In its heyday of the 1990s, Rockville Steel & Manufacturing Co. had 30 employees and more than a year’s worth of backlogged projects.
Today, the company, which works out of the Montgomery Airpark Business Center in Gaithersburg, has 20 employees and a backlog of about two months.
“The last couple of years have been difficult,” said Tom Steffes, president of the family-owned business, which was founded in 1978 by his father, John Steffes.
The company makes steel rooftop supporters, stairs, awnings, balcony rails and other metallic products for clients that have included the White House, National Institutes of Health in Bethesda, Jefferson Memorial, and Bureau of Engraving and Printing. It has survived by diversifying its product base and finding new markets such as China and South America.
“We’re exporting more out of the country,” Steffes said.
Job figures alone would cast “Made in Maryland” as a declining phenomenon. The number of manufacturing jobs in the state fell 4.4 percent in the past year to 107,600 in October, the lowest level in at least 22 years, according to federal figures.
In the past decade, Maryland has lost some 44,000 manufacturing jobs, or 29 percent, while during that same time, private jobs have grown by 4 percent. A similar trend has occurred nationally, with increased technology and global competition driving down employment in the sector.
Yet at the same time, manufacturing output is rising. Maryland’s gross domestic product in manufacturing almost doubled from 1992 to 2011 to $19.5 billion in 2011 dollars, according to federal figures.
Output may be up, but a big problem is increased competition from companies in other states and even other countries that keep prices for manufactured goods low, said Gene Burner, president of the Manufacturers’ Alliance of Maryland, a coalition of state manufacturing companies.
“You not only have to compete with companies in your region, such as those from Delaware, New Jersey and Pennsylvania, but those across the country and in Canada, Mexico and in other countries,” Burner said. “Manufacturers are getting as efficient as they can, but you have to have a demand for your products.”
Maryland’s manufacturing prowess declines
In the 1920s, as Baltimore became one of the largest clothing manufacturing centers in the country, Maryland ranked 16th nationally in the value of industrial production, according to a report by Baltimore economic and policy consulting firm Sage Policy Group for Burner’s trade group.
But technological changes, global competition, a greater priority on high-tech jobs and other trends led to the percentage of Maryland jobs in manufacturing dropping from 35 percent in 1960 to 9 percent in 1990. That percentage has continued to drop, hitting 4 percent this year, well below the national average of 9 percent. A recent blow was the Sparrows Point steel mill laying off almost all of its 2,000 employees this summer.
Maryland now ranks among the bottom 10 states in both percentage of manufacturing jobs and manufacturing’s share of a state’s gross domestic product, according to the National Association of Manufacturing.
Such statistics can be used to call for Maryland to “de-emphasize manufacturing in its economic development efforts and focus instead on a combination of high, medium, and low wage service sector industries such as information technology, medical research/biotech, financial services and tourism,” the Sage/Alliance report states. “But this type of juxtaposition is completely inappropriate. Though it is true that Maryland is unlikely to be globally competitive in low-tech areas such as apparel and textiles, Marylanders can help the U.S. compete in the area of high-technology manufacturing.”
High-tech manufacturing, which is less labor-intensive, has replaced many assembly lines. That is seen in companies such as London liquor producer Diageo, which recently unveiled a renovated bottling facility in Relay near Baltimore.
Diageo invested about $50 million in the plant, which employs 140, replacing outdated equipment with high-speed bottling lines and other upgrades. Workers there blend and process Jose Cuervo tequila, Captain Morgan’s rum and Seagram’s whiskey, producing some 11 million cases annually. The plant plans to add Smirnoff vodka in the spring.
Executives expect the Maryland plant to be among the most efficient of those run by Diageo, which has about 25,000 employees worldwide. "We are creating best-in-class operations that are more efficient, cost effective and environmentally sustainable,” David Cutter, president of Diageo Americas Supply, said in a statement. “This facility is a ... prime example of Diageo's continued commitment to local manufacturing."
The site has historic significance, as Maryland Distllery opened the state’s first legal distillery there in 1933 after Prohibition ended. Diageo took over the plant about a decade ago from another owner.
The workers there function more as computer operators than assembly-line employees, Burner said.
“It’s a major investment in that facility,” he said. “Diageo not only made it more efficient, but safer.”
In search of ‘high-tech’ manufacturing
Gaithersburg biotech MedImmune is among the high-tech manufacturers that have expanded their presence in Maryland. Military giants Lockheed Martin, BAE Systems and Northrop Grumman also have significant high-tech aerospace manufacturing operations in the state.
Last year, MedImmune opened a 500,000-square-foot plant in Frederick, where workers manufacture Synagis, a drug designed to prevent respiratory infections in children. The $600 million facility took five years to build.
Employment there was about 300 when the facility opened, and that is now up to some 440, said Michael O'Brien, a company spokesman.
“I think we are at the right level for a while,” O’Brien said. “As more products come through the pipeline, there is more room to expand there.”
MedImmune started manufacturing Synagis in Frederick a little more than a decade ago. The company manufactures its FluMist vaccine in Mountain View, Calif.; it is then shipped to the U.K. for bulk manufacturing and then to Philadelphia for blending and packaging.
A problem with relying on biotechs to produce manufacturing jobs is the long development time, Burner said.
“They are great, high-paying jobs,” he said. “But it can take 10 years to get a product to market.”
Manufacturing jobs generally pay more than the average, although it depends on the industry and whether it is an assembly-line position or in management. Manufacturing jobs in Maryland in late 2010 paid an average of $70,460, higher than the private-sector average of $54,340, according to state labor figures.
But those included management, as assembly-line production workers made significantly less at $35,860, according to federal labor figures.
The U.S. is actually still the world’s biggest manufacturer, according to the National Association of Manufacturers, which cites World Bank figures. The U.S. produces 18.2 percent of global manufactured products, with China second at 17.6 percent, the group says.
The state has boosted efforts to assist manufacturers. For example, the Maryland Department of Business and Economic Development recently approved a $250,000 conditional loan and assisted with a state-backed guarantee on a $3.6 million bank loan to allow Protenergy Natural Foods to expand its U.S. headquarters in Cambridge.
The natural food and beverage processing company is purchasing a 200,000-square-foot building it leases and plans to add up to 100 new jobs by April to its 53-member workforce there.
In the past year, Protenergy of Richmond Hill, Ontario, has invested significantly in the Cambridge plant, which was the first U.S. facility that it opened about a year ago, CFO John Black said. The business added two more production lines, which “significantly increase our capabilities and capacity to meet growing customer demand for our products,” he said.
As margins have shrunk at Rockville Steel, employees are spending more time in the field to find new clients, Steffes said. “We work with a lot of colleges and universities,” he said.
Exporting is another way to boost sales, and Rockville Steel is not the only Maryland manufacturer exporting more to other countries.
Exports from Maryland companies to other nations have grown the last few years, by 10 percent in the first nine months this year from the same period in 2011, to $8.7 billion, according to federal trade figures. Manufacturing represents roughly 89 percent of total Maryland exports, according to the national manufacturers group.
As for what it will take to significantly grow manufacturing jobs, the Sage/Alliance report called for Maryland to have “a stable and competitive business climate, especially in relation to neighboring states,” better global marketing of products made in Maryland and more funds for the state research and development tax credit.
Add to that a general improvement of the economy, Burner said.
“That will take time,” he said.