Oregon’s small manufacturers grow under the radar


1013 Manufacturing 02Away from the glitter and the glamour, Oregon’s small manufacturers grow.

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STORY BY CHRISTINA COOKE

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On a recent morning, Portland Bolt employees produced steel fasteners for the Sellwood Bridge in Portland, a light-rail system in Southern California and the new World Trade Center in New York. 
// Photos by Adam Wickham

Steel bolts produced at the Portland Bolt & Manufacturing Co. shore up numerous landmarks in the Rose City — the Convention Center, the U.S. Bank Tower and the canopy at the Timbers’ soccer stadium included. In fact, bolts produced at the company’s Northwest Portland factory do serious work all over the world, anchoring everything from roller coasters at Disneyland to a power plant in Egypt and a copper mine in Peru.

Although Portland Bolt has been in business for 101 years — and turned out a whopping 5.75 million pounds of bolts for projects in 50 states and 31 countries last year — it’s not a company most people have heard of.

“We’re an under-the-radar type of business,” says president and CEO Jonathan Todd, who has been in charge since 2005. “Most of the time people don’t think about our product, because it’s underground or in the concrete or covered up by wood.”

In a state known mostly for its large high-tech and apparel manufacturers, the smaller, grittier manufacturers often get overlooked. After all, it’s far sexier to talk about the company developing mobile technologies or sponsoring Olympic athletes than the one manufacturing PVC pipe for under your sink.

Yet the manufacturers working in metal, wood, plastic and other basic materials drive a significant portion of the Oregon economy. In addition to providing thousands of people with stable employment, they produce essential components for larger industries. Behind the scenes, they make the scuff boards, the brake pins, the conveyer belts, the power-line transmission anchors — and the countless other nonglamorous pieces — that keep the construction, transportation, food-processing and power-production fields running smoothly.

“Small manufacturers are a fundamental part of the economic makeup of the state,” says Jay Clemens, president and CEO of Associated Oregon Industries, a private nonprofit that advocates for Oregon businesses. “They’re all part of a highly integrated industrial base, and collectively, they have a huge impact on Oregon.”

Though manufacturing has declined significantly across the country over the past few decades, the Portland metro area has managed to maintain a surprisingly strong manufacturing base. As of 2012, manufacturing workers comprised 11% of the metro area’s workforce, compared with 8.5% in other major metro areas, according to a study compiled by ECONorthwest for the Value of Jobs Coalition. Of the 100 largest metro areas in the country, in fact, Portland’s manufacturing sector ranks 17th in size.

In addition, according to the Oregon Employment Department, a vast majority of the state’s manufacturing firms — 87% — are small, employing fewer than 50 people.

Chris Scherer, president of the Oregon Manufacturing Extension Partnership (OMEP), a nonprofit that works with businesses to improve their ability to compete in the global economy, says small manufacturers in core industries make up the bulk of his clientele.

“The overall intelligence level of the companies that survived the recession is way higher than it was,” he says. “Folks are looking over the horizon and are far more interested in things that will result in growth: new business ideas, expanding products and taking advantage of the new technologies available.”

We need to recognize the small firms, Clemens says, because their well-being affects the state’s ability to sell outside its borders and generate wealth. “The more their role in the economy is recognized,” he says, “the smarter we all get in public life about how we legislate and how we make an environment that allows Oregon’s small manufacturing base to be competitive in the larger economy.”

With this in mind, we ventured into oft-overlooked industrial districts across the state to talk with the people producing the nuts and bolts we rely on but rarely see. In addition to understanding the role these manufacturers play in the Oregon economy, we wanted to know what global and local forces these small business are up against and how they’re adapting in response.


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Above: Established in a 6,000-square-foot livery stable in 1912, Portland Bolt now operates out of an 85,000-square-foot facility in Northwest Portland.
Below: Thirty-three of Portland Bolt’s 48 employees work on the factory floor.
// Photos by Adam Wickham
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Though many of Oregon’s bread-and-butter manufacturers operate in hole-in-the-wall spaces most locals don’t know about, the global marketplace pits them against large overseas companies that rely on high-volume transactions and cheap labor.

As the last company in the U.S. producing whisks for restaurant suppliers and kitchen supply stores, 14-employee Best Manufacturers in Portland competes against large distributors importing from China that offer both bulk discounts and a variety of kitchen products along with the wire whippers.

