ARE YOU READY FOR A RECOVERY?

If the current economy's health is like a patient, the fourth-quarter pulse is a lot stronger.

• Photos

As 2003 draws to a close, the economic outlook appears brighter for a sustained recovery than it appeared when the new year's bells were still ringing.

But the question remains whether the economic recovery will mean more jobs.

At Clow Stamping, Merrifield, it has meant more jobs.

Owner Reggie Clow said there is currently more work than the manufacturing company can handle.

Clow Stamping's fiscal year, which ended Sept. 31, was up 12 percent compared to the previous year and has the company increasing its forecast 2004 from 6 percent to 23 percent.

"I'm hiring just as fast as I can train," Clow said. The result is a net gain in about 40 production people, which takes the company to nearly 300 employees. Clow said the firm needs 20 more people now. "We've been in a hiring mode since June 1."

Business has been so good, Clow Stamping is now falling behind schedule. Orders are coming in from customers who have not placed orders in years, some from the high tech industry. Clow said the top 5 percent of the manufacturer's accounts are going up in sales.

"From my standpoint it's definitely coming back," Clow said of the economy. "And I talk to a lot of competitors and some of them are fairly slow, but most of them are better than they were a year ago."

Clow also serves as Brainerd Lakes Area Development Corp. president.

"The employment issue (more jobs) is usually the last thing to happen when the economy turns around and we are starting to see it," he said. "... We are adding three new employees every week and, by the end of February, I'd be to the point to have all the labor I need unless sales continue to grow more and more."

Manufacturing has changed with the recession and global competition. Customers keep less inventory on hand and require faster turnaround times. Product delivery that used to be four to six weeks is now two to four weeks.

At Clow Stamping the increased business means overtime and a voluntary shift on Christmas Eve. Shifts are scheduled Dec. 26 and Dec. 27. And Clow said they are thinking of adding Sunday shifts, which were implemented three to four years ago.

Clow Stamping is considering adding equipment and possibly a small building addition in the spring.

"It makes me nervous to think about adding on additional debt," Clow said. "I don't know how busy I'm going to be in six months -- nobody does -- but it's gotten to the point for good customer service I need to increase my capacity."

Sheila Haverkamp, Brainerd Lakes Area Development Corp. executive director, said signs of a manufacturing upswing are visible. She pointed to BLADC's work with Stern Industries, Plastics Plus, Brainerd Technical Design and Blow Molding Inc., a new startup manufacturer in the Northern Pacific Center. All those efforts are expected to equate to added jobs.

But it is not yet the fabled tide that raises all boats.

Haverkamp said while some manufacturers are seeing considerable growth, others are still dealing with slower activity. However, the signs of an economic turnaround are positive.

Lakeland Mold Co., Brainerd, also is experiencing an increase in business. President John Newhouse said the market increase in the fourth quarter is consistent with the industry and the general economic conditions.

Lakeland Mold predicts more than 20 percent growth in 2004 compared to 2003. Newhouse said getting business has required them to be more aggressive but the company had a solid foundation of cost reduction that has allowed it to be profitable despite pressure for price cutting.

The slowdown for Lakeland Mold began in 2001 but the plummet occurred in 2002. Sales grew this year. And reasonable growth is predicted for plastic part manufacturers in 2004.

But this time that growth is likely to mean fewer jobs as growth is absorbed by greater efficiency.

At Lakeland Mold, Newhouse said fewer people will be hired per unit of output than would have occurred five years ago because the company is more efficient. So the company may only hire one worker now when five years ago they may have hired five people.

Lakeland Mold now employs 70 people and is hiring a few more. In 1999, the company had 85 employees.

While individuals and their families have faced significant turmoil and hardship with area layoffs, construction in the Brainerd and Baxter areas continues on new business ventures.

Manufacturing jobs, which rose to more than 3,500 in Crow Wing County in the second quarter of 2000, steadily dropped after reaching that peak.

"Manufacturing is declining," said Anthony Schaffhauser, Minnesota Department of Employment and Economic Development regional labor market analyst. He said manufacturers are faced with a global economy and non-competitive wages in developing countries. "It's a global trend that we are part of."

A lot of the changes in the economy are not related to the recession alone, but are changes in the basic structure, Schaffhauser said.

"We know it's changed," he said. And he said the forces behind the change are trends that are expected to continue.

"I think the economy is starting to improve," he said. "... A lot of the manufacturing jobs lost are not coming back."

In the Brainerd/Baxter area, the downturn resulted in significant manufacturing job losses, but overall the number of jobs -- even in the recession -- actually increased.

The Brainerd-Baxter region increased employment by about 1,700 jobs or almost 3 percent between 2000 and 2002. Construction added almost 600 jobs or 17 percent. Manufacturing lost about 800 jobs, just more than 8 percent of industry employment.

Sectors with job gains were in retail, construction and health services. Other opportunities may exist but Schaffhauser said not many businesses are expanding anywhere.

The Brainerd/Baxter labor market area has the largest employment concentration within a 75-mile radius. It is the second largest employment hub north of the Twin Cities and St. Cloud metro areas and is second only to Duluth.

"The regional center of Brainerd-Baxter unites significant areas of these counties economically, if not politically," the DEED report stated.

Schaffhauser, who splits time between the Bemidji and Brainerd offices, said the area job market has shown impressive resiliency following the Potlatch paper mill closing.

Missota Paper, which purchased the Potlatch mill, continues to be in an extended shutdown with an uncertain future.

And other businesses that opened with high hopes have closed their doors.

Julia Sullivan, owner of Godfather's Pizza, which employed about 24 people, closed her business earlier this month. Godfather's opened earlier this year but Sullivan said things never took off the way she expected and in part she attributes that to the economy and tighter budgets for people.

"I think it was just this year, the resorts had a hard time and everybody had a hard time just trying to make it over the hump," Sullivan said.

Mark Ronnei, Grand View Lodge general manager, said this year was slightly better than 2002 and there are hopes for a slight increase in 2004. Ronnei said after that, with consumer confidence growing, things may improve more substantially in the future. Snow, on the ground here and in the Twin Cities, has helped along with the recent addition of the Glacial Spa.

At Breezy Point Resort, owner Bob Spizzo said it appears people are more confident. The resort has held its own and golf has been down, but Breezy Point has depended on a steady customer base of 12,000 timeshare families. And there's ice arena use that has included the Minnesota Wild and figure skater Kristy Yamaguchi. Baby boomers have sold out the 750 deeded campsites, Spizzo said.

"We are optimistic for the new year," Spizzo said.

At Cragun's Resort, owner Dutch Cragun said there is no question things would even be better if there was a better snow base now. Cragun said the latest snow conditions point to the need to have more multiple activities, such as the inside sports and activities centers, to help resorts survive winters without snow.

Brainerd-Baxter has about 4 percent of total state employment.

"I'm optimistic about it," Newhouse said of the economy. "There is a lot of effort being put into economic development."

Newhouse expects the 2020 Vitality Task Force will have ideas with a boost for attracting prospective employers, downtown Brainerd renovation efforts and a focus to be a viable place to attract business to the area.

Newhouse said: "The fact that all of this is happening on the leading edge of what I believe is an economic recovery is wonderful timing."