The state’s manufacturing job base, which began sliding in the early 1980s with defense industry cuts, will continue its gradual decline into the next century, analysts predict.
The industry’s job base will slip from about 81,200 now to 79,061 by 2005, according to the state Department of Employment and Training. Manufacturing is Rhode Island’s third largest industry, behind the service and retail/wholesale industries. The department breaks manufacturing into two categories: durable and non-durable goods. It estimates that there will be 50,141 durable and 28,920 non-durable manufacturing jobs in Rhode Island in 2005, totaling 79,061.
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The estimates were done in 1994, when there were 56,837 durable and 30,302 non-durable manufacturing jobs in state, for a total of 87,139. Durable goods have a life expectancy of 10 or more years; non-durable goods last less than 10 years. The estimates for September of 1998 say there are 51,800 durable and 28,400 non-durable goods jobs in Rhode Island, totaling 81,200.
The decline is part of a long-running trend of manufacturing job loss that began with defense cutbacks and worsened with Rhode Island’s banking crisis and competition from foreign markets, which has particularly damaged the costume jewelry sector, analysts said.
“Manufacturing has been declining since 1984,” noted Robert Langlais, assistant director of the department’s Labor Market Information division, citing Hasbro Inc.’s decision to move many of its manufacturing jobs south as a significant factor.
Region-wide, the manufacturing industry’s slowdown will contribute to an overall drop in New England’s job growth, according to the New England Economic Project, a nonprofit economic forecasting group. Recently, it predicted that the world’s economic slowdown will strike the region sometime between “now and mid 1999, and New England will emerge on the other end growing more slowly than has been the case during the past several years,” project President Yolanda Kodrzychi said in an Oct. 28 statement.
New England’s job growth, in fact, will slow to an annualized rate of 1.4 percent in the fourth quarter of 1998, down from recent growth rates of more than 2 percent, the project predicted. But other statistics also bear consideration, said Lawrence R. Kunkel, executive director of the Central Rhode Island Development Corp., a nonprofit group which promotes economic development in the manufacturing industry. According to New England economic indicators provided by the Federal Reserve Bank of Boston, the number of manufacturing jobs in Rhode Island dipped from 79,800 in July of 1997 to 78,800 in April of 1998. However, the number of jobs then began to increase again, up to 79,400 in July of 1998.
A key statistic, Kunkel said, is the number of hours workers log per week. That number has increased from 39.7 in July 1997 to 41.3 in July 1998, the economic indicators say. This is a good sign, Kunkel said, because companies can only ask employees to work overtime for so long. Eventually, they will to have to hire more people, he said. He also noted that average hourly wages (not seasonally adjusted) are up from $11.30 in July 1997 to $11.63 in July 1998.
“When you combine all of these things, I really believe that we’re going to continue to see these job gains in the manufacturing sector in the state,” Kunkel said. The workers that are hired are likely to be those with technical skills. Low skilled jobs are being phased out in favor of high skilled ones, industry leaders say.
“If anything, we’re looking for more skills than we were last year, (people) not intimidated by computer-controlled equipment,” said Jonathan Fain, president of Teknor Apex Co. in Pawtucket, which makes tread rubber and shoe soling, among other products. “I think our (the industry’s) low skilled jobs are becoming high skilled.”
Indeed, to compete with countries with lower labor costs, companies are relying increasingly on knowledge to get ahead, said John Cronin, executive director of Rhode Island Manufacturing Extension Services, which provides manufacturers with low cost management, engineering, and training services.
“Skilled people are still in strong demand — that hasn’t changed at all, and it might become even bigger,” Cronin said. “Those manufacturers that are competing well and investing in technology and training need skilled folks to stay (competitive), and some of the lower-skilled folks have been let go.”
Many companies are turning to contract labor and temporary agencies to fill positions. Two forces are driving this trend, industry experts say. One is the scarcity of skilled labor. The other is the difficulty of finding it. For example, Acorn Manufacturing Co., a Mansfield, Mass. forged-iron maker, has hired many of its temps as full-timers after a trial period, said President Eric DeLong, who said finding workers willing to learn a number of skills is difficult.
“It’s a lot of work today to go through the interviews to find the right people, and it’s costly,” DeLong said. “We use a lot of temps. It seems to work out well. I think it’s common today, and I think there’s a lot of people who are out of work who are going that way. It’s a good resource.”
They’re particularly good for companies looking to fill immediate needs. Automation Technologies Corp. in Cranston, which designs and builds automated systems, hires conservatively and uses contract help to ride out the peaks and valleys of business, said President Philip Dion. The risk inherent in hiring full-timers is also driving the trend, said Leslie Taito, executive administrator for the Rhode Island Manufacturers Association. The cost of hiring someone who doesn’t work out has led some companies to use temp agencies to pre-screen employees, she said. Taito also noted that vocational schools have trouble keeping up with technology because it is costly and rapidly becomes obsolete. The way to fill the gap, she said, may be to create a special school sponsored by the industry to create a skilled workforce.
“That’s an option we have to very seriously look at,” Taito said. “We’ve got some excellent vocational schools, but they need some help.” So far, concern over the lack of available skilled labor has outpaced concern over the world financial crisis among Rhode Island manufacturers. But analysts warn that we may soon see ripple effects of the crisis locally.
The main impact in Rhode Island so far, Kunkel said, is that companies are being more cautious with their future plans.
“I don’t think we’re seeing any tangible impact now,” he said. “But there’s no question it’s had a negative impact on their (companies’) expectations; it may make them a little more cautious going forward with respect to substantial additions to the employment base.”
Still, companies’ biggest concern is remains finding the best people, manufacturers said. “There is a concern with the global economic slowdown, but locally it’s really a skills gap (that concerns companies),” Cronin said.
Added Carolyn Moore, employment specialist for Toray Plastics America Inc., a North Kingstown manufacturer of polypropylene and polyester film, “It’s not a major concern right now, but like all prudent businesses we are watching it.”
