Factories adapt in North Carolina town

PITTSBORO, N.C. — Until the late 1950s, the low-slung brick building in the center of this minuscule town was home to the Kayser-Roth hosiery mill. Some 400 workers tended to clattering looms, churning out pantyhose.

"It was the best employer in town," said Nancy May, a former worker.

The hosiery mill is gone now, along with much of the Carolina textile industry — a casualty of the global reordering that has concentrated production in Asia and Latin America. But the old brick building is still here and still making products — albeit ones scarcely imagined a half-century ago.

Today, the site is occupied by a biotechnology company, Biolex Therapeutics.

Inside, 90 workers harness expensive laboratory equipment and a plant called duckweed, a bane to local ponds, to develop a drug for a serious liver ailment. Even the lowest-paid lab technician takes home far more than the seamstresses earned.

If the startup succeeds, its product will be substantially more lucrative than pantyhose.

As lawmakers pursue legislation aimed at softening the blow from factory closures, and as the downside of trade emerges as a talking point in the 2008 presidential campaign, it might seem that manufacturing is a dying part of the U.S. economy. But the retooling of this old brick building on Credle Street underscores how U.S. manufacturing is in many regards stronger than ever.

The United States makes more manufactured goods today than at any time in history, as measured by the dollar value of production adjusted for inflation — three times as much as in the mid-1950s, the supposed heyday of U.S. industry.

Between 1977 and 2005, the value of U.S. manufacturing swelled from $1.3 trillion to an all-time record $4.5 trillion, according to the Bureau of Economic Analysis.

With less than 5 percent of the world's population, the United States is responsible for almost one-fourth of global manufacturing, a share that has changed little in decades. It is the largest manufacturing economy by far.

Japan, the only serious rival for that title, has been losing ground. China has been growing but represents only about one-tenth of world manufacturing.

But if the big picture is brighter than many realize, U.S. manufacturing is nevertheless undergoing fundamental change that is exerting enormous pressure on workers.

Imports are rising, now representing a third of all manufactured goods consumed in the country, up from 10 percent in the 1970s.

Exports rise faster

U.S. exports are rising even faster than imports, but companies face intense price competition, with China, India, Brazil and other low-wage countries part of a global marketplace for labor and materials.

Manufacturers are redesigning production lines to make them more efficient, substituting machinery for people wherever possible.

So while U.S. manufacturing is not declining, manufacturing employment has been shrinking dramatically. After peaking in 1979 at 19 million workers, its work force has since dropped to 14 million, the lowest number since 1950.

A stark educational divide has emerged on the factory floor, as skills and training separate winners from losers.

In 1973, more than half of all U.S. manufacturing workers failed to complete high school, and only 6 percent attended some college, according to the National Association of Manufacturers. By 2001, nearly half finished high school and one-fourth attended some college.

North Carolina encapsulates the forces remaking U.S. manufacturing. Between 2002 and 2005, the state lost 72,000 manufacturing jobs, about three-fourths in textiles, furniture-making and electronics, according to the North Carolina Commission on Workforce Development.

At the same time, the state has become a rising powerhouse in lucrative new manufacturing sectors such as biotechnology, pharmaceuticals and sophisticated textiles.

As they grapple with change, North Carolina's workers and factory owners are helping answer a pressing question: What does the future hold for manufacturing in the United States?

Global competition

"We didn't see it coming," the furniture man grimly declared.

Michael Dugan once ran Henredon Furniture Industries, which operated a plant in Spruce Pine, a former mining town in the rugged mountains in the western part of the state.

There the company made hand-carved wooden bedroom furniture, once employing more than 1,000 people. Many lacked high-school diplomas and some were illiterate, yet the factory provided a way for these workers to support families and to acquire modest homes and cars.

Henredon's four-poster beds retailed for about $5,000 in the early 1990s, Dugan said. A few years later, similar models started showing up from the Philippines for less than $2,000.

Now they can be found for $799, produced by workers in southern China.

Henredon first trimmed its work force. Three years ago, it shut down the plant, eliminating the last 350 positions and adding to a wave of layoffs in surrounding Mitchell County, which has had roughly one-fifth of its jobs wiped out since 2000, according to the Employment Security Commission of North Carolina.

Many of the storefronts in Spruce Pine's brick downtown are empty. Restaurants and shops have closed, as local spending power plummeted.

Master carver to guard

For 26 years, Phillip Wilson worked at Henredon as a master carver. Now, on most days, he wakes before dawn and drives to his new job — the 5:30 a.m. shift as a prison guard at the medium-security Mountain View Correctional facility. His pay is down 15 percent, forcing him into a second job at a used-appliance store.

