Regional economy healthy; manufacturing begins to stir

by Clarissa French

SBJ Editor

cfrench@sbj.net

Lagging economic sectors are showing signs of life in southwest Missouri, including manufacturing.

"Obviously we've lagged a little bit in the manufacturing category but we're starting to see some real solid signs of life in manufacturing," said Greg Williams, senior vice president of economic development with the Springfield Area Chamber of Commerce.

Rita Needham, executive director of the Southwest Area Manufacturers Association, agrees.

"In talking with my members, I am seeing increased activity this year and I am seeing that some hiring is going on, but it is not anything we would call robust," Neeham said. "We call it encouraging, because for the first time in three years, we are starting to see this type of activity."

And the encouraging reports are broad-based, not generating from a particular type of manufacturing. SAMA is made up of 70 member companies representing more than 6,500 manufacturing jobs.

Meanwhile, the overall health of the regional economy remains strong.

"Professional services and health care and retail are all still just thriving and growing," Williams said.

Southwest Missouri isn't seeing dramatic changes with the recovery because of its relative stability during the recession.

"Even in what was known nationally as a recessionary period, our unemployment rate and our job growth have been very, very stable, and it's hard to say those indicators have fluctuated very much," Williams said.

Another positive factor is increasing deal flow in the area served by the Ozarks Regional Economic Partnership, he added.

"Deal flow" refers to "new company inquiries in the region, not just in Springfield but in our 10-county service area," Williams said. "Our deal flow is certainly beginning to show signs of life again. We're picking up leads and good quality referrals and starting to really click again."

That trend began in March or early April, with interest particularly from industrial and office-related businesses. That's a good sign, Williams said, because those particular sectors had really slowed down over the last 18 months.

Another positive is consumer confidence. "In discussions with lenders and banking professionals in the area, we're hearing that businesses and individuals are beginning to show signs of freeing up capital, and that's obviously a good sign. It's back on the upward movement side again," Williams said.

Manufacturing

According to the Federal Deposit Insurance Corp.'s Missouri State Profile for spring 2004, released July 7, Missouri's economy added 11,800 jobs in fourth-quarter 2003 after losing 9,300 jobs in the third quarter.

Total nonfarm employment in Missouri lost 13,500 jobs in 2003, 7,700 of them in the manufacturing sector. That loss was minimally offset by a gain of 800 manufacturing jobs in 2003.

In the Springfield Metropolitan Statistical Area, comprising Christian, Dallas, Greene, Polk and Webster counties, manufacturing employment peaked at 22,800 jobs in December 1999 and now stands at 17,000, according to the Springfield chamber.

"I'd say it's going to be another year, year and a half before we're back to that high mark," Williams said. "But if we do one or two, even three additional deals at one of our industrial parks, we could be there a lot sooner than that, but I still say we're about a year off."

Needham, however, said, "I think getting back in a year, a year and a half is even optimistic because we did have some significant losses, but I do see that we are making progress now, and that's what we want to see."

She noted that while there continues to be some downsizing, "I think we're seeing more gains than losses. I think, for the most part, people have leveled out and are at least thinking of hiring again, even if they haven't actually started doing that yet."

Meanwhile, SAMA is working to preserve the number of manufacturing jobs in the community and ensure that conditions are such that employment can increase.

"Conditions" refers in large part to what Needham calls "structural costs."

"By that, I mean things like the workers' compensation, the unemployment insurance, which there's just been some new legislation that will greatly increase the employer tax in that area. Also health care, litigation costs, regulatory issues those things we term as structural costs."

Those costs play a large role in global competition, Needham said.

"In a report that was done late last year, it showed that American manufacturers have 22 percent more of those structural costs added to their cost of doing business than their foreign competition that they competing against. Even if they're not doing exporting business, they're in this competitive environment where that is a big, big factor."

As a result, SAMA is working with legislators to address some of those issues and will hold a legislative forum Aug. 4.