Manufacturing.

• Position: Industryoutlook - Panel Discussion

For our second annual manufacturing roundtable, we gathered a diverse group of industry leaders for a lively discussion of current issues, including education reform and the pros and cons of globalization.

Participants included Fred Lampropoulos, CEO of Merit Medical, which currently employs about 1,200 (an imminent expansion is expected to add 500-700 more jobs) in manufacturing interventional cardiology and radiology devices; Leigh Weintraub, COO of Merit; Rachel Sweet-Martin of 111-year-old Sweet-Martin Candy Company, which employs 110; Susan Trinkle, VP of USANA Health Sciences, a network marketing company specializing in nutritional supplements; Mark May, VP of May Foundry and Machine Co., founded in 1918; Terry Naylor, controller for Western Electrochemical, which employs about 200 in producing oxidizers for solid fuel rockets and oxidizers for high explosives; David Holbrook, GM for Packaging Corp. of America, which manufactures corrugated packing boxes; Jon White, Sr. VP of manufacturing for ICON Health & Fitness, a producer of fitness equipment employing about 5,000 (3,500 in Utah); Mark Whiting, CFO of Lifetime Products, which employs 2,200 in manufacturing basketball equipment as well as folding tables and chairs; and Jeff Alexander, president of Alexander's Digital Printing and a State representative.

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Special thanks to moderator Tom Bingham, president of the Utah Manufacturers Association, for leading our discussion.

Let me just give a brief economic overview to set the stage for some of what we will want to discuss today. This has largely been a manufacturing recession. Of the over 2.7 million workers lost nationally, 2.4 million of those have come from the manufacturing sector, and we are just now seeing some indications that the manufacturing industry may be showing some signs of recovery. What is the situation with the companies represented here today as far as the economy is concerned and your operation, and what do you anticipate in the fourth quarter 2003 and into 2004?

WHITE: We just finished the two best years in our company's history during this period of time. I think one of the reasons we haven't felt the manufacturing recession is because people, since September 11, have wanted to stay home; it's kind of that 'cocooning' theory. And our products fit well into that type of situation.

TRINKLE: We have actually experienced quite a bit of growth in the last two years, as well. With vitamins and network marketing, we offer an opportunity for additional income, I guess. So with the recession, you can see some growth in that area, quite a bit of growth.

LAMPROPOULOS: Well, we have had, again, another record year. But we are concerned about the regulatory environment in our industry, both as a publicly held company with Sarbanes-Oxley and with additional expenses that are mounted on from FASBE. And then just this last week we saw an increase by the FDA for small companies. Just a year ago they started a program where when you file the 510-K you had to pay a filing fee, and we noticed that this first increase, one year after the program began, was a 29 percent increase. Tax on innovation, between that and all the rules of the game, I'm very concerned about the environment for smaller companies.

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SWEET-MARTIN: It is getting better so far this year, but the year started out pretty rough. The hardest part for us is a lot of our business is going offshore. Manufacturing with NAFTA has moved to Mexico or Canada where the world price of sugar is 10 cents a pound less expensive than in our country. Regulatory issues and health care is not the same. So people are bringing that product into our environment at 20 to 30 cents cheaper per pound than what we can manufacture in the states. And so in the world of dollar stores and Wal-Marts, where volume is everything, but you have to have some type of profit margin in there somewhere, it is getting more and more competitive. So, not to say we haven't had a good year. The fourth quarter has definitely been the best spot on the whole radar screen. It is just making us become leaner, faster, more efficient, and it is more critical for us to go and find the niche markets and carry through with that.

MAY: I find something similar to what Rachel was saying. The foundry industry competes in a worldwide market. There has been an awful lot of business that has gone offshore as far as casting business is concerned, especially the grey iron and ductile iron. There's been a number of foundries that have closed in the country; the foundry business has been down this...