MAKE POUGH­KEEP­SIE GREAT AGAIN

Can the U.s. hang on to its fac­to­ries? tay­lor Man­u­fac­tur­ing is a case study in why the news is not all bad.

Forbes - - CONTENTS - By wil­liam bald­win

Can the U.S. hang on to its fac­to­ries? Tay­lor Man­u­fac­tur­ing is a case study in why the news is not all bad.

In the de­bate about whether the ero­sion of fac­tory em­ploy­ment can be stemmed, you’ll find a glim­mer of hope in a cu­ri­ous lit­tle out­fit called the James L. Tay­lor Man­u­fac­tur­ing Co. This busi­ness, which has been in Pough­keep­sie, New York, for 106 years, makes clamps and other wood­work­ing tools. The clamps are rather like the thing you’d use to glue the sides of a dresser drawer, but you won’t find them at Home De­pot. They cost $15,000 and up.

Pro­duc­ers of fur­ni­ture, floor­ing and cab­i­nets, mostly on Tay­lor’s home con­ti­nent, are the buy­ers. Tay­lor, then, is an Amer­i­can man­u­fac­turer sell­ing to other Amer­i­can man­u­fac­tur­ers. In a global econ­omy you’d think it would be dou­bly cursed. But it’s thriv­ing. It’s solidly prof­itable on sales of $12 mil­lion, says chief ex­ec­u­tive Michael Bur­dis. If you are me­chan­i­cally adept he’d like to add you to his pay­roll of 37.

Make that triply cursed, New York be­ing an es­pe­cially poi­sonous lo­cale for goods pro­duc­tion. Since a peak 74 years ago, the state has seen 80% of its fac­tory jobs melt away. In the same span the whole U.S. has lost 30%.

Tay­lor is alive be­cause its spe­cial­ized mar­ket, a few hun­dred tools a year, isn’t vul­ner­a­ble to low-wage ex­porters. “If we were mak­ing 300,000 iphones a month we couldn’t com­pete,” al­lows

Bradley Quick, Tay­lor’s chief engi­neer.

Pough­keep­sie—the name refers to both a city 70 miles up the Hud­son River and the sur­round­ing town—has a glo­ri­ous past. It was home to a dairy equip­ment fac­tory with 764 work­ers. Fiat made cars here. The Smith Broth­ers churned out 30 tons of cough drops a day. Ap­parel man­u­fac­tur­ing was big.

The dairy equip­ment peo­ple found bet­ter lo­cales for their man­u­fac­tur­ing. Fiat’s assem­bly line has be­come a strip mall. The Smith fam­ily hung on for five gen­er­a­tions, then sold out to a phar­ma­ceu­ti­cal com­pany that moved pro­duc­tion out of New York. The Pough­keep­sie Un­der­wear Co.? Crushed by the com­pe­ti­tion. Its three-story fac­tory was re­cently turned into shops and govern­ment-sub­si­dized apart­ments.

In­ter­na­tional Busi­ness Ma­chines in­ter­rupted this grim trend, for a while. It chose Dutchess County, of which Pough­keep­sie is the seat, as a place to make com­put­ers. At one point IBM had 30,000 work­ers in Dutchess and across the river in Ul­ster County. But those high-wage jobs didn’t last. To­day the com­pany’s Hud­son Val­ley em­ploy­ment is scarcely a tenth of what it was, to judge from some dig­ging by the Pough­keep­sie Jour­nal (IBM won’t talk).

You could blame this col­lapse on the de­cline of main­frames. But why didn’t some­thing else take their place? Be­cause a new ven­ture can just as eas­ily open up in a state that is friend­lier to em­ploy­ers. In 1982 New York tacked a “tem­po­rary” 1.18 mul­ti­plier on its al­ready stiff in­come tax for busi­nesses lo­cated in cer­tain coun­ties near New York City, the list in­clud­ing Dutchess. The mul­ti­plier re­mains in ef­fect and was re­cently boosted to 1.28.

