Manufacturing a future: Region's economy has been evolving

2014-03-22T20:15:00Z 2014-04-10T15:15:14Z Manufacturing a future: Region's economy has been evolvingJoseph S. Pete joseph.pete@nwi.com, (219) 933-3316 nwitimes.com

Northwest Indiana was forged largely on steel, and its lunch-pail identity is welded to the metal made in the blaze of the mills that loom over the lakeshore. But today's new jobs are more likely to be found in suburban business parks and health care facilities.

The first mills began to pop up in Northwest Indiana around the turn of the 20th century, after little land remained along the Chicago shoreline for massive industrial development. Heavy industry remains central to the region's economy.

About one out of every six employed workers in the Gary metropolitan area works in manufacturing, according to the most recent U.S. Census American Community Survey data. More than 52 percent of the manufacturing jobs are in the steel mills or other primary metals plants, such as Jupiter Aluminum in Hammond. Service centers and other fabricated metal product plants account for another 8.4 percent of the manufacturing jobs, said Micah Pollak, an assistant professor of economics at Indiana University Northwest.

Primary metals manufacturing is 24 times more concentrated in Northwest Indiana than the nation as a whole, Pollak said.

But Northwest Indiana's economy has been evolving. Primary metal manufacturing, the region's signature industry, has lost 31 percent of its jobs in Lake County since 2001, Pollak said. Employment has declined after a wave of consolidations, a growing amount of automation, and a shift to hiring contractors for security and other jobs that once were done in-house.

"Unfortunately, there is no area in manufacturing for Northwest Indiana that has added a significant amount of jobs in the last few years," Pollak said. "With only a few exceptions, Northwest Indiana has lost jobs in manufacturing every year since at least the 1990s, averaging about 1,000 jobs lost per year. We've gone from 58,600 manufacturing jobs in 1990 to 36,000 jobs in 2013."

Structural change

In the future, manufacturing operations are expected to continue to become leaner as production gets more high-tech and automated, Pollak said. Factories will be more nimble, turning prototypes into products faster and adjusting to consumer demand more quickly. Workers will need a higher level of skills and often have to work with computer numerical control tools such as mills, lathes and plasma cutters.

"New technology improves productivity and allows firms to produce more with fewer workers," Pollak said.

Other industries have added jobs as the local manufacturing sector contracted its workforce. Northwest Indiana has added 19,600 jobs in private education and health services since 1990, and more than 6,000 jobs in professional and business services and leisure and hospitality. Health care has eclipsed the mills as the region's largest employer.

Today's steel mills are cranking out as much metal as they did in 1990, according to World Steel Association statistics. But they are doing it with fewer workers because they are more automated and steelmakers have outsourced many nonproduction jobs, such as payroll, to independent contractors, said Morton Marcus, a economist who taught at Indiana University's Kelley School of Business for three decades.

"There's been a tremendous increase in output of work per worker," Marcus said.

Over the last 25 years, automation has enabled steelmakers to produce the same tonnages with about one-third the production workers, said Gary Norgren, ArcelorMittal USA's division manager of raw materials.

Workers used to skim oil out of water at the mills. They used to drive forklifts. Now, automated cars haul materials around, and machines filter out floating oil, said Norgren, who is based out of the corporate office at ArcelorMittal Burns Harbor.

"It's a computer age," he said. "So much of what we do is by computer, with multiple processes programmed together. It once took a lot of people, but now it's electrical, mechanical, hydraulic and pneumatic systems."

Ongoing technological advances have boosted productivity and also improved safety at region workplaces, including facilities that have been around for more than a century. A 300-person team of refining technologists at BP, for instance, has pioneered advances that include wireless, ultrasonic sensors continuously monitoring pipes at the BP Whiting Refinery for signs of corrosion.

"Safety is the top priority at BP, and we see technology as an important part of our approach to safety along with people and processes," said BP Products North America Vice President of Technology Ron Unnerstall, a Purdue University graduate who has worked at the Whiting Refinery, among others.

New technology has further reduced greenhouse gas and wastewater emissions at factories. For example, carbon dioxide intensity per ton of steel produced has shrunk by 33 percent since 1990.

"Advances in process control technology in improving the consistency and reliability of environmental control equipment has allowed U. S. Steel Gary Works to continuously improve its environmental compliance," U.S. Steel spokeswoman Courtney Boone said. "This has certainly impacted and influenced the attainment improvements applauded by IDEM in Lake County."

At the cutting edge

Local industry has unprecedented access to new technology, such as the 3-D computer modeling at the Center for Innovation through Visualization and Simulation, or CIVS, at Purdue University Calumet in Hammond. The university laboratory helps manufacturers train their employees with interactive programs and advance their production processes by turning complex data into virtual reality computer animations that can be studied to find improvements.

