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After decades of manufacturing decline in Maryland, signs of turnaround

After decades of manufacturing decline in Maryland, signs of turnaround

Buzzes, drones and hisses pulse through the air at NRL & Associates, a precision machine shop that makes parts and prototypes and assemblies for clients in a small business park just across the Bay Bridge.

But when Rich Coursey walks the floor of his growing business, he hears more than machines cutting aluminum or the rumble of a piece getting finished.

"You want to know what we say?" he asked. "We say, 'That's the sound of money.'"

That sound is growing louder. NRL, which Coursey owns with two business partners, has nearly doubled its employment in the past 10 years to almost 60 people.

His isn't the only manufacturing company in Maryland adding jobs. State manufacturers have added almost 5,000 positions since 2014, when employment in the industry hit a low of about 103,000, according to the U.S. Labor Department.

The sector grew faster than any other sector in the state in 2016. It was the first time since at least 1990 that manufacturing employment increased two years in a row.

The gains are nowhere near enough to counter decades of manufacturing losses in Maryland, once home to a mighty manufacturing base, with Bethlehem Steel, Crown Cork & Seal, Martin Marietta, General Motors and other giants supplying tens of thousands of jobs.

Nor are they happening everywhere. In about a third of the state's counties, manufacturing employment was down during the fiscal year that ended in June. Just last week, GE Healthcare confirmed plans to close a plant in Laurel where about 180 people make neonatal incubators and warmers.

But with output on the upswing, employment declines are leveling off — and in some places, turning around.

"The good news is we really are moving in the right direction," said Mike Galiazzo of the Regional Manufacturing Institute in Baltimore County. The industry group has represented Maryland manufacturers since the 1990s.

The Norwegian firm Nammo said this month it would open a facility in Charles County and hire 130 people over the next five years to make rocket motors and warheads for the Navy. Delaware-based Crystal Steel Fabricators plans to open a new plant in Caroline County and hire 126 people over the next two years.

The British drug maker AstraZeneca is in the midst of a $200 million expansion of its Frederick manufacturing plant, with plans for 300 jobs. A spokeswoman said the firm has been hiring "steadily" and expects to open the new facility later this year.

Beneath the headlines, much of the growth comes from smaller businesses such as NRL.

Mobern Lighting in Jessup has jumped from 30 workers to 120 over the last six years. President William Stone said the firm is riding a wave of interest in new lighting technologies such as LEDs and has retooled to be able to offer custom products within days.

Thorlabs Quantum Electronics, which makes semiconductor lasers and electro-optics systems in Jessup, has added about 45 workers in the past three years for a total of about 115.

The firm grew out of research at the University of Maryland and was acquired in 2009 by New Jersey-based Thorlabs Inc. General Manager David Beatson said he expects hiring to continue, as the firm pushes to increase revenue by 25 percent this year.

About half of the current workforce hold technical positions, such as engineers, Beatson said. But many of the new hires will be on the assembly floor.

"I'm hiring as we speak," he said.

Industry attention

Maryland's recent gains come as manufacturing finds itself in the spotlight, thanks in part to President Donald J. Trump and his campaign promises to bring factory jobs back to the United States.

Trump met this past week with business leaders including Under Armour CEO Kevin Plank, who wants his Baltimore-based sports apparel firm to produce goods closer to their final markets and hopes to do some small-batch manufacturing in Baltimore.

Industry professionals say they've benefited from Gov. Larry Hogan's interest. Hogan has emphasized manufacturing since taking office in 2015.

This month the governor unveiled the More Jobs for Marylanders Act, which would eliminate state taxes for 10 years for new manufacturers that locate in high-unemployment areas, including Baltimore and some of the southern counties of the Eastern Shore, and extend tax credits to existing manufacturers in those areas that add jobs.

The legislation also would allow manufacturers to write down the value of their machinery and equipment more quickly — a move that supporters say will make it less costly for firms to keep up with rapidly evolving technology.

A Hogan spokesman said the goal is to create jobs, including "thousands" in Baltimore.

