At Tri Tool Inc.’s sprawling facility in Rancho Cordova, employees work among massive pieces of precision-cut metal, exotic-looking tools and tons of computerized, complex machinery.
It’s just what you expect from a company that touts itself as a worldwide designer and manufacturer of precision portable machine tools for oil pipelines and other heavy-duty industries. It’s also the kind of old-school industrial manufacturing operation that some say is an endangered species in California.
But Tri Tool is not endangered. Far from it. Co-owner George J. Wernette III says the company, co-founded by his father in 1972, is thriving.
Last year, Tri Tool opened a 15,000-square-foot office and warehouse in Texas to better serve the pipeline oil and gas industries in the Gulf of Mexico. The privately held company does not disclose earnings but says revenue is up 72 percent since 2006, a period that includes the recent recession.
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“Even during the recession, we still did pretty well,” said Wernette, standing in the cavernous, 139,000-square-foot plant where some of the company’s 200 workers were grinding, polishing, inspecting and readying parts and tools that will be shipped to customers at home and abroad.
That cannot be said of California.
California still suffers
Between 2004 and 2010, the state bled a whopping 281,492 manufacturing jobs, or 18.5 percent, according to state Employment Development Department figures. Some of those jobs were in hard-hit industries like aerospace, food canneries and auto manufacturing. The industry bottomed out in 2010, losing 40,000 jobs in one year, before settling at 1.24 million statewide.
Since then, recovery has been decidedly slow. From 2011 to 2014, annual statewide manufacturing employment has hovered at around 1.25 million.
The Sacramento area saw similarly dismal losses in the recession, but recovery has been more pronounced. Manufacturing jobs in the region fell from 43,058 in 2005 to 32,783 in 2010, a drop of nearly 24 percent. Last year, EDD said the sector employed 34,550, up nearly 5.4 percent from the dog days of 2010.
Jolts to manufacturing statewide and in the Sacramento area have made headlines in recent years. Last year, Tesla Motors Inc. spurned California’s overtures and chose a site near Reno for a new, 6,500-job battery factory outside Reno. South Sacramento lost 700 high-wage, blue-collar jobs when the longtime Campbell Soup factory closed its doors in 2013, although Macy’s Inc. recently announced it would occupy part of the space with a 175-employee distribution hub.
But there have been gains in manufacturing jobs.
This month, Nina’s Mexican Food Products, a subsidiary of Ole Mexican Foods of Atlanta, purchased the former Bimbo Bakeries USA plant on Iron Rock Way in Elk Grove, planning to convert it to a Mexican food plant with 150 to 300 jobs. Last year, Rancho Cordova-based VSP Global added a lens-grinding manufacturing facility – with up to 250 jobs – on Blue Ravine Road in Folsom.
West Sacramento has added companies such as Nippon Shokken USA Inc., which manufactures a line of Japanese seasonings.
Farther down the Central Valley, Sacramento-based Blue Diamond Growers continues to add workers to its manufacturing and processing plant in Turlock. Initially employing 100, the three-phase project eventually will top out at 500,000 square feet and add more jobs over the next decade.
Some encouraging signs
Those are encouraging signs to labor experts like Michael Bernick, a labor lawyer in San Francisco and former EDD director. Analysts “are constantly predicting that manufacturing is dead in the state. That has been going on for 20 years,” he said. “Yet with 1.2 million manufacturing jobs in California, we still have a very vibrant manufacturing industry.”
High-profile closings of major industrial facilities in California over the past decade – including the New United Motor Manufacturing Inc. General Motors-Toyota auto-assembly plant shutdown in Fremont in 2010 – have helped foster the perception that traditional industrial manufacturing operations are disappearing from California.
But Bernick said a closer examination of recent numbers refutes that perception.
For example, EDD figures show that machinery manufacturing jobs in California rose 4.7 percent to 77,500 between December 2013 and December 2014. Wood product manufacturing was up 6.9 percent – to 23,100 jobs – in the same period.
