The Business of Making Things

Industrial employment is sluggish, but the region remains a great place for manufacturing.

by Jerry Davich

For more than a century, Northwest Indiana and manufacturing have gone together like steel mills and smokestacks. But slow economic growth, slashed wages and the loss of good-paying production jobs in 2014 has kicked another dent in the chugging industry.

“Since 1990, the region has lost almost 50 percent of jobs in primary metal manufacturing,” says Micah Pollak, assistant professor of economics at Indiana University Northwest. “This is a continuation of a trend in this region, and the nation, since the 1970s.”

Roughly 2.5 million manufacturing jobs in this country have been lost, merged or shipped overseas since 2001, according to a report by the Economic Policy Institute. Last year, however, employment in primary metal manufacturing in this region fell by only 1.67 percent, hinting at hope for 2015 and beyond.

Manufacturing jobs from all industries here, including durable goods and primary metal production, rose about 2 percent in 2014, slightly better than the nation's rate. But its growth rate was significantly worse than the state's, which grew 4.3 percent, according to the Northwest Indiana Coincident Index.

The Index, which measures economic activity and growth, shows that our region's economy grew by 1.68 percent. Using similar data, the nation's economy grew 3.2 percent and the state grew 4.55 percent over the same time period.

“So while the economy improved here, it improved significantly slower than both the state and nation,” Pollak says.

This lackluster growth is mostly due to two factors: Last year's extremely harsh winter which took us longer to dig ourselves out. And several major construction projects were completed, such as the BP Whiting Refinery project, at its peak employing more than 14,000 skilled tradesmen.

“While these factors did limit our growth significantly in 2014, they were hopefully one-time shocks to the region and do not represent any significant structural change,” Pollak says.

At the 2014 Workforce Summit, held at Avalon Manor in Hobart, business experts confirmed that this region's manufacturing industry is simply producing more products with fewer workers. Many of those high-quality jobs are being replaced with lower-paying ones in other sectors.

In their annual forecast, Indiana University Kelley School of Business economists showed more optimism for 2015 than for previous years. The panel expects Indiana to add 55,000 workers and the unemployment rate to fall to 5.25 percent by year's end.

The NWI Coincident Index's forecast for the first two quarters of 2015 is modest at best, citing “Weak to No Growth.”

“If we extend that forecast to all of 2015, we're likely to see relatively weak growth in the rage of 1 to 2 percent overall,” Pollak says.

However, all is not bleak for this year, with several massive projects proposed or in the works, including NIPSCO's modernization venture, the South Shore rail line expansion, the Illiana Expressway, and continued expansion of the Gary/Chicago International Airport.

In addition, the Quarterly NAI Hiffman Industrial Market Review, which tracks industrial vacancy rates, showed promise in late 2014 with a rate of 6.9 percent (down from 7.2 percent for the previous year's third quarter).

“This suggests that Northwest Indiana continues to be an attractive area for industry,” Pollak says.

Several manufacturing firms in the northern part of this state illustrate this trend and they are leading the charge to pump up production, create jobs and expand their facilities. Here are a handful of companies bucking the downward trends, both locally and globally.

Giving mobility to megatrends

“We had a record year in 2014,” says Joe Garnett, director of marketing and brand development for BraunAbility Corp. in Winamac.

The company, in business for more than 40 years, has revolutionized what mobility and independence means to wheelchair users around the globe. Its founder, Ralph Braun, was diagnosed as a boy with spinal muscular atrophy and, by 15, he was unable to walk. He invented one of the first electric scooters, called the Tri-Wheeler, which led to designing the first wheelchair lift and steering controls. It allowed the Winamac native to drive independently for the first time in his life. “He became a pioneer in the industry,” says Garnett, a Crown Point native.

Braun died in 2013 but he set up a succession plan for the increasingly mobile company, now boasting more than 1,000 employees. In addition to the massive facilities in Winamac, the privately held company has locations in Mesa, Arizona, Sweden and Brazil. It serves three units of business: the consumer market, commercial sector and international sales, which comprise its fastest growth.

Its best-selling products are wheelchair lifts, and its newest product will be featured this year in a minivan platform, labeled as a mobility crossover vehicle, or MXV.

With more than 10,000 spinal cord injuries each year, there is a steady need in the market. Factor in megatrends such a graying America, longer lives and high-tech medical developments, and this is one manufacturing company that is set to be a leader in this region for years to come.

Schafer in high gear

“2014 was a good year for us,” says David Alley, sales and marketing manager for Schafer Industries, based in South Bend.

The firm's primary market is gears and axle assemblies for golf and utility vehicles. With other locations in Fort Wayne, Ohio and Illinois, company officials are excited over the rising level of quotation requests, with all five plants responding to new customer inquiries.