"Maryland has made a lot of progress," spokesman Doug Mayer said. But manufacturing — which currently makes up less than 4 percent of the state's total jobs, down from nearly 9 percent in 1990 — is also "an area where Maryland can clearly make up ground."

The state shed nearly half its manufacturing jobs over the past 25 years. The decline quickened in the 2000s amid growing trade with China. Even when the industry started to rebound nationally in 2010, employment in Maryland continued to fall.

Economist Richard Clinch, director of the University of Baltimore's Jacob France Institute, said the relatively high cost of doing business in Maryland — with its pro-environment, labor-friendly policies— led many firms to relocate. But as advances in automation and 3-D printing reduce costs, he said, the state has an opportunity to reclaim pieces of the market.

That's especially true for firms focused on high-value products tied to other parts of the state economy, such as defense and medicine, he said.

"Having some slow and incremental growth in Maryland is possible," Clinch said. "That said, will manufacturing ever reach the highs it had when Martin Marietta was one of the largest facilities in the country? No, probably not."

Mark Muro has studied manufacturing as a senior fellow at the Brookings Institution.

As the industry grows increasingly automated, he said, many of the boldest job promises by politicians will fall flat.

But that doesn't mean the focus on the sector is misplaced, Muro said. He pointed to the outsized role it plays creating exports, supporting other businesses and bringing new products to market. It also offers relatively high wages, including for people without college degrees.

"The fact is that it simply doesn't require thousands of people to run a factory like it did in your parents' generation," he said. "At the same time, it is a uniquely valuable activity that should be valued inordinately."

County of the future

Queen Anne's County, home of NRL & Associates, is best known for the farmland and shoreline that have attracted commuters and retirees to live just across the Bay Bridge from Annapolis.

But it's also one of just a few counties in Maryland that have more manufacturing jobs today than they did in 2001.

Its small base of manufacturers — many of them neighbors in a single business park in Stevensville — offers a glimpse of where the industry in Maryland appears to be headed.

Jean Fabi, acting director of the county's Department of Economic Development, said the county benefits from its location — close to the business and transportation hubs of Baltimore, Washington and Wilmington, Del., but far enough away to keep real estate and other costs down.

County officials, who have been trying to diversify the local economy, have offered flexible zoning, grants and other incentives to lure firms. They're also trying to boost workforce training to address a shortage of skilled workers.

Fabi said the companies she sees succeed are investing in new products and new technology that enable them to respond more quickly to customer demands.

Most of the firms employ fewer than 50 people. Some serve defense clients. Others have carved out niches selling specialty items such as guitars, boat parts and locally distilled spirits.

At the NRL shop, titanium pieces destined for the military are stacked just feet away from wooden duck calls and neonatal incubators.

Three high-tech precision cutters, so sensitive to movement they sit on their own islands of concrete, line one wall. The machines, which cost about $1 million each, can be programmed to make a variety of items and run overnight without supervision. They'll send text messages if something goes wrong.

The machines have allowed NRL to make products faster and more cheaply, Coursey said. And they've had an "if you build it, they will come" effect on clients looking for complicated pieces.

With more business comes more hiring. NRL expects to add five to 10 people in the next year.

"It's all about the technology," Coursey said.

Don Gross, the third-generation owner of Gross Mechanical Laboratories, or Groco, has brought on about five people since 2012 for a total of roughly 50. The company makes filters, pumps and other parts for boats.

An improving economy means people are buying boats again, Gross said. With more automation and rising labor costs in China, he said, the firm is more competitive. He's investing in major new machinery, too.

But Gross said manufacturers like him have to compete on innovation, not price. He's rolling out a new kind of valve for boats that can be opened and closed remotely.

"That's how we survive and how we move forward: coming up with new things."

In the lobby of his building, a display case full of inventions greets visitors.

The oldest date back to the 1920s, shortly after his grandfather started the firm. But to Gross, the history of advances in the case points to the way forward.

"It's the strategy for every manufacturer in every industry," he said. "If you're going to get ahead, you've got to build a better mousetrap."

nsherman@baltsun.com

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