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Steel Industry Success Illustrates Broader Factory Rebound

By MARA LEE

July 06, 2010

Andy Hunt, a salesman for NESSteel in Tolland, has witnessed the generation-long decline of factory work in the state, booking orders since 1979 from manufacturers buying metal to make parts.

This recession was particularly brutal, with 22,000 manufacturing jobs evaporating between July 2008 and January 2010. Hunt said February 2009 had the lowest sales he'd ever seen.

But as hard as it is to believe, it's manufacturing that's leading this economic recovery, both here and nationwide. Since January, Connecticut has added 2,200 manufacturing jobs. That's 15 percent of the state's total job growth, in a sector that makes up only 10 percent of jobs.

When you exclude the roughly 6,500 temporary census jobs, manufacturing has accounted for more than a quarter of the job gains.

The rebound is clearest at the companies such as NESSteel that supply materials to factories. During one week in May, Hunt visited factories in Tolland, Vernon and Manchester, all looking to add machine operators as they bought steel.

And he doesn't just benefit from the rebound — he's an example of the demand driving it.

"My company is going to get me a new company car Friday," he said recently.

And even in Connecticut, far from the auto industry plants of Ohio, Indiana and Michigan, that demand trickles down, and translates into jobs — and overtime.

"I was shocked when I first started here, the amount of work they got," said John Crespo, 50, who started working for Ulbrich Stainless Steels and Special Metals in Wallingford in February. His employer of 30 years, Wallingford's Century Fireplace, which made pokers and fire screens, shut down a year earlier.

As encouraging as it is, no one is ready to declare that the rebound will bring manufacturing back anywhere near the number of jobs the sector had in the '90s. The momentum depends on the overall U.S. economy, which has shown weakness since May — including a disappointing report Friday on factory orders.

But for Crespo and many others, the improvement is real.

He'd made $16.25 an hour with Century, and is making $15.92 an hour now — and gets at least 10 hours of overtime every week.

Crespo's getting that overtime, and Ulbrich's continuing to hire, because car sales began bouncing back with Cash for Clunkers last summer. This year, businesses began replacing older cars and trucks, and sales, particularly for American automakers, have continued to climb.

As auto dealers exhausted their inventories, they turned to automakers for more vehicles, and that brought work to the parts manufacturers. Those manufacturers cleared out their inventories, and turned to smaller component suppliers, like those in Connecticut.

And the parts manufacturers and component suppliers all looked to places like Ulbrich, NESSteel, Theis Precision Steel in Bristol and Yarde Metals in Southington for raw materials.

"Automotive has come back, and is leading the way," Hunt said.

Rapid Rebound

Workers at Connecticut's steel mills and metal service centers are loving the rebound. The state doesn't have any massive mills where iron ore is smelted with coke; instead, it has secondary mills, which roll sheets of steel to the desired thickness, or cut strips or lengths to order.

Crespo is one of 18 production workers hired at Ulbrich in the last 11 months — about a third of whom were men called back from layoffs in 2009. Manufacturing employment, now at 184, will grow in the next few weeks, but will still be below 2007's 196 head-count.

"It started turning around in September, and we haven't looked back since," said Tom Curtin, corporate director for human resources at Ulbrich. The family-owned company, headquartered in North Haven, has 311 employees in the state.

In the plant, giant sheets of steel drape across yards and yards of machinery, looking like industrial-size aluminum foil. Workers use pulleys hanging from the ceiling to lift heavy coils onto the machines. Other sections of the factory have men making crates that will ship coils to factories in the Midwest.

None of the furnaces that soften the steel is visible. They're hidden inside giant metal boxes — though a peephole reveals the fiery red core.

The mills, and the machine shops and plants that are their customers, are known as durable goods manufacturers. That's the segment that's growing the fastest in Connecticut — with 700 more jobs from April to May, following 2,700 new jobs from January to April.

That's good news, because while the quality of manufacturing work varies widely, from $9-an-hour jobs stuffing peppers to $34 an hour for the average Pratt & Whitney machinist, durable goods jobs generally pay more.

National employment data released Friday showed factories added 11,000 production workers in June, continuing a 2010 trend. Still, the sector has 50,000 fewer workers than it did in June 2009.

Auto-part makers are the biggest customers for Ulbrich's steel coils, making up 35 percent of sales; medical is 20 percent and aerospace, another 20 percent.

Nick Wahl, product manager at the Wallingford mill, said business dropped by half from 2008 to 2009. But in 2010, the company recouped about three-quarters of the lost volume, and now is 10 percent below 2008's level.

Mike Shea, an account manager at Southington's Yarde Metals, said business fell off a cliff in 2008 and the first nine months of 2009, and then shot up "to the mountain top." He shook his head in amazement. A downsizing of about 3 percent left Yarde with 440 employees in Connecticut, but then customers' inventory restocking improved sales so rapidly that many employees received bonuses at the end of 2009.

The growth trajectory flattened in May, as inventory replenishment wrapped up, but many in the industry remain optimistic.

"Hopefully, it'll sustain," Shea said. "A lot of our big customers think so."

Executives at Ulbrich agree. By managing cash through dark times, they're able to capitalize on the recovery. "We've picked up market share as a result of the recession," Curtin said.

Wahl added, "There seems to be no shortage of demand. We're sold out right now through early August."

Opening Wallets

As men on the line work more hours, they create demand of their own.

John Gursky, 52, came to Ulbrich in August 2007 after a year of unemployment. He had worked for Waterbury Roller Mills for 14 years until it closed in 2006. He'd also had a year of unemployment before getting that job, when the previous brass mill he'd worked for shut down.

In December 2008, Gursky's hours were reduced to four days a week, and in late March 2009, he was laid off.

By the end of August 2009, Gursky had returned to Ulbrich, to an entry-level job. In March 2010, he was able to return to a more skilled position on third shift, and is making about $19.80 an hour. All plant workers got a 3 percent raise in April.

"Since I've been hired, I've been working overtime," Gursky said. "My savings account has improved a lot."

"Last year, we didn't take a vacation," Gursky said. This year, "I'm taking the family down to Busch Gardens."

Gursky will rent a passenger van to carry his two daughters and three grandchildren to Virginia. With more customers, miles add up, and rental car companies need to replace more vehicles.

Car sales in June were 14 percent higher than a year earlier, the eighth consecutive month of improvements, though sales were much weaker than they'd been in May, when rental car company purchases surged.

Wahl, the Ulbrich product manager, projects that the company will return to its pre-recession revenue levels in 2011. "You're hoping to God it's going to stay like this, and stay strong," he said. "I can only tell what we see. I hear no one crying the blues."