“Schafer is constantly reinvesting into the newest technology gear manufacturing equipment,” Alley says.

Last year alone, the company installed its ninth gear grinder, two new gear shavers, four new lathes and two new ID/OD grinders. Schafer also produces axles, transmissions and brakes for ATVs, high speed side-by-sides and utility vehicles.

What began as Schafer Gear Works in 1934 has meshed into an industry giant after its current management team bought the company in 1988. At that time, the company had gross sales of $3 million. Today, annual revenue tops $80 million with more than 300 employees.

The South Bend flagship plant, a 108,000-square-foot facility in Blackthorn Industrial Park, produces medium-volume gearing for a very wide variety of markets. The Rockford plant produces large low-volume gears for rail, mining, oil/gas and industrial markets. Fort Wayne produces small high-precision gears and shafts for aeronautical and medical equipment. Axle assemblies are made in the Ohio facility.

“We expect 2015 to be very similar to 2014, and 2016 to be an exciting year full of new product launches,” Alley says.

Forging ahead in the industry

“2014 was an extremely exciting year for our company,” says Greg J. Heim, chief financial officer for Modern Drop Forge Co. in Merrillville. “We celebrated our 100-year anniversary, made significant strides in moving our largest operation to our new Merrillville facility, and saw a record level of activity across the company.”

Modern Forge initially began in 1914, as Modern Die & Tool Co., a part-time business for Melvin and Sadie Farmer in Blue Island, Illinois. The enterprising couple soon bought a forging hammer, a die shop and a small office. Within two years, the fledging business was already becoming profitable. By 1919, they acquired more land, more hammers and a new name, Modern Die and Drop Forge Co.

The business continued to expand until the Great Depression, when it survived by producing packing rings for locomotive axles and horseshoes for police mounts and other city horses. By 1936, a new six-hammer shop was erected and a new shortened name hung on the shingle: Modern Drop Forge Co.

To this day, the firm still goes by this name but it has forged ahead in a competitive industry through specialized products, modern equipment and old-fashioned work ethic. It also serves several industries, including marine, motorcycle, agriculture, railroad, aircraft and automotive.

The company diversified its operations, added new plants in other states, and employs more than 500 workers at multiple machine centers for finished products and assemblies. A century after its birth, Modern Forge is operated by the family's third generation through Greg Heim and his brother, Rick. They continue to put the word “modern” to good use with the industry's latest equipment and expansion plans. This includes its much-heralded relocation from Blue Island to Merrillville, which began in 2011. Northwest Indiana officials did everything but roll out a red carpet to welcome the firm to this region.

“In 2015, we plan to complete our Merrillville facility by mid-year, and continue to invest in our other locations,” Heim says. “Overall we are anticipating continued growth in our core markets, and potentially a rebound in the segments of the agriculture and mining markets we participate in.”

No plans of dissolving

“2014 has been yet another very successful year for MonoSol,” says Christian H. Herrmanns, the firm's vice president of marketing and sales. “Overall business growth was in the double-digits, driven by the expansion of single-unit dose format laundry and automatic dish-wash products in the United States and Europe.”

The Merrillville-based manufacturing giant, in business since 1953, is an innovator in specialty water-soluble polymer-based films–more commonly known by consumers as laundry detergent pods. MonoSol LLC, however, offers a wide range of other water-soluble, unit-dose applications for consumer, agricultural chemicals and industrial products, as well as additional films, solutions and compounds.

“The North American laundry unit dose market was a disproportional growth driver in 2014,” says Herrmanns, whose company exports its many products around the world.

Last year, the company watched the introduction of two new single-unit dose laundry detergent products in the Japanese market. It almost immediately captured nearly 10 percent of the market share in that country. Further market introductions in Asia are expected this year and beyond.

“This growth is expected to continue in 2015 at a similar magnitude, but with further geographical expansions into the Asian market,” Herrmanns says.

Locally, MonoSol is building a $95 million facility in the AmeriPlex industrial park in Portage, expected to create more than 150 jobs and boost its capacity by 15 percent.

“We are leveraging our technology leadership in water soluble films into new application areas, such as the delivery of personal care products and food ingredients,” Herrmanns says, referring to the company's latest manufacturing platform.

Labeled as Vivos Films, these film products are transparent, odorless and tasteless, composed of a proprietary blend of food grade ingredients. They also offer robust mechanical properties enabling real-world usage for various food delivery applications.

“Vivos Films are another new and exciting platform under development for the safe delivery of water treatment chemicals for applications in markets such as the oil and gas industry,” he says.

Unlike its innumerable products, MonoSol has no plans of dissolving in the near future.