“Stores and restaurant suppliers want to buy 100 different items from the same company, not each item from a different company,” says owner John Merrifield. For Best products to even make it into stores, he says, “at the corporate level, someone has to care whether they’re buying an American-made product.”

Though globalization applies constant pressure to gritty Oregon manufacturers, the forces that work against them — namely, their often diminutive size and Oregon location — can work to their advantage too.

Specializing in the harnesses that hold the engine wires of industrial or military transportation equipment, the 40-employee AmFor Electronics in Portland often finds itself beaten out by larger companies in Mexico. Still, AmFor has been able to leverage its U.S. location to win back clients.

“Our per-piece price is higher, but companies are getting more savvy to looking at the entire process from start to finish,” says Jesse Oliver, president of sales. When they consider the possibility of smaller lots, shorter lead times and quicker fixes to quality issues, they realize the total cost of a stateside manufacturer can actually be cheaper. “The challenge is finding those companies that see the value in the total landed cost methodology,” Oliver says.

Don Riddle of Applied Plastics Machining in Portland also builds his business on advantages farther-flung companies have a hard time achieving. In his 12-person machine shop on a recent afternoon, one employee attached wheels to the base of a clear plastic jeweler’s stool, a second screen-printed a logo onto a gas station snack-food holder, and a third flame-polished the edges of a Plexiglas cake riser that will eventually display Jockey underwear.

Riddle often works 60 to 70 hours a week and, if necessary, tears over to the UPS distribution center at midnight to ensure his clients prompt deliveries. “We’re too flexible for the big guys,” says Riddle. “If you need something at 3 o’clock this afternoon, I can do that. No manufacturer in China can do that.”

Pacific Overhead Door (PACDOOR), just around the corner from Applied Plastics, adjusted its business model to similarly take advantage of its edge. Years ago, the company sold $200 mass-produced garage doors, but realizing that large national corporations were better equipped to satisfy mainstream demand, it began offering $2,000-plus carriage-style doors specifically tailored to customers’ needs.

“We are constantly under assault by outside competition all over the country,” owner Steve Harris says. “They sometimes can sell commodity doors at a cheaper price, but they can’t sell custom doors and provide custom services nearly as competitively as we can sitting in our Portland home base, selling to people in the Portland metropolitan region.”

While outsourcing has long been a no-brainer for companies looking to increase profit margins, Scherer says, that is changing. ”The gap in what the true costs are of producing in the U.S. versus offshore is narrowing. For a while it was such a wide gap: Something that cost a buck here was three cents there.” But as American productivity stays high and Chinese wages increase, “it’s no longer an automatic decision,” he says. “This is affecting even the littlest guys.”


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Above: Portland Bolt produces bolts ranging from 40 inches to 40 feet long.
Below: Applied Plastics Machining, a 12-person company, produces all things plastic — and from the scraps, makes the scuff boards that line the interiors of tractor trailers and railcars. This device is a vacuum hose for the recycling system.
// Photos by Adam Wickham 
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At the local level, basic manufacturers face an entirely separate set of challenges. Portland Bolt was located in the gritty neighborhood now known as the Pearl District for decades before condos and loft apartments began to appear, and neighbors began complaining about the noise and the forklifts crossing the road. The manufacturer moved deep within the Northwest industrial district in 1992 but has started witnessing the creep again.

“There’s plenty of industry right here, but it’s also starting to turn,” Todd says. “There are a lot of tile companies, a lot of businesses bringing in retail aspects. You can almost fast-forward another 20 years and we might have to move out.”

Tom Leaptrott of Columbia Forge & Machine Works, which employs about 32 people in a riverside factory under the St. Johns Bridge, sees a constant battle between manufacturing and residential needs. “It’s getting to be more of a problem as more people move back into the St. Johns area and more residential housing goes up,” he says, indicating the apartments under construction across the street.

In addition to land-use conflicts, many small manufacturers say they don’t find Oregon a politically welcoming place to do business. “The tax rate and political structure in Oregon are brutal,” says Jeff Sherman, president of Ridgeline Pipe Manufacturing, a PVC pipe maker in Eugene, citing particularly high income taxes. “Our political environment discourages me greatly as a business guy.”

