Despite export boom, manufacturers cautious

updated 6:03 p.m. ET April 20, 2008

WASHINGTON - The massive cranes slicing the skies over Brazil, Dubai and China can't come off the assembly lines fast enough at Manitowoc Co.'s manufacturing plants here and overseas.

But an insatiable global appetite doesn't mean the Wisconsin-based heavy equipment maker is boosting its payrolls.

The company last year added about 1,000 workers to bring its total to 11,000 but has no plans to repeat that hiring binge as recessionary effects play out here and abroad, said Eric Etchart, president and general manager of Manitowoc's crane segment. At best, Manitowoc may make some temporary employees permanent this year to help deplete a $2.88 billion crane backlog, up about 81 percent from 2006.

Manitowoc's growing export strength is matched by its increasing caution at home — a position mimicked by U.S. manufacturers steeling themselves for recessionary reality.

The weak dollar, combined with rapid industrial growth in Asia, the Middle East and Eastern Europe, has boosted exports of construction and agricultural equipment, and raw materials such as aluminum and steel. Heavy equipment maker Caterpillar Inc. said Friday demand for its global mining and energy products pushed first-quarter earnings up 13 percent — easily surpassing Wall Street estimates.

These foreign sales are offsetting weaker demand from U.S. homebuilders and automakers, and cushioning the broader economy straining from the credit crunch, soaring energy prices and declines in consumer spending.

Many economists expect the weak dollar-strong export link to remain for another year as the Federal Reserve tries to push down interest rates, which tends to weaken the greenback. Manufacturing jobs, however, will not be created on the back of that export strength.

"You're not going to see the job growth. Manufacturing employment, in a good year, is flat," said Thomas Runiewicz, an industrial economist at Global Insight.

Businesses expand their payrolls based on expectations. Other nations' economies are not shrinking, but growth projections are slowing in China, Latin America and elsewhere, Runiewicz said. He expects no more than a 0.6 percent gain in U.S. manufacturing output this year, and that estimate would be between flat and 0.3 percent without the strength of exports.

The current job situation also is alarming. Manufacturing employment fell by 48,000 in March and by 310,000 over the past 12 months, according to Labor Department data. Manufacturers have shed jobs annually since 1997, although Caterpillar again bucked the trend. Chief Financial Officer Dave Burritt said the company's payrolls have grown by about 30,000, or roughly 42 percent, in the last five years, and Caterpillar recently added 3,000 jobs alone at its Peoria, Ill., headquarters.

Still, in the current environment, the "countervailing forces" of the dollar's continued strength against China's yuan and the effects of the domestic housing slump are preventing the U.S. from getting the full export and job growth of a cheaper dollar against the euro, said Peter Morici, a business professor at the University of Maryland.

MORE FROM STOCKS & ECONOMY

Stocks & economy Section Front

Administration plans for end of ‘too big to fail’ Jobless consumers will hold back recovery Economists point to rising debt as next crisis Jobless rate rises to 26-year high Stocks end shortened week with big fall Factory orders rise more than expected in May Pending home sales climb in May Manufacturing report boosts economic hope Mortgage applications decline Consumer confidence slipped in June Stocks & economy Section Front   Add Stocks & economy headlines to your news reader: