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Published: Friday, 12/26/2008

More cuts at factories predicted

FROM BLADE STAFF AND NEWS SERVICES

MINNEAPOLIS - The sudden global economic slowdown is trimming sales, earnings, jobs, and plants across the U.S. manufacturing landscape - and economists say more cuts are on the way next year.

DuPont, Dow Chemical Co., Ford Motor Co., General Motors Corp., and Anheuser Busch Cos, among others, are shutting factories and slashing jobs around the globe; those firms eliminated 26,000 jobs and announced 30 plant closings this month. Nationally, manufacturers have scrubbed 600,000 jobs this year - including 85,000 last month.

In metropolitan Toledo, local auto plants and parts manufacturers have laid off thousands this year - some temporarily, others permanently.

Chrysler LLC's Toledo Jeep Assembly complex started 2008 with more than 6,000 employees on three shifts building Jeep Wranglers and Libertys and Dodge Nitros, and will end the year with fewer than 1,400 on the payroll.

Likewise, GM's Toledo Powertrain Plant - the most productive transmission plant in North America - began 2008 with more than 1,800 hourly employees but will have approximately 1,300 at year's end.

Both Chrysler factories and the GM Powertrain plant are on an extended holiday shutdown because of slow sales.

Early this month, GM said it will cut shifts at car factories in Lordstown, Ohio; Orion Township, Michigan; and Oshawa, Ont., starting in February.

This week, it closed its factory in Moraine, Ohio, near Dayton, and idled most of its Janesville, Wis., factory.

A recession "always hits manufacturing first and hardest," said Hank Cox, a spokesman for the 10,000-member National Association of Manufacturers.

"We are going into a valley, and it looks like we are going to be in for a long, deep valley."

Dan Meckstroth, spokesman for the trade group Manufacturers Alliance/MAPI, said this recession is likely to accelerate the decline in the U.S. manufacturing jobs base. On average, U.S. manufacturing jobs have fallen 0.5 percent each year since 1979.

This recession "is probably not going to be like June 2000 to 2003, when manufacturing lost 3 million jobs and never really got them back," Mr. Meckstroth said. "But we are going to lose a lot of manufacturing jobs in this cycle."

Low-skilled manufacturing jobs went to China and Asia in the 1990s and the early part of this decade mainly because of the labor-cost differential, Mr. Cox said.

But U.S. products also went overseas, boosting revenue and profit. For two years, a weak U.S. dollar and rapid growth in markets such as China and India propelled the U.S. economy.

But as the economies of China and India have slowed, and Europe, Mexico, and Japan have slipped into recession, U.S. exports have stalled.

"Now the worry is that that [export] pillar has been kicked out from beneath the manufacturing sector," Mr. Meckstroth said. "Exports were growing at double-digit rates and it looks like it's going to be negative or flat in 2009."

Restructuring has been the buzz word of the fourth quarter. The country's producers are slashing salaries and benefits, idling production lines and curtailing supplier contracts in attempts to maximize cash flow, preserve or restore profit, and boost shareholder value.

"Cash is now king," Patrick Campbell, chief financial officer at 3M, told Wall Street analysts after the conglomerate on Dec. 8 announced 500 job cuts in addition to the 1,800 layoffs the week before. Those 2,300 are in addition to 1,200 previously announced cuts.



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