Muskegon Area experiences a manufacturing comeback Companies that survived the recession have capacity to diversify and shift gears

By Dave Alexander The Muskegon Chronicle EGELSTON TOWNSHIP, Mich. (AP) -- Eagle Alloy Inc. is one of the survivors of the Great Recession. Along with other local, mid-sized industrial companies, the Egelston Township steel foundry took a beating in 2008 and 2009. But Eagle Alloy, its group of companies, and other surviving Muskegon-area manufacturers have come roaring back from the worst economic downturn since the Great Depression. Eagle Alloy has hired back 137 workers since December to reach a group total of 400 employees, and is in the process of hiring another 50, co-owners Mark Fazakerley and John Workman said. The company at 5142 Evanston is planning a $14 million expansion in the second half of this year and can be expected to hire another 150 workers. Along with Eagle Alloy, Muskegon is home to several manufacturing plants employing several hundred workers that are seeing brighter days since making it through the economic downturn that began in 2007, according to Ed Garner, president of Muskegon Area First -- the local economic development agency. Eagle Alloy is joined by GE Aviation (formerly Johnson Technology), ADAC Plastics, Hilite International, Michigan Steel, the Port City Group, SAF Holland, Diversified Machine and Fleet Engineers -- all of which have had increases in employment, investment or both, Garner said. "When these companies saw the trouble spots, they battened down the hatches to survive," Garner said of what are mostly locally-owned companies or regional companies with a Muskegon management team committed to the community. "These companies seem to have the capacity to diversify and shift their gears to market demands." Muskegon's leading manufacturer Alcoa Howmet in Whitehall also is on the rebound from the recession with its layoff list gone, hiring underway and employment reaching nearly 2,300, company officials said. The hiring has the job placement and training staff at Michigan Works! Muskegon-Oceana extremely busy, according to spokeswoman Brittany Lenertz. "We've seen the trend in hiring," Lenertz said. "We have seen an increase in job orders in our Michigan Talent Bank. And we are seeing starting wages beginning to go up with three industrial companies increasing starting pay just in the past month." Not every Muskegon manufacturer survived the Great Recession. Sappi Fine Paper and Lift-Tech International, among others, shut down Muskegon operations in past years. The number of Muskegon County manufacturers dropped from 306 at the beginning of 2006 to 271 at the end of 2010 -- an 11 percent decline. Ever-critical manufacturing jobs were hammered even worse. Manufacturing employment prior to the Great Recession peaked at 13,300 jobs in June 2006 and sunk to a low of 9,200 jobs in July 2009 -- a loss of 30 percent of the workforce. But industrial employment climbed back to 10,200 workers in March, according to state labor statistics. Eagle Alloy and its workers felt the pain, the owners said. Employment in 2009 dropped to 200 from a peak of 430 the prior year. But Fazakerley, Workman and the Eagle Alloy team put a survival plan together, restructuring the company by cutting down to one shift and taking substantial reductions in pay. The survival plan was written well before the Great Recession hit, Workman said. The company never put all of its eggs in one basket, keeping a single industry no more than 30 percent of its total sales, a single customer no more than 20 percent and being in a position to lose 40 percent of its business and still break even, Workman said. Sales dropped by 50 percent for Eagle Alloy but the company was in a position to survive, Fazakerly said. Making steel parts for all types of industries and customers, Eagle Alloy has never sold to the volatile automotive industry -- sparing it the collapse of the domestic automakers. As the economy began to recover, Eagle Alloy was available to take up the orders that competitors who have gone out of business had filled. Foreign cost increases and quality issues also have brought work back to the United States from foundries in China, the owners said. "Now, virtually all of our industries that we serve are busy," Fazakerley said of companies from John Deere and Caterpillar to Harley Davidson. Eagle Alloy -- along with Eagle Precision Cast Parts, Eagle Aluminum Cast Products and Eagle CNC Technologies -- produce parts for the oil and gas, food processing, defense, truck trailer, railroad, mining and construction equipment industries. "The high cost of oil and commodities from nickel to gold translates into work for us," Workman said. "Anything that is being mined means those customers are really, really busy." John Deere and Caterpillar are new and growing relationships. Eagle Alloy is producing 22 parts on a new John Deere farm sprayer that is expected to sell 3,000 units and bring a potential of $5.5 million of new business to the company. Since being founded in 1979 by Fazakerley and Wayne Jarvis, who retired 10 years ago, Eagle Alloy has been a shell-mold steel foundry. The molds are formed with "coated" sand purchased from a supplier near Chicago. "We create value by taking scrap steel from the area and turning it into usable parts," Fazakerley said. "But the real value to our customers is our ability to design the castings they need at a cost that is competitive." However, as demand for the various 2,000 parts Eagle Alloy produces for dozens of customers has increased, the cost of coated sand and its availability has become a major issue. The same coated sand is now being used in a hydraulic "fracking" process now being used in natural gas drilling. To protect its supplies and control its costs, Eagle Alloy plans to produce its own coated sand at a new 70,000-square-foot expansion, the owners said. The initial $8 million project has grown to $14 million as foundry capacity will be increased and new equipment purchased, they said. The Eagle Alloy recovery story is being repeated in plants across the area, Garner said. "One of the things that is driving the current growth with our manufacturers coming out of the recession is they have been able to pick up work from those that didn't survive," Garner said. "The other factor is simply supply and demand. As we consumers continue to use stuff, we have created a back log of orders that are now coming in." Economic developers and elected officials concerned with the continuing double-digit unemployment in Muskegon County are hoping the manufacturing turnaround continues, rippling through other sectors of the local economy. "The concern is how long will this last," Garner said. "The rising demand for workers has to be sustainable for employers to hire." Workman and Fazakerley said manufacturers in Muskegon need the community's support. Through Egelston Township, the state is providing a $500,000 federal community development block grant to assist in the job-creating $14 million expansion. The township also will consider industrial property tax breaks, the owners said. "Our country needs manufacturing," Workman said. "Yes, we are in a global economy. But other countries are not playing by the same rules as we are." Fazakerley remains optimistic about the immediate future of industrial companies in Muskegon. "I think this recovery is going to continue," he said. "The strongest and most immediate job growth in Muskegon County will be in manufacturing. The remaining manufacturers in Muskegon are pretty stable and are well run operations." Published: Wed, Jun 22, 2011