Bur­dis al­lows that taxes and la­bor costs (his ma­chin­ists get be­tween $18 and $30 an hour) would be a lit­tle lower in the South. One rea­son he hasn’t moved the com­pany is that he and Quick like liv­ing in New York.

Quick, 54, has been in Dutchess County since he was 5. His fa­ther and grand­fa­ther worked at Tay­lor. Bur­dis, 64, grew up in Troy, New York, another has-been man­u­fac­tur­ing town, and ended up at Tay­lor be­cause, years ear­lier, he had dated the daugh­ter of the owner-pres­i­dent. That fel­low had plenty of in­her­ited money and didn’t need to squeeze ev­ery nickel out of the clamps. To­ward the end of his life he had Bur­dis and Quick grad­u­ally ac­quire his shares at an af­ford­able price.

Another an­chor is Tay­lor’s ca­pa­cious fac­tory, va­cant when Bur­dis bought it three years ago and moved the busi­ness from cramped quar­ters down­town. The build­ing used to ac­com­mo­date 225 work­ers at a firm mak­ing parts for power lines. Heirs sold that busi­ness to Hubbell Inc. Hubbell axed the work­ers and moved pro­duc­tion to Mex­ico.

Spread across 2 acres, Tay­lor’s fac­tory hands work ef­fi­ciently. On a re­cent day one of them kept

four met­al­work­ing ma­chines busy at once. Oth­ers tin­kered with a floor­ing nester that looks like a gi­ant Foos­ball game.

To un­der­stand what this prod­uct does, it helps to know that in the floor­board mills of the South­east, “nester” usu­ally refers to a per­son—some- one who snatches boards com­ing off a con­veyor belt in ran­dom lengths, hastily re­ar­ranges them so that each row of one to five pieces is just so long, and bun­dles the rows into a stack.

Not long af­ter Brad Quick de­signed a con­trap­tion to do the work and wrote 7,000 lines of C++ to run it, Bur­dis got a call from a des­per­ate mill man­ager in Mis­sis­sippi. “I have eight nesters and four of them just called in sick,” he said, or­der­ing three of the $115,000 ma­chines. The robotic nester plucks up 12 boards, pon­ders, for a mil­lisec­ond, which of 1,585 com­bi­na­tions makes the best row, then spits out the se­lec­tion.

Is there com­pe­ti­tion from Asia? Not much in the tools for cabi­net fac­to­ries and none in nesters. Says Bur­dis: “Chi­nese firms are happy to make rudi­men­tary ma­chines that are fine for em­ploy­ees mak­ing Chi­nese wages but are no good for em­ploy­ees mak­ing North Amer­i­can wages.”

For his part, Bur­dis buys Amer­i­can when he can. Tay­lor’s four nu­mer­i­cally con­trolled ma­chin­ing cen­ters came from Cal­i­for­nia. But busi­ness is busi­ness. Two weld­ing ro­bots and a spanking new $325,000 steel-cut­ting laser, as well as the pro­gram­mable logic con­trollers that go into prod­ucts, are all from Ja­pan.

Tay­lor, of course, must not only fend off im­ports but find cus­tomers who can do the same. China knocked out a lot of the North Carolina fur­ni­ture fac­to­ries that used to be buy­ers of clamp­ing ma­chines. It hasn’t yet elim­i­nated the Amer­i­can fac­to­ries that make cus­tom cab­i­nets for kitchen re­mod­el­ing jobs.

As for a hos­tile buy­out, Tay­lor is safe. Be­tween them Bur­dis and Quick own 85% of the shares and have three sons in the busi­ness. It seems New York is go­ing to have this fac­tory for a while longer.

Tay­lor’s Michael Bur­dis, chief ex­ec­u­tive, and Bradley Quick, chief engi­neer: Their floor­ing nester doesn’t call in sick.

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