Throughout the state, and indeed the nation, laid-off factory workers are typically able to find new jobs but mostly for lower pay.

Furniture-making is typical of the manufacturing sectors shrinking in the U.S. For many, labor represents a relatively high proportion of total costs, making them vulnerable to foreign competition. If factories cannot automate, they die.

And with machines increasingly occupying the center of production, manufacturers want highly trained, literate workers at the controls. To meet the demand and help workers secure jobs, North Carolina has beefed up courses at its community colleges.

Three years ago, it set up Bionetwork, a training program based in community colleges, to feed workers into the state's growing biotech sector.

"All of the skills are closely tied to the workplace," said Norman Smit, Bionetwork's recruitment director.

Smit seeks students from declining areas of manufacturing. Given intensive training and a willingness to adapt, a textile or furniture worker can become a better-paid biotech technician, he says. As proof, he points to Regina Whitaker.

Ten years ago, straight out of high school, Whitaker went to work at a yarn-texturing plant in Yadkinville, in the Piedmont region. Her mother had worked there for 30 years.

From midnight until 8 a.m., Whitaker tended to whirring machinery, alternately wishing for another job and worrying that she would actually have to find one: Her company was opening plants in China and Brazil and laying people off in Yadkinville.

"I couldn't see spending my life there," Whitaker said.

In January 2003, she enrolled in the first associate-degree classes offered in biotechnology at Forsyth Technical Community College.

She graduated in July 2004 and was hired as a lab technician at Targacept, a biotech startup in Winston-Salem that was spun off from R.J. Reynolds Tobacco.

Where the tobacco giant had researched the use of nicotine to make people crave cigarettes, Targacept is focusing on the nicotine receptors in the brain to develop drugs for Alzheimer's disease and schizophrenia.

Whitaker, 28, said her salary is "significantly more" than the $13.40 an hour she made at the yarn factory.

"I'm not struggling now," she said. "Before, it was paycheck to paycheck."

Glen Raven Custom Fabrics was another Carolina textile operation whose future seemed in doubt.

In the early 1990s, the company was still concentrated on products under siege from foreign competition — pantyhose, luggage fabric and yarn for apparel. Throughout the Carolinas, other textile companies were vanishing.

Glen Raven managed to endure and prosper by refocusing on specialty industrial fabrics for outdoor furniture, boats and awnings — expensive goods that require customization, high-end machinery and technical expertise.

High-value products

Economists suggest this is the future for successful U.S. manufacturers: zeroing in on high-value products that tap America's technological advantages to offset high labor costs. This strategy has fostered a boom in exports of U.S.-made industrial engines and machinery, aerospace gear and pharmaceuticals.

North Carolina has embraced this approach, aggressively pushing biotechnology development.

In the past decade, the number of biosciences firms has jumped to 386 from 131, and the number of workers has more than doubled, from 20,000 to 47,000, according to the North Carolina Biotechnology Center, a government arm that promotes the industry.

At Research Triangle Park, a sprawling complex outside Raleigh-Durham, Biogen Idec has established one of the larger biomanufacturing facilities in the United States, making sophisticated pharmaceuticals.

Entry-level workers with the necessary training earn $27,000 to $35,000 a year. Experienced production workers can make considerably more.

Fewer on factory floor

For Glen Raven, the focus on high-technology production has turned its factory floors into lonely expanses.

In Norlina, N.C., a red-brick factory just down Highway 1 from the town's lone traffic light, 225 people once made pantyhose, pushing baskets of nylon across the floor by hand.

Now, 156 workers man computers that control acres of robotic arms and bobbins producing yarn.

The refashioning has positioned Glen Raven to profit from what many portray as the mortal threat to the Carolina textile industry: China now buys growing volumes of the company's products.

Last year, North Carolina exported $52 million of textiles and fabrics to China, a fivefold increase from 2003.

Chinese factories increasingly use Glen Raven's fabrics to make sun umbrellas and upholstery for lounge chairs, sending many of these finished goods back across the Pacific to the United States.

The workers at these Chinese factories typically make less in a month than the price of a sun umbrella at a U.S. retailer. Glen Raven's success allows the company to pay its workers $10.50 to $22 an hour, plus benefits.

Even at those wages, labor represents only 5 percent of the overall cost of turning fiber into fabric.

Put another way, the efficiency of the machines that have eliminated jobs at its plants has allowed Glen Raven to pay the remaining workers enough to afford cars, health care and homes.

Some of those homes boast patios and lawns now shaded by sun umbrellas made in China using fabric woven just down the road.