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Manitowoc jobs await economic turnaround

Written by Jim Hook/The Chambersburg Public Opinion | Jul 27, 2017 2:07 PM
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Manitowoc Company is located off Pa. 16 in Shady Grove in Franklin County. (Photo: Markell DeLoatch, Public Opinion)

(Shady Grove) -- The jobs have not materialized a year after Manitowoc announced it was moving its crawler crane operation from Wisconsin to Pennsylvania.

The state backed the company's $19 million investment with a $1.35 million grant. The project is expected to create 250 local jobs in three years.

Trouble is: The companies that make equipment for the construction industry are at the bottom of a down cycle. Manitowoc, known locally as Grove, makes cranes - machines that lift steel and concrete.

"The $20 million investment hasn't created jobs yet because of the cyclical nature of the business," said Barry Pennypacker, Manitowoc Co. president and CEO. "When business comes back this will be a booming facility."

Department of Community and Economic Development Secretary Dennis Davin continues the 'Jobs that Pay' tour at Manitowoc Cranes LLC, Shady Grove. In August 2016, Governor Tom Wolf announced Manitowoc Cranes LLC would consolidate an out-of-state site to expand its operations in Pennsylvania and will create 250 new jobs over three years. Markell DeLoatch, Public Opinion

 

Pennypacker foresees when a policeman will direct traffic outside the 300-acre campus at the change of shifts. He recalled that the Grove plant once employed 2,200 workers.

The Shady Grove operation currently employs 1,240 people - 740 in the shops, according to Les Middleton, senior vice president of Americas Mobile Cranes. Since Jan. 1 the shops have added 130 workers, but many are unrelated to the relocation of the crawler crane production.

"We need something to come out of Washington, D.C.," Pennypacker said.

Republicans and Democrats agree that something needs to be done about the nation's infrastructure, he said, but opinions diverge when it comes to talking about where the money should come from to pay for it all. Until the federal government commits to the investing hundreds of billions of dollars in infrastructure, the industry must rely on state spending. California could serve as a model, according to Pennpacker.

The California legislature recently raised that state's gas tax 12 cents a gallon, the first such hike in 23 years, and added an annual vehicle fee. The revenue will address about a fourth of the state's backlog. Half the state roads are in poor condition, according to the American Society of Civil Engineers.

Pennypacker invited Pennsylvania Department of Community and Economic Development Secretary Dennis Davin to return when U.S. Rep. Bill Shuster, "(President Donald) Trump's infrastructure guy," visits the plant later this year. Shuster, chairman of the House transportation committee, represents Pennsylvania's Ninth District, which includes Franklin County and Shady Grove.

Davin also said that the federal government needs to play big part in rebuilding the infrastructure. He mentioned Pennsylvania's three ports--Erie on the Great Lakes, Pittsburgh to the Gulf of Mexico and Philadelphia on the Atlantic Ocean.

Davin walked through the Manitowoc buildings on Wednesday as part of his "Jobs that Pay" tour of Pennsylvania businesses. He said he was impressed with how clean the work environment is.

"This is not a dirty job," he said. "They pay a great starting wage. Not every kid needs to go to a four-year college."

During the informal tour, company and state officials discussed improving job training for manufacturers.

They also talked about Interstate 81 improvements, specifically on Pa. 16 at Exit 5. A truck loaded with a long, wide Manitowoc crane can take Pa. 16 directly to I-81, but cannot negotiate a left turn at Exit 5 to go south on I-81, according to Pat Cassner, vice president of Americas manufacturing. The driver must go 12 miles north to Exit 17 before turning south.

Manitowoc consolidated its U.S. crane manufacturing to improve efficiency and operating margins. The company is adding crawler cranes, cranes that move on treads instead of wheels, to Shady Grove. The local plant currently assembles mobile, hydraulic cranes that move on rubber tires.

The transition is about 90 percent complete, according to Middleton. The crawler operations should be fully operational at the end of August. The company reported in May that the cost of the move was on budget.

Pennypacker said the company had many reasons for choosing to consolidate at Shady Grove instead of in Manitowoc, Wisconsin.

He said the primary reason was the campus: "Wisconsin fit here. This didn't fit in Wisconsin."

Brian Ross, deputy director of the Governor's Action Team, said that the quality of the local workforce was one of the driving factors for Manitowoc's consolidation in Pennsylvania.

The stakes were high. Pennsylvania might lose not only the prospect of 250 new hires, but the 800 already working at Shady Grove, according to Ross. The action team looked at the impact of the jobs on the community. Manufacturing jobs create other support jobs in the community.

"You're not looking at minimum wage jobs," Ross said. "We're talking about family sustaining jobs."

Economic development is a double-edged sword if the economy is doing well, he said. Where do the employees come from and how do you train them?

For several months the local unemployment rate has hovered below 5 percent, a rate many consider to be full employment.

"We like to see a progression of the local workforce," Ross said. "Manitowoc does a good job of training with its own programs."

Manitowoc County, Wisconsin, meanwhile is not looking back to a year ago.

"We're not celebrating that," said Karen Nichols, executive director of the Chamber of Commerce of Manitowoc County. "We have other things to celebrate. Our economy is strong."

Manitowoc Co. laid off about 525 employees in Wisconsin over the past year as part of the move. Manitowoc County's unemployment rate spiked at 5.2 percent in February. Currently the jobless rate is 3.1 percent.

"The people of our community persevere really well," Nichols said. "For many people the situation has turned out quite well. Everyone has adjusted quite well. We have a lot of companies looking for good, well qualified workers. We're very diversified in our economy."

Wisconsin lost nearly 75,000 jobs in manufacturing during the recession, and has regained 50,000 of them, according to the U.S. Bureau of Labor Statistics. Pennsylvania lost about 100,000 manufacturing jobs in the recession and has yet to get them back.

Davin said that Pennsylvania is set up well for manufacturing and recently ditched an onerous business tax.

Manufacturing comprises a larger part of the labor force in Wisconsin and Franklin County (both 15 percent) than in Pennsylvania (9 percent.)

In the past year Franklin County has lost 100 manufacturing jobs. The local area relies heavily on construction for its manufacturing jobs -- Manitowoc cranes, Volvo Construction Equipment and JLG Industries' lifts.

Pennypacker said that on his drive from Philadelphia on the Pennsylvania Turnpike he counted 26 cranes, 22 of them made outside the U.S.

"America's infrastructure should be built by American cranes," he said.

Middleton said Manitowoc has moved to be more efficient by consolidation and paring down support jobs.

The company faces a major obstacle outside its control, according to Pennypacker. The exchange rate between the U.S. dollar and the euro and Japanese yen hurts American manufacturers.

"I'm at a 25 to 33 percent disadvantage," Pennypacker said. "We have the best technology. We don't necessarily have the best cost. I think tariffs should be discussed and in be the cards. We have to have to have a better mouse trap, and that's what we have here."


This article is part of a content-sharing partnership between WITF and Public Opinion Online.

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