Tough economy has Utah manufacturers going lean

Utah manufacturers say that both orders and jobs disappeared in the recent economic crunch. Only one of them seems to be coming back right now.

"Economic recovery without job growth" describes Utah's immediate manufacturing prospects, as companies embrace the lean, efficient models they created to cope with the recession.

"When things started slowing down in the economy, it gave us the opportunity to look internally and get some difficult-to-reach objectives in our manufacturing," said Randy Hales, president and CEO of Orem-based Mity-Lite Inc. "Orders were slowing, so we focused on continuous improvement and making sure we are as efficient as we can be."

That's been the pattern for local manufacturers, said Tom Bingham, president of the Utah Manufacturers Association, making companies stronger and more competitive. It is also "part of the reason we're not seeing people who have lost their job coming right back."

Becoming lean means companies are taking all the waste and barriers they can find out of their processes. And they're finding "they can do the same thing with fewer people and a lot of that is going on," Bingham said. So as product demand comes back, many are not rehiring "and that's a concern we have for job growth. A number of those companies will not bring back everyone they laid off; jobs are not going to be there. It's recovery without job growth and it's fairly common, particularly among manufacturers."

Manufacturing's payroll in Utah is about $5.7 billion, according to David Sorensen, executive director of Manufacturing Extension for Utah, at Utah Valley University, but it's a smaller part of the state's gross domestic product than it used to be. The average size of the companies is 26 employees. The feds count as large manufacturers only those companies that have 5,000 or more workers; only 34 of Utah's 3,900 manufacturers have 500 employees.

But small manufacturers are essential for large manufacturers to survive, said Sorensen, and 80 to 90 percent of the products consumed by large manufacturers are made by small manufacturers like the many in Utah.

The fundamentals of manufacturing have been changing. Thirty years ago, said Sorensen, manufacturers brought in raw materials, built the products and sent them out to be sold. If something didn't sell, it was modified or discounted to get rid of it. Now, "there's not as much inventory and they're shipping more rapidly, not making investments they can avoid. They are trading standing inventory for services. I think a lot more companies are looking seriously at their cost."