Manufacturers looking forward to improving conditions

2014-03-16T00:00:00Z 2014-03-16T00:56:07Z Manufacturers looking forward to improving conditionsJoseph S. Pete joseph.pete@nwi.com, (219) 933-3316 nwitimes.com

If the economy were a poker table, Northwest Indiana would be all in for manufacturing.

Heavy industry is 24 times more concentrated in Northwest Indiana than in the nation as a whole, said Micah Pollak, assistant professor of economics at Indiana University Northwest.

The industry is notorious cyclical: assembly lines roll at full speed and shifts work around the clock when the economy is humming, but factory parking lots empty out during downturns.

The region lost more than 5,000 manufacturing jobs during recession, and has since gained more than 3,000 of them back. Lear Corp. and Contract Services Group in Hammond added hundreds of jobs to keep up with bustling auto sales, which hit their highest level since 2007 last year.

Automakers sold about 15.6 million cars last year, and that has been a boon for the local steel mills that ring Lake Michigan's southern shore. They crank out much of the 15 million tons of flat-rolled steel that goes to the automotive market every year.

Shipments to the appliance industry — another major end market of local mills — rose by 21.4 percent last year, said Susan Zlajic, manager of government affairs at ArcelorMittal USA Inc.

Manufacturing surged to a tremendous 6.6 percent growth rate over the last five months, Federal Reserve Bank of Chicago Senior Economist William Strauss said. Heavy industry in the Midwest, especially the automotive and steelmaking sectors, has fared particularly well.

Local companies have been investing in their facilities. U.S. Steel just spent around $45 million on a blast furnace reline at Gary Works, and ArcelorMittal plans to do two months of maintenance to its No. 7 blast furnace at Indiana Harbor in East Chicago.

Demand is on the upswing. ArcelorMittal forecasts steel shipment will rise by 3 percent this year. Automakers also plan to ramp up production to 16.3 million units this year as the economy improves and more people replace older vehicles, said Tim Roper, owner of Smith Motors Auto Group, which operates Chevrolet dealerships in Hammond and Lowell.

Ford's Chicago Assembly Plant in Hegewisch has been running at full capacity, and produced a record 175,000 Explorers last year, a 14 percent increase over 2012.

Region workers have benefited by way of bigger paychecks. Ford employees at the Southside factory and the Chicago Stamping Plant in Chicago Heights will get $8,800 in profit-sharing in March. Ford made $5.7 billion last year.

More take-home pay for factory workers has a ripple effect in the overall economy. More than 25 percent of earnings come from manufacturing, Pollak said.

Overall, the manufacturing industry has been gaining momentum. Economic activity in the sector grew nationally in January for the eight straight month, according to the Institute of Supply Management Report on Business.

New orders, production and employment all have been growing. Both the primary metals and fabricated metal products industries, which are concentrated in Northwest Indiana, reported continued growth.

National industrial production increased for the fifth consecutive month in December, rising by 0.3 percent, according to the Federal Reserve. Fourth quarter production surged by an annualized rate of 6.8 percent, marking the fastest growth rate since the second quarter of 2010.

Factory output rose by 0.4 percent in December, a 2.6 percent improvement over the same month in 2012.

Most manufacturers are optimistic the trend will continue, Berlin Metals President Roy Berlin said. They do not expect any dramatic rise, but are looking forward to steady, ongoing gains.

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