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Caterpillar hiring helps grow manufacturing payrolls
Bloomberg News
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Published: 2/5/2010 3:41 PM

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Caterpillar Inc. and General Electric Co. are among companies hiring workers as the global economy recovers, contributing to the first increase U.S. manufacturing payrolls in three years in January.

Peoria-based Caterpillar, the world's biggest maker of bulldozers and excavators, has recalled more than 500 laid-off workers over the past two months. Fairfield, Connecticut-based General Electric is hiring U.S. workers in energy, appliances, rail and research. Locally, Caterpillar has operations in Montgomery.

A Labor Department report today showed manufacturers added hours and increased wages in addition to payrolls last month, bolstering signs production is roaring ahead this year after advancing at the fastest pace in a decade over the second half of 2009. The need to rebuild depleted stockpiles will sustain the rebound for months to come and may provide the spark that will revive overall employment, economists say.

"This is one of the things that will help kick-start things, that will help create a sustainable economic rebound in 2010," said Ken Mayland, chief economist at ClearView Economics LLC in Pepper Pike, Ohio. "Inventories are still not in any kind of balance. We are going to see a couple of quarters of significant rebuilding," he said, meaning "manufacturing will lead the economy and the labor-market rebound."

Factories unexpectedly added 11,000 workers to payrolls in January, the first increase since January 2007 and the biggest since April 2006. The median forecast of economists surveyed by Bloomberg anticipated a 20,000 decline. Autos, clothing, plastics and computer-equipment were among the industries hiring.

Longer Workweek

The workweek rose to 40 hours 48 minutes and over-time averaged 3 hours 30 minutes, reaching levels not seen since mid 2008.

"These are some encouraging signs for the labor markets," said Joe Carson, director of Economic Research at AllianceBernstein LP in New York. "Companies historically increase the workweek before they hire and you are seeing this trend."

GE Vice Chairman John Krenicki, who is also chief executive officer of the GE Energy Infrastructure unit, said government incentives across the globe are stimulating job creation and exports.

"The most important thing to create jobs is to see that the market will be there in the future," Krenicki said in an interview last week. "That's true in the U.S. and virtually every other country around the world."

Passenger Locomotives

GE is bidding to supply passenger locomotives for Amtrak, and in November announced a joint venture in China to make high- speed rail locomotives that may add 200 U.S. jobs.

In the past year, GE has announced more than 13,000 new jobs it plans to create or retain, according to a tally of press releases and announcements compiled by Bloomberg News. The company, which is shrinking its finance arm, has about 300,000 employees globally, 23,000 fewer than at the end of 2008, based on figures in press releases.

Caterpillar is continuing to hire some workers, such as engineers, on a selective basis and may continue bringing back more production workers, said spokesman Jim Dugan.

"If we continue to see an increase in demand and the need to bring more people back in to meet that demand, we will," he said. "But we're going to be cautious and prudent in our approach."

Caterpillar's global workforce decreased by 19,074 last year and now stands at 93,813, Dugan said. In addition to rehiring workers, fewer company locations are relying on four- day workweeks and rolling layoffs than they did last year, he said.

Productivity Surge

To be sure, the 5.9 million U.S. factory jobs lost over the past decade may never be recovered because productivity has surged, said Daniel Meckstroth, chief economist at the Manufacturers Alliance/MAPI, a public policy and economic research organization in Arlington, Virginia.

Manufacturing productivity rose 7.1 percent in the last three quarters of 2009, the biggest nine-month gain since records began in 1987, according to figures from the Labor Department.

"Because of the high productivity growth rate in manufacturing, you really have to have very strong increases in production," for companies to add jobs, Meckstroth said.

Manufacturing expanded in January at the fastest pace since August 2004, according to the Institute for Supply Management's factory index, released Feb. 1. The group's new orders index rose to the highest level since December 2004 and its employment gauge increased for the third straight month.

San Jose, California-based Cisco, the biggest maker of networking equipment, this week predicted accelerating sales growth and said it will boost its workforce by as much as 3,000 as customers resume spending to deal with surging data traffic.

"Almost every country is saying their momentum is better than it was before, and almost every business is saying it's more optimistic," Chief Executive Officer John Chambers said in an interview.