Shift to calmer economic waters, more growth on horizon

Published 12:00 am Saturday, January 7, 2012

By Emily Ford
SALISBURY — Ask Rowan County business leaders how they feel about 2012 and you’ll likely hear two words: “Cautiously optimistic.”
They might say it in a whisper, but several Rowan companies see a light at the end of the recession tunnel, and a few even plan to hire additional employees in the New Year.
“We expect significant new announcements in the first quarter of 2012,” said Robert Van Geons, executive director for RowanWorks Economic Development.
Van Geons said the new jobs and investment in the next thee months will come from existing industries ready to expand. While he’s also seen increased interest from outside firms considering a move to Rowan, Van Geons said those deals take longer to put together.
Eight or nine Rowan companies are considering expansions that could generate as few as five or as many as dozens of jobs, Van Geons said.
The “overwhelming majority” of local industries expect stability or modest growth in the next quarter, he said.
“We are not hearing as much severe concern about operations,” he said. “That’s a shift from where we were.”
The numbers are looking a little better02, too. In November, the last month for which figures are available, Rowan reported 10.6 percent unemployment. That’s a slight decrease from the 10.8 percent jobless rate in October, but a bigger dip from the 11.8 percent rate in November 2010.
Despite the positive outlook and slightly improving local employment figures, too many people in Rowan County still don’t have a job, Van Geons said.
“We are well short of where we need to be in getting our residents back to work,” he said. “It’s going to be a long, slow road out of the recession.”
Finding a niche
Nationally, the manufacturing industry has shown surprising strength, with more companies hiring than reducing employment and growth in exports. Orders at U.S. factories were up 1.8 percent in November after a two-month slide.
Several local manufacturers are no different, saying they see signs the economy has stopped its downward spiral and stabilized. Strong retails sales at the end of 2011 give them reason for hope in 2012.
“We see some positive outlook because retail sales have held up nicely during the last half of last year,” said David Roberts, chief operating officer for Tuscarora Yarn.
Tuscarora, which designs and produces specialty yarns, expanded its China Grove plant last year to the tune of $7 million and added 124 jobs.
“We believe that the economy is still struggling but that consumers are still spending,” Roberts said.
Because Tuscarora is a niche player in the textile industry and offers a variety of value-added products with good demand in the marketplace, “we expect not robust business, but a solid year,” Roberts said.
Companywide, Tuscarora invested $13 million last year in plant expansion and modernization and added 150 employees, proof that American manufacturers are alive and well.
Not everything is made in China. Many companies like Tuscarora that create higher-value items are stable and even growing.
Boral Composites in East Spencer, which opened in May 2011 with one shift, likely will run two or even three shifts by the end of January, Plant Manager Deon Van den Berg said.
Van den Berg said he expects to hire up to 10 hourly workers this year, adding to the 10 employees already at the plant. Boral may expand to add a second production line, he said.
While he doesn’t expect the construction industry, which has fallen roughly 40 percent from its peak in 2005, to recover to pre-recession levels until at least 2014, Van den Berg said Boral has found a way to succeed despite the lack of new housing.
Boral’s exterior trim product called TruExterior can replace wood or PVC products on any residential or commercial building, new or old.
“We make housing materials, but we have less exposure to the building market,” he said.
Like Tuscarora, Boral has a niche. Made from 75 percent recyclable and renewable materials, TruExterior can be molded to make corners, soffits, facia board, garage door casings and more.
The success of a pilot production program in San Antonio led Boral to build the Rowan plant, where Boral is working to catch up with demand. The manufacturing process is so secret, a Post photographer could not take pictures inside the plant.
“We do expect a lot of interest in this product due to the properties it has,” Van den Berg said.
Positive signs
Like Boral and Tuscarora, a number of Rowan companies hired workers in 2011 or plan to in 2012, Van Geons said, including United Forest Products, Henkel, Daimler, Magna, Duke Energy, Turnkey, Infiltrator Systems, Norandal and Altec.
“Companies that announced projects as we entered the recession or in the midst of it, they are completing their commitments,” he said. “They are investing in equipment and adding employment, and that is at least some indication that there is some positive momentum in our economy.”
The new Hitachi Metals operation in Rowan County will be smaller than planned because expected partnerships fell through, according to a company official.
Hitachi Metals announced in December that it will add 65 jobs and invest about $60 million over four years at a ferrite magnet manufacturing plant in China Grove. That’s down from the $71.6 million and 148 jobs Hitachi expected.
The company’s cash incentive for the expansion will be reduced according to the drop in jobs and investment numbers, Van Geons said.
That’s one of the few blemishes in recent local economic development news, making December 2011 quite different from December 2010, when PGT announced it would shutter its Heilig Road windows manufacturing plant and lay off 490 people.
What a difference a year can make.
“Right now, the economy appears to have settled significantly,” Van Geons said. “There are many more positive signs in our local and regional economy then there appeared to be a year ago.”
A statewide economic measure showed surprising improvement in November. Created by N.C. State University economist Michael Walden, the index points to the direction of the state’s economy four to six months into the future.
“The index surged in November, with all components improving,” Walden wrote in a press release Monday. “Is this a sign of an accelerating state economy for the new year?”
It was the second consecutive month that the index had gone up. The index is based on five measures: building permits, unemployment benefits, manufacturing wages, manufacturing hours logged and an index of the national economy.
Van Geons said while keeping expectations realistic, he’s pleased with the increase in activity at the Economic Development Commission.
“There are companies looking at Rowan County,” he said. “There is a lot of activity and potential for us.”
For the first time in months, companies are asking about land rather than just inquiring about existing buildings.
“A year ago, there was absolutely no interest in construction at all,” he said.
Companies are confident enough in their short- to mid-term growth projections that they are willing to consider a significant investment in real estate, Van Geons said.
Fragile recovery
The economy remains fragile, and business leaders say any substantial blow could deal the recovery a major setback.
Concerns include rising oil prices, the European debt crisis and unemployment benefits coming to an end for many, which could force homeowners into foreclosure.
Nerves are frayed, and people remain hyper-sensitive to any sign the local economy is faltering.
A rumor that Salisbury’s Norandal plant was shutting down spread like wildfire, Plant Manager Mike Fox said. The plant, which rolls aluminum into metal sheets and foil for commercial use, remains open and actually expects to increase output by 10 percent in 2012, Fox said.
The rumor started because employees were off work for longer than usual over the holidays, he said. The plant stopped production for year-end capital improvements, including floor repairs and replacing the central water pumps.
“It was just normal season-ending downtime that was a little bit longer than normal, but we’re in good shape,” Fox said.
Norandal added 15 employees in 2011 and invested $7 million in the Salisbury plant.
“We are taking some market share and seeing growth,” Fox said.
Contact reporter Emily Ford at 704-797-4264.

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Projects added since July 1 by category
Manufacturing     25
Food processing     5
Other services     3
Transportation/warehousing     2
Utilities     1

Visits since July 1 from potential industries
Manufacturing     11
Food processing      4
Transportation/warehousing      1

Recent economic development activity

Recent economic
development activity

   A “project” means a company has asked for detailed information about Rowan County and local officials are actively pursuing an expansion or relocation of industry

61 Projects added
27 Visits from potential industries

69 Projects added
25 Visits

Since July 1
35 Projects added
16 Visits

Source: RowanWorks Economic Development