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14 2014 Economic Forecast www.wbjournal.com Worcester Business Journal Here are five things to watch in manufacturing and technology in 2014: Fewer Workers, Higher Yield Despite adding 6,300 jobs overall dur- ing the past year, the Central Massachusetts region lost 600 manufac- turing positions between October 2012 and October 2013, according to state workforce data. The sector —which includes the makers of comput- ers and electronic products — now represents 13.8 percent of private employment in Central Massachusetts, down from 22.3 percent two decades ago. "Manufacturing is not going to be the job generator it was in the past," said Jack Healy, director of operations at the Massachusetts Manufacturing Extension Partnership (MassMEP) in Worcester. "All of a sudden, automation has become more attractive than hiring people." The rise of cheap, automat- ed technology, though, has allowed the Bay State to grow industrial production by near- ly 6 percent over the past year, better than Indonesia's indus- trial growth rate of 5.6 percent and only slightly behind China's growth rate of 7.3 percent. Productivity gains in the industry have out- paced the rest of the Massachusetts economy, Healy said, which has boosted total output by just under 4 percent in 2013. In dollar terms, the commonwealth's industrial pro- duction has grown 18 percent over the past four years from roughly $31.5 billion in 2009 to $41 billion today. Despite halving the size of their workforces since the late 1990s, Massachusetts manufacturers make more money than they did 15 years ago, said Brian Gilmore, executive vice president of the Associated Industries of Massachusetts (AIM). Europe: Open For Business Again Massachusetts makes everything from electrical equipment to computers to medical instruments. The only thing all Bay State's products have in com- mon? They're high-quality items with large per-unit profit margins. "We've moved away from low value-added products to high value-added products," Healy said. Massachusetts' manufacturing exports go dispropor- tionately to traditional European markets like the United Kingdom and Germany, Gilmore said. A weak exchange rate and the automobile slow- down led to fewer purchases of capital equipment across the Atlantic during the late 2000s, he said, but the tide has changed over the past year as the European economy has strengthened. "We don't sell on price in the international mar- ketplace," Gilmore said. "People want to buy our technology." Production Coming Back Here's something no one thought pos- sible a few years ago: The Bay State is going head to head against China and coming out on top. Why's that? Manufacturers are being asked more regularly to sell directly to consumers, Healy said, meaning they're responsible for writing their own marketing copy and servicing the products. That's giving local companies a big leg up. "It's very hard for a Chinese manufacturer to figure out how to connect with an American consumer," Healy said. American firms are also more responsive when retailers decide they want to quickly ramp up produc- tion of a hot product, Healy said. Smaller-sized compa- nies allow for more flexibility, Gilmore said — the average Bay State manufacturing employee works at a firm with less than 20 employees — plus shipping from the Far East takes at least an additional six weeks. There's just one thing that could derail re-shoring, 5 Things To WaTch Manufacturers Getting More From Less, But Can They Get Younger? By michael novinson Worcester Business Journal Staff Writer M anufacturers in Central Massachusetts have learned to do more with less, attracting new business to the region while struggling to prepare future generations of work- ers. The sector is rife with apparent contradictions: jobs are down, but productivity is up. Its history in Massachusetts dates back centuries, though today it relies on more specialized, advanced technol- ogy than perhaps any other sector. Yet companies forge ahead with aging workforces, selling to mature markets and taking jobs back from places like China. Meanwhile, the technology sector is enjoying a rosier outlook, due in part to the proliferation of data and rise of cloud computing. Manufacturing & Technology 2 3 Jack Healy of MassMEP: "Automation has become more attractive than hiring people." Steady Downward Trend The manufacturing sector has steadily lost jobs in Central Massachusetts over the last 20 years. Manufacturing Jobs 76,300 81.600 65,100 63,400 54,600 Private-Sector Jobs 341,700 380,900 388,900 397,800 396,700 % of Private-Sector Jobs in Manufacturing 22.3% 21.4% 16.7% 15.9% 13.8% Note: Data is seasonally unadjusted from each October from the Worcester, Framingham, and Leominster-Fitchburg- Gardner areas, as defined by the U.S. Bureau of Labor Statistics. Source: Mass. Executive Office of Labor and Workforce Development 1 >> Continued On Page 37 2013 2008 2003 1998 1993