By contrast, the state’s high-tech manufacturing sector wasn’t quite as robust, in terms of growth. While employing more than 264,000 in California, computer and electronic product manufacturing was essentially flat in the year-over-year period. Semiconductor and electronic component manufacturing was down 0.2 percent, or 200 jobs, to 85,600, in the period.
“Probably some of it has to do with a housing rebound and the general economic recovery of the state,” Bernick said. “But it’s interesting that it’s not just computers that are leading the way. More traditional manufacturing, the industrial sub-sectors, are seeing some growth. Perhaps most important, none of these job gains or losses are very large … 1.2 million manufacturing jobs still mean something.”
Compared with other states, California’s manufacturing sector remains a powerhouse. A U.S. Census Bureau report for 2012 said the Golden State topped the nation in sheer numbers: nearly 39,000 manufacturing businesses and 1.2 million workers.
Jordan Levine, director of economic research for Beacon Economics, credited the state’s recent improvement in California manufacturing jobs for helping the state amass a record $174.13 billion in merchandise exports last year, surpassing the 2013 record of $168.13 billion.
Since bottoming out in 2010, Levine said, the state “has added 23,000 manufacturing jobs – primarily in durable goods manufacturing,” which includes metal, wood, machinery, computers and semiconductors, medical devices and appliances.
Those jobs offer a wide range of hourly wages: a median of $9.50 an hour for packers, packagers and other basic laborers, up to $44.62 an hour for industrial production managers, according to a July 2012 EDD report. Median hourly pay for other sectors included $18.70 for machinists; $17.62 for welders, cutters and fitters; $13.86 for electromechanical equipment assemblers; and $26.16 for industrial machinery mechanics.
Barriers to growth
But the anemic rate of growth for California’s manufacturing industry is a point of concern for the Sacramento-based California Manufacturers & Technology Association, the industry’s trade group. It contends that job growth in the state’s manufacturing sector was less than 1 percent between January 2010 and October 2014, while job growth nationally over the same period was nearly 6.3 percent, with 719,000 jobs added to boost the national total to 12.18 million.
CMTA spokesman Gino DiCaro said “we must attract more manufacturing. … If we want to be a model for the rest of the country, we need a growing number of innovative and energy efficient manufacturers to scale up in California and create middle-class jobs. At the very least, we need to attract manufacturing at the same rate as the rest of the country.”
While applauding the Governor’s Office of Business and Economic Development for offering millions of dollars in tax credits to manufacturing firms that create jobs in California, DiCaro said California’s comparatively high energy costs, extensive permitting processes and costly workers’ compensation premiums “make it difficult for California to attract its fair share of manufacturers and investors.”
Beacon’s Levine agreed, adding that California’s housing and lifestyle costs have “made it more challenging to develop more manufacturing space in California.”
Among those who are already here, some Sacramento-area manufacturers report they are doing well.
In Natomas, Advanced Refrigeration Systems expanded last spring into a new 40,000-square-foot headquarters and production facility. Since then, the privately held company says its 20 employees have been busy designing, engineering and manufacturing energy-efficient refrigeration systems for clients that include Nugget Markets, Costco, Wal-Mart and Safeway.
“Business is real good. We’ve been slammed this year,” said Marcus Wilson, chief financial officer, who declined to state specifics. “We had our best year last year, and we’ll have a better one this year. … So, yeah, it’s excellent.”
Titan Gilroy, star of “Titan American Built” on the MAVTV cable network, relocated his business office, machine shop, manufacturing facility and TV production company from Grass Valley to Rocklin late last year. He says he’s added eight workers in recent months, serving sectors that include aerospace, defense, medical and subsea engineering.
The second half of “Titan American Built,” which heralds the made-in-America manufacturing industry, begins March 1. “What we’ve done is pull back the curtains, doing a new project every week. If you can’t show people what you’re doing, they can’t grasp it.”
A cheerleader for American manufacturing, Gilroy believes the show can help educate audiences about the kind of sophisticated work being done here. “(Manufacturing) is something that has to be seen. When they see it, (the public) can become passionate about it.”
Call The Bee’s Mark Glover, (916) 321-1184.