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May 24, 2010

Looking For Recovery | In the wake of job losses from the Great Recession, we identify which industries are primed for a comeback...and which might be knocked out.

In recent months, the tide of awful employment news has been receding. Every region of the state added more jobs than it lost in March, according to state figures, and unemployment rates dropped all over too.

But the recession leaves behind a changed jobs landscape. Data from the Executive Office of Labor and Workforce Development show that some areas that lost the most positions over the past few years were the ones that could least afford to do so.

Heightened Contrast

In March 2006, with the economy generally booming, the Fitchburg-Gardner-Leominster area had one of the highest unemployment rates in the state, 6.5 percent.

Four years later, unemployment had risen to 12 percent, as the area lost 3,900 jobs. That represents 7.8 percent of the jobs it started with in 2006.

The Worcester area, with a much larger population, saw its unemployment rise from a somewhat lower starting point of 5.2 percent to a somewhat less startling 9.8 percent. It lost 12,600 jobs, or 5.2 percent.

Meanwhile, the Framingham area started out as an especially bright spot in the economic landscape in 2006, with an employment rate of just 4.1 percent.

By 2010 unemployment was up, but only to 7.3 percent, and the area had lost just 3,500 jobs, 2.3 percent of what it started with.

What explains the different outcomes of the recession for different parts of Central Massachusetts? One big factor, according to several people who track the region’s economy, is the accelerated decline of traditional manufacturing.

The state lost 2.7 percent of its total jobs over the past four years, but within the manufacturing industry, the loss was 16.7 percent. North Central was hit much harder than the rest of the state, with employment in manufacturing dropping by a breathtaking 25.8 percent.

David McKeehan, president of the North Central Massachusetts Chamber of Commerce, said part of the manufacturing job losses were probably due to the same technological improvements that have been going on for decades.

While production and output in the area’s manufacturing industry have seen little change, he said, productivity gains have reduced employment significantly.

McKeehan said another factor could be the outsourcing of some factory jobs.

For example, he said, many manufacturers are contracting out work like cleaning and electrical repairs, which changes the way the state classifies the work.

“That, unfortunately, has created the impression that manufacturing is not as prevalent as it is,” he said.

As for the strikingly sharp decline in North Central’s manufacturing unemployment, Alan Clayton-Matthews, a Northeastern University professor who studies Bay State employment statistics, said one reason might be the concentration of contract manufacturers in the area.

As the manufacturing economy tanked in 2008, he said, large companies probably cut back drastically on the contract jobs they commissioned.

Making Less

James LeBlanc, vice president of Fosta-Tek Optics in Leominster, said another factor is the importance of the auto parts industry for the area’s plastics cluster.

He said his business has done fairly well through the recession, but only because it’s focused mostly on the military market.

“If it weren’t for that, we’d be like everybody else,” he said.

But Al Cotton, spokesman for Clinton plastics manufacturer Nypro Inc., said Nypro and other companies that focus on medical device manufacturing have done quite well in recent years. He said the notion that the North Central plastics cluster has been hit especially hard comes as a surprise.

“We’re definitely not part of that statistic,” Cotton said.

Meanwhile, the flip side of North Central’s particularly rough recession is MetroWest’s relatively less intense one. Maureen Dunne, a researcher with the MetroWest Economic Research Center at Framingham State College, said employment in the area hit its all-time peak in 2008, and the area’s recession really only started in the second quarter of 2009.

Dunne said MetroWest benefited from having few financial services firms or traditional manufacturing plants.

Some of its high-tech products, such as luxury amenities for cars, were hit by the general downturn in production, but area specialties like professional services, research and development and corporate headquarters were hurt less by the initial stages of the recession, she said.

Those businesses did suffer from the national credit crunch, but the results weren’t as intense as they were elsewhere.

“That said, we will have lost thousands of jobs in the first half of 2009,” Dunne said.

Regional Differences

These days, though, data suggests the Framingham area is already recovering jobs quicker than other parts of Central Massachusetts.

According to the state’s seasonally adjusted employment figures, the area has gained jobs every month since December. During the same period, the Fitchburg-Leominster-Gardner numbers bounced up and down, ending up lower in March than in December, and the Worcester numbers continued to slide steadily.

Clayton-Matthews said that isn’t a big surprise.

He said economic expansions “usually don’t start in the manufacturing centers of the state, but they do work their way out as overall economic activity grows statewide.”

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