North Jersey Manufacturers Give Mixed Report

September 7, 2014
By Hugh R. Morley
Staff Writer for The Record
Dan Brady, a top executive at Rockleigh-based Crestron Electronics, says he wasn’t surprised by recent reports that the nation’s manufacturing sector is surging.

He said his company, which makes and supplies electronic controls for heating, air conditioning and entertainment systems, did “very strong” business in July and August.

Brady, vice president for Crestron’s manufacturing division, said his unit hired 50 people the past year, increasing its workforce about 20 percent.
“We have just finished our best fiscal year ever, in June,” he said. “I think the U.S. economy and many industries are seeing a turnaround. … Many people are commenting the same thing.”

Brady’s view concurred with the upbeat picture painted last week by the release of a monthly index compiled by the Institute for Supply Management, showing that U.S. manufacturing grew at its fastest pace in three years and suggesting that the sector is helping drive the economy’s improvement.

Yet interviews with North Jersey manufacturers last week offered a far more mixed picture, with some saying they have a string of new customers, increased orders from existing clients and growing revenue — and others reporting stagnant demand and shrinking orders in some cases.

Some said business is being driven by customers’ renewed confidence in the economy, the shift of work back to the U.S. as producing goods overseas has become more expensive, a rise in exports, and the need to renew machinery that had not been replaced since the recession.

Those who see no uptick say customers are still too wary about where the economy is going to increase orders.

Paul Viola, owner of Quantum Concepts, a Bogota medical supplies maker, is encouraged because he has new customers but says he hasn’t seen a big increase in orders.

He said his company, which makes and supplies electronic controls for heating, air conditioning and entertainment systems, did “very strong” business in July and August.

Brady, vice president for Crestron’s manufacturing division, said his unit hired 50 people the past year, increasing its workforce about 20 percent.

“We have just finished our best fiscal year ever, in June,” he said. “I think the U.S. economy and many industries are seeing a turnaround. … Many people are commenting the same thing.”

Brady’s view concurred with the upbeat picture painted last week by the release of a monthly index compiled by the Institute for Supply Management, showing that U.S. manufacturing grew at its fastest pace in three years and suggesting that the sector is helping drive the economy’s improvement.

Yet interviews with North Jersey manufacturers last week offered a far more mixed picture, with some saying they have a string of new customers, increased orders from existing clients and growing revenue — and others reporting stagnant demand and shrinking orders in some cases.

Some said business is being driven by customers’ renewed confidence in the economy, the shift of work back to the U.S. as producing goods overseas has become more expensive, a rise in exports, and the need to renew machinery that had not been replaced since the recession.

Those who see no uptick say customers are still too wary about where the economy is going to increase orders.

Paul Viola, owner of Bogota-based Quantum Concepts, which makes medical equipment and surgical instruments for companies like Mahwah-based Stryker Orthopaedics, said he recently got orders from four new start-ups and inquiries from about as many others, which he takes as a solid sign that the economy is creating new businesses.

“I feel it is encouraging,” he said, adding that he hopes he can stick with them as they grow. But business overall has not increased, and he has seen no surge in orders from existing customers.

“People are spending their money more cautiously,” he said. “People are spending their money more wisely. If they normally would buy five sets of instruments because they need three and would keep two on the shelf, now they will buy three.”

Ed Peterhoff, president of Star-Glo Industries, an East Rutherford-based manufacturer of rubber, plastic and metal parts, dismissed any notion of a North Jersey manufacturing boom.

“We are not seeing it,” said Peterhoff, adding that he hears the same from his manufacturing subcontractors. In fact, he said, after a reasonable start to 2013 that suggested Star-Glo’s business was getting better, it soured a year ago.

“It’s been very up-and-down since,” he said. “We may get a month where orders seem to be picking up, and then we will get a month where orders aren’t.”

A difficult market is nothing new for New Jersey manufacturers, who have for decades been squeezed by competitors producing goods in lower-cost parts of the U.S. and around the world.

Manufacturing jobs are less than half what they were 25 years ago, as employers have left the state because of the relatively high cost of doing business, tight environmental restrictions and other factors. Many companies have shifted production overseas.

Economists have for a while cited New Jersey’s diminished manufacturing sector — it now accounts for about 6 percent of the state workforce — as one reason why the state has not rebounded from the recession as well as most of the rest of the nation. Manufacturing accounts for nearly 9 percent of U.S. employment, and so a surge in the sector has proportionally more impact nationwide than it would in New Jersey.

John W. Kennedy, chief executive of Morris Plains-based New Jersey Manufacturing Extension, a non-profit organization that helps companies become more efficient, said a few parts of the state’s manufacturing sector are seeing an uptick, including chemicals and electronics, specialty manufacturers, and some food producers.

He added, however, that “the reality is that a lot of them are seeing status quo right now, and things aren’t necessarily picking up.”

The Institute for Supply Management’s monthly index found that economic activity nationally expanded for the 15th consecutive month in August, when the reading was the highest since March 2011.

The organization found U.S. manufacturing had increased in 17 of the 18 industry sectors it studies, with the greatest increase occurring in plastics and rubber products, furniture and related products, and fabricated metal products. Only the textiles sector saw a contraction, the report found.

Manufacturing strength also was reflected in a report by the U.S. Commerce Department that found that factory orders nationwide rose 10.5 percent in July, the biggest one-month increase on record. That was largely from transportation orders, however, and when those were removed from the figure, nationwide orders were down 0.8 percent.

At the same time, the national jobs report on Friday showed that manufacturing added no jobs in August, the sector’s worst performance in a year.

Employment in New Jersey’s manufacturing sector has been stable lately, adding 500 jobs since March compared with a loss of 1,300 jobs for the first seven months of the year. Yet the state clearly trails the nation, which added 105,000 jobs from January through August.

New Jersey figures for August won’t be released until Sept. 18, but it’s clear that some manufacturers have fared well over the summer.
At Beacon Converters of Saddle Brook, a sterilization packaging manufacturer for the medical devices and pharmaceuticals industries, orders have been robust.

“While midsummer traditionally is a slower time for our business, it did not hold true this year,” said Jackie Daly Johnson, company president. “Orders and customer inquiries have continued at the steady and increasing pace enjoyed this spring.”

She said the strength was partly from increased business from existing customers and new ones that have moved into the those industries, adding that the growth contributed to the company’s decision to hire five more workers. That brought the company’s workforce to more than 80.

Craig Sigler, owner of M.W. Jenkins’ Sons, a maker of industrial brushes based in Cedar Grove, said business is up about 10 percent over last year, but he is not convinced that it’s a sign of an improving economy.

“I think its basically people have been putting off ordering parts for so long that they have finally worn out, and they have to spend the money,” Sigler said. “I think it’s still kind of stagnant. Let’s face it, five years ago, it was horrible. You are still trying to get back to where you were five years ago.”

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