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.
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.