On a local level in Portland, too, many business owners say they feel the city looks to earn revenue off businesses, charging them exorbitant prices for utilities like water, for example, rather than supporting them.

“The city of Portland is a tough business climate: everything from permitting to regulation,” says Leaptrott of Columbia Forge. “I have a business in St. Helens too, and that city was much easier to work with as far as permitting and incentives.”


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Angelina Alcoke flame-polishes plastic boxes in the 30,000-square-foot Applied Plastics facility.
// Photo by Adam Wickham

Following in the footsteps of his grandfather, who worked at a paper mill his entire life, Steve Beauchamp has operated the heading machine at Portland Bolt for 34 years. Wearing a T-shirt with the sleeves cut off one recent morning, the muscular 55-year-old transferred steel rods with red-hot tips one by one into a giant gray forge. The machine clamped down and, with a deep thumping sound, punched out a hex head.

Beauchamp realizes spending multiple decades with the same company is almost unheard of these days, but he likes the stability. “This is a really solid company that grows,” Beauchamp says. “I feel appreciated here, that my experience is valued.”

Like many small-business owners, Bolt’s Todd emphasizes the family-like atmosphere of his company. “I come out here all the time,” he says, walking across the floor as members of the day shift thread and galvanize bolts. “I know all their names. I’m invested in them, and they’re invested in us.”

In general, manufacturing jobs treat their holders well, according to the Value of Jobs Coalition report. They offer wages and salaries 8% higher and benefits 59% higher than their nonmanufacturing counterparts. Plus, nonwhite manufacturing workers earn 49% more than nonwhite workers in other sectors.

In addition to covering 90% of health insurance premiums and providing seven paid holidays and two weeks of paid vacation per year to start, Applied Plastics pays for a life coach to consult one-on-one with its employees every month. “With a small manufacturer, the company has personality,” Riddle says. “I’m not sure you’re going to get that in a large company.”

Though the long-term employee base of Oregon manufacturers is fairly stable, many have trouble recruiting new blood because the education system encourages students to attend college rather than enter the workforce or enter trade school and young people tend to job hop before settling down. Plus, the practical trades have the “cool” factor working against them. “Most people don’t raise their kids to go into manufacturing,” Scherer says, explaining that many think of production jobs as dirty and low paying. “We’d like to see that perception change,” he says.

Nevertheless, as the overall economy rebounds from the recession and an increasing number of companies reshore their production, the small manufacturers left standing are stabilizing and, in many cases, growing, Scherer says.

Columbia Forge & Machine Works, which produces everything from battleship door handles to pole-line transmission hardware for the Bonneville Power Administration, is in major expansion mode. Because so many other West Coast forging operations have closed down and the Portland manufacturer is successfully moving into new markets, it has seen revenue growth of about 15% each of the last four years, Leaptrott says. Scherer predicts the next decade will be a good one for U.S. manufacturers, especially those in Oregon, because the productivity of the Oregon workforce is higher than most.

To take advantage of the reviving economic climate, basic factory businesses across the state are looking for ways to adapt both what they produce and how they produce it. Many, including Best and AmFor Electronics, are streamlining their operations by incorporating lean manufacturing techniques, often with the guidance of OMEP. Others are adjusting their offerings to better correspond with demand. Layton Manufacturing in Salem, for example, has transitioned from making asphalt-paving equipment to mobile-home-moving equipment and food-processing equipment for companies like Bob’s Red Mill and Frito-Lay.

“When I saw the market was hard to sustain, I started looking for other products that could flow through the plant,” says president John Layton, who made the latest specialty switch in the early 2000s. So far the adjustment has paid off, he says. “We bottomed out in 2008 with the recession but have been enjoying 20% growth every year since then.”

AmFor Electronics, too, is adjusting its offerings to correspond with current economic circumstances. To make use of the capacity left over from a onetime, two-year contract it fulfilled for Advance Auto Parts in 2011, the company is trying to gain traction as a contractor that manufactures other people’s ideas.

“We have excess capacity space-wise and a pretty flexible workforce,” Oliver says.

Even though many of Oregon’s small manufacturers are extremely dynamic as they shake off the downturn and figure out how to grow amid the ever-changing forces around them, they go unnoticed by the mainstream. But it doesn’t bother them too much.

“I know we bring value,” says Todd at Portland Bolt. “I see it in the marketplace.”