The lab has helped manufacturers save more than $30 million from increased efficiency and improved designs for blast furnaces, temperature sensors and venturi scrubbers that use liquid to remove fine particulates from streams. The lab also spared a manufacturing company $100 million capital expense by figuring out how it could avoid replacing a major piece of equipment.

Recently, CIVS assisted ArcelorMittal Burns Harbor after a housing gear burst on a piece of machinery that handles hot metal slabs before they are stretched out to sheet. Computer animations helped the steelmaker figure out why it broke, what would cause it to break again and how much load it could handle without breaking, research engineer Bin Wu said. The lab also helped U.S. Steel save money by figuring out a new way to inspect a crane that lifts a ladle full of molten metal without shutting down production for two days.

"For manufacturing, there's direct savings by troubleshooting, cost avoidance by not having to buy new equipment and avoiding downtime," CIVS Director Chenn Zhou said. "We also offer training that provides more skill for operators, results in more effective communication and saves money over time."

Technology alters scale

Manufacturing has evolved along with technology. Manufacturers that have expanded recently, such as Fronius USA in Portage, do not require massive operations such as U.S. Steel's Gary Works, which sprawls for 7 miles along the Lake Michigan shoreline and once employed more than 30,000 workers.

Take the Lake Business Center in Munster. From the 1950s and 1970s, the 1.2 million-square-foot factory building was home to a single company, the mattress maker Simmons Co., which employed 1,200 workers. Developers have invested millions to renovate and divide up the property, which is now occupied by several smaller businesses. Medical device distributor MAC Medical Supply Co. employs about 20 workers in the business park, while heating and air-conditioning component maker Tec Air plans to eventually employ 250 workers there.

The local manufacturers that have been investing and growing in recent years tend to make more advanced products. Fronius USA moved its American headquarters and manufacturing facility into the AmeriPlex at the Port business park in Portage. The company plans to employ up to 500 people to make solar inverters, which are components in units that turn sunlight into electricity that can be fed into the transmission grid or used to power individual buildings.

It's a futuristic industry, said Jessica Sosa, head of human resources and legal for Fronius USA.

"Just think of the big picture," she said. "Logically, we're going to run out of oil and fossil fuels, but the sun is always going to be there. People are starting to see that energy can be produced cheaper by the sun, and provided by nature every day."

Workers assemble complicated electronic equipment that converts an alternating current to a direct current, allowing sunlight to power electronics or feed into the grid. Workers need knowledge of electronics and the supervisor must have a bachelor's degree because he or she needs to be able to ascertain what the problem is if a nonfunctioning unit rolls off the line, said Markus Hankiewicz, head of repair.

The company now produces 3- to 12-kilowatt units for solar system installers in 22 states and plans to soon upgrade to a newer product. The inverters grow ever more technologically advanced as engineers figure out how they can capture and retain more solar energy, Hankiewicz said.

Workers put together the inverters in laboratory-like conditions, wearing special coats and shoes so they are electric static discharge-free, Sosa said. 

"People think manufacturing is dirty work, but that's a misconception," she said. 

The future

Most of the region's growing manufacturers tend to be smaller and higher-tech than the hulking fire-and-brimstone factories of yesteryear.

Merrillville-based water soluble filmmaker MonoSol has been investing $39 million in an expansion of its LaPorte plant and is adding 100 more workers to keep pace with surging demand for the popular Tide Pod capsules and other single-load detergent packets.

Vanair Manufacturing, which makes vehicle-mounted air compressors and tool lifts, recently pumped $1.2 million into a 30,000-square-foot expansion that led it to hire an additional 20 employees.

Recycled packaging maker Pratt Industries is pouring $310 million into Valparaiso, to create what company officials are calling the most technologically advanced 100 percent recycled paper mill in the world.

Manufacturing jobs at such companies continue to pay well, but Northwest Indiana could benefit from nurturing other industries to have a more diversified economy, Marcus said.

"It's smart to be diversified, but it's difficult," he said. "It might be desirable to have different kinds of restaurants, but it's hard to get a Thai restaurant to come to your town if the people don't like spicy food and aren't willing to try anything new."

To grow and evolve economically, communities will need to focus on quality of life, Marcus said. That is how they could lure talented, educated workers who in turn will bring employers.

"How do you make these places appealing to young families?" he said. "That involves having a good diversity of retail trade, parks and playgrounds, and the good schools that are so important to young families. That's how you attract the young engineering grads. Culture matters."

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