. Not just my professional
life," Ms. Conway said.
The closures suggest that a growing share of the record job
losses in recent weeks won't be temporary, said Gabriel Ehrlich, an
economic forecaster at the University of Michigan. The more that
job losses turn from temporary to permanent, he said, the harder
the hit to consumer spending and every company that relies on it --
including manufacturers.
"The higher the proportion of permanent layoffs, the worse the
chances of a strong recovery start to look," Mr. Ehrlich said.
Layoffs have already wiped away nearly a decade of employment
gains at U.S. manufacturers. Factories added 1.4 million workers
from 2010 through the end of last year, employing a total of 12.9
million people in December. The manufacturing workforce has since
dropped to 11.5 million, the Bureau of Labor Statistics said
Friday, including 1.3 million jobs lost in April alone, though this
also includes temporary layoffs.
Manufacturers in recent years have pushed up output faster than
they have expanded payrolls, in part by investing in automation.
Since the pandemic took hold, capital investment by manufacturers
has cratered.
Robert Atkinson, president of the Information Technology and
Innovation Foundation, a Washington, D.C., technology-research
think tank, said companies that hadn't invested in more efficient
plants will struggle to keep operating them profitably while demand
is much lower.
"Manufacturing is becoming a stagnant sector," he said.
Layoff notices from states across the country indicate a rise in
permanent factory closures in recent weeks. In one, Blue Bell
Mattress Co. said it was closing its plant in Roseville, Mich.,
after losing its only two customers within several weeks. First,
furniture chain Art Van Furniture LLC filed for bankruptcy in early
March. Weeks later, Connecticut-based chain Bob's Discount
Furniture canceled orders and closed its warehouses to new
deliveries because it had closed its stores during the crisis.
Chicago-based R.R. Donnelley & Sons Co. told analysts last
month that demand for its printed signs and mailers fell as
companies cut back on marketing over the past two months. The
company is closing two printing plants in St. Louis and laying off
72 workers.
Lenox Corp., a maker of china dishes including sets for the
White House, is closing its last factory, in Kinston, N.C., and
laying off 159 employees, who produced as many as 20,000 pieces of
fine china each day.
Chief Executive Mads Ryder said stay-at-home restrictions had
decimated orders from stores that stock Lenox plates and cups.
"What happened in the retail environment simply just overwhelmed
us," he said. Lenox will now make all of its products through
contract manufacturers abroad. Those manufacturers make plates for
multiple designers, creating economies of scale that his plants in
the U.S. couldn't match, he said.
"This is a natural step in a global world," he said. "You can't
tell the difference."
John La Tocha, a machine operator at Michigan Maple Block for
more than 20 years, said the company had struggled to recapture
business lost after the housing market collapsed in the 2008
recession, and only recently reversed some pay cuts implemented at
that time.
Now, the dimming construction outlook and restaurant closures
will sap orders for the company's cutting boards and counters.
Mr. La Tocha said he doesn't expect to find another woodworking
job in northern Michigan, where the economy has shifted toward
tourism from manufacturing over the years.
Michigan officials are allowing factories to open again on
Monday. Michigan Maple Block won't be among them.
"When I started to work there, it was one of the best jobs in
the area," he said. "If it opened back up, I'd go back to work
right away."
Write to Austen Hufford at austen.hufford@wsj.com and Bob Tita
at robert.tita@wsj.com
(END) Dow Jones Newswires
May 10, 2020 11:14 ET (15:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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