As manufacturing changes, so does the geography of manufacturing. With the help of Cognetics Inc., INC. identified the 10 metropolitan areas that are home to the greatest concentrations of fast-growing manufacturers. On the list are some Sunbelt cities that are relatively new to manufacturing, but there are also signs of renewal in some of the old manufacturing centers of the Rust Belt. Reporter Leslie Brokaw profiled some new companies in old industries that typify America's manufacturing revival.
#5 SAN FRANCISCO
Finis Conner had little success trying to raise money from venture capitalists when he launched his disk-drive company in 1986. All around Silicon Valley, disk-drive firms were failing almost daily, as the high-tech industry came to the realization that there were simply too many companies. In the shakeout that followed, many producers sought to cut costs by moving production offshore to Korea or Taiwan. But not Conner Peripherals Inc. Squeezing a $6-million investment and a sizable contract out of Compaq Computer Corp, Conner entered into the disk-drive sweepstakes with a new design that was smaller and faster and used 30% fewer parts than conventional drives -- and, therefore, cost less to produce. In 1987, its first year, Conner's sales topped $100 million, a record for the industry, as Conner seized market share not only from American competitors but from the Japanese and Taiwanese as well. When books are closed on its second year in December, Conner expects to post sales of $300 million, a good portion of it to Japanese computer maker Toshiba and a host of other foreign customers. At Conner Peripherals they don't just talk about American industrial competitiveness. They're writing the book on it.
While most of Texas rises and falls with the price of oil, Dallas has insisted on building a diversified economy with a strong and growing manufacturing base. Among the stellar performers has been Microdynamics Inc., which makes computer-aided design systems for manufacturers of clothing, shoes, and other products cut from leather and fabric. Microdynamics combines IBM hardware, its own software, and its own custom-designed peripherals into packages that sell from $75,000 to $750,000. The systems lay out the most material-efficient patterns, savings clients 2% to 4% annually on cost of materials. And by linking the computer directly to the knives, lasers, and water jets, precision is improved. Microdynamics's systems now help direct the manufacture of Liz Claiborne clothing, Bally shoes, Levi Strauss jeans, and La-Z-Boy recliners. Sales during the past year have climbed from $12 million to $18 million.
Flexible production doesn't get much more flexible than at Road Rescue Inc., a St. Paul company across the river from Minneapolis. The company makes every one of its $50,000 ambulances to order, accommodating hundreds of different design options, from the color of the trim to the layout of the ambulance interior. Road Rescue constructs its high-tech medical chambers on top of chassis and engines purchased from Ford and General Motors. The whole process employs about 100 metal workers, welders, and assemblers, most of them fresh from vocational school. Now in its 12th year of operation, Road Rescue last year posted sales of $11 million, representing 5% of the U.S. market.
Although Chicago has lost 30% of its manufacturing jobs, it remains one of our leading manufacturing cities. At Viking Enterprises Corp, for example, what started in 1966 as a modest prepress color-separation house has become a vertically integrated operation that does everything from printing its own line of greeting cards to operating retail card shops. Like most successful printers, Viking has been energetic in introducing the computer into its operation. According to comptroller David Peterson, the company's new electronic retouching system is so versatile that it can "put Gorbachev's head on Reagan's body without you even noticing it." Viking's employment has gone from 100 to 350 in five years.
In the past decade, the Motor City has lost more than third of its manufacturing jobs -- some 130,000 total. But while the big automakers and their supplies have been cutting back on production jobs, hundreds of smaller companies like Novatron Corp. have begun to take advantage of the pool of skilled talent in the area. Novatron, with annual sales of $8 million, employs 110 who manufacture custom-designed instrument panels for boats and recreational vehicles. These specialty dashboards are now found on 30% of Class-A motor homes, 35% of U.S.-made boats, and 90% of Canadian boats -- just the kind of market share Detroit companies used to brag about in the 1950s.
The high-tech economy in and around Boston boasts a number of fast-growing manufacturers in the hot fields of computers, biotechnology, and medical instruments. Many of these companies trace their origins to the research laboratories of Harvard and MIT. But there are a number of more pedestrian academic spinoffs as well. Take, for example, Kryptonite Corp., which introduced the world's first nearly unbreakable bicycle lock. With bicycle thefts creating something of a mini crime wave on Boston college campuses in the early 1970s, bike shop mechanic Stanley Kaplan and his partner Michael Zane saw a ready market for their Kryptonite lock. To manufacture their product, they found a 60-year-old steel-bending machine that Zane's father had used to produce lighting fixtures and computer pats in Boston's South End -- a machine the company still uses today, along with two dozen that have been added. Kryptonite last year sold near $5 million worth of bicycle protection in the United States and foreign countries. And so artful and unusual is the lock's design that it has won a prize from the Japanese and is displayed in the permanent collections of the State Museum of Munich and the Museum of Modern Art, in New York City.
#2 NEW YORK CITY
A decade ago, there were 153,000 New Yorkers working in the shops of the city's bustling garment district. Today, there are 106,000. Part of the problem is overseas competition, but even more disastrous competition comes from New York's real-estate interests, who have priced the manufacturers out of their quarters. Although the city now offers moving grants of up to $110,000 to companies that agree to move their manufacturing operations to other city locations, most prefer to stay put and stay small. Typical is Dero Leather Co., located on West 37th Street, which designs and manufactures its own line of leather coats, skirts, pants, and dresses in an array of bright colors. The firm was set up six years ago by Italian immigrants Anna Marie and Rocco D'Amelio, who survive the New York rents and the quick changes in fashion by keeping inventory to zero: every piece is made to order. Because those orders don't always flow evenly, the D'Amelios and their 30 to 50 cutters and sewers often find themselves working weekends in order to meet the deadlines to wholesale customers. Sales were up 35% in the past year.
Between 1979 and 1984, the fabricated-metal industry lost 15% of its work force. But in Philadelphia, transforming sheet metal is the fastest-growing segment of the manufacturing sector. Much of the growth is tied to military contracts. And much of it is based on so-called computer numerically controlled (CNC) machines like those at Lavelle Aircraft Co., an aerospace parts manufacturer founded in 1940. During the pat three years, the company has plowed almost $1.5 million in profits into several pieces of automation equipment that will allow for more efficient production of exhaust ducts for Boeing helicopters and Navy F-14 fighters. Lavelle president Richard Ludwig says the new machines allow him to cut metal without an array of costly special tools required in the past. They also cut labor costs -- not just because they require fewer operators, but also because operators no longer are required to have the skills and experience of the operators of the noncomputerized machines. Lavelle's investments in modernization have already begun to pay off: since 1983, sales have increased 58% at the same time that employment has been reduced by 20%.
Just about the last thing you'd expect to find around Miami is a paper mill. In fact, there is only one: Atlas Paper Mills, founded seven years ago by Cuban-born Remberto Bastanzuri. Actually, Atlas is a paper recycler, converting 11,000 tons of old paper and computer printouts each year into tissues, paper towels, and toilet paper. These recycled materials cost Bastanzuri about $180 per ton -- about a third the cost of the virgin pulp used as raw material by traditional paper mills. Bastanzuri uses that price advantage to steal away big institutional customers from such giants as Procter & Gamble and nearby Georgia-Pacific. With sales last year of about $10 million. Bastanzuri credits his success to low corporate overhead and a dedicated work force, most of it drawn from Miami's burgeoning Cuban community. Indeed, Miami's immigrant community is helping to fuel an industrial boom in the Miami area, where manufacturing employment is up 23% since the early 1970s.