Bleeding eases as manufacturing undergoes shakeout.

In the beleaguered local manufacturing sector, maintaining the status quo is about all most observers can ask for, and if one keeps such modest goals in mind, 2006 will be a reasonably upbeat year for the manufacturing industry. In recent years, the forces of globalization have battered the job market for manufacturing jobs, as numerous local firms have outsourced production jobs to Asia and Latin America, not to mention other states that offer tax breaks or lower business costs. But as the New Year begins, the bleeding seems to have subsisted and manufacturers that are staying on top of the industry trends are poised to have a solid year.

"Overall business conditions are good, but again this only applies to those companies that are a little more advanced than your traditional morn and pop types of companies." David Goodreau, the chairman of the Small Manufacturers Association said. "The companies that stay on top of technology and have more financial resources are tending to be the ones that are grabbing the biggest share of the opportunities available fight and they're also better positioned to take advantage of what's going on within the global environment. The more agile a company is, the more contracts they are likely to win."

Additionally, Goodreau points out that the effects of workers comp reform will continue to kick in, in the coming year, giving manufacturers a much needed break from the increases that have plagued the industry in recent years.

According to Daniel Blake, the director of California State University, Northridge's, San Fernando Valley Economic Research Center, the two-pronged factor of the reduced workers' comp costs, coupled with the renewed vigor of the local aerospace industry will lead to fewer job losses in 2006.

"From a general perspective, things are down for the aerospace industry, in that we're still looking for it to lose about 600 to 700 jobs in the next year," Blake said. "But that's much lower than it has been in the past in the past few years where there were 2,500 to 3,000 job losses yearly. In a sense, it's good news."

Another trend to watch during the course of the year is consolidation within the sector. As competition within the industry becomes increasingly difficult, smaller firms have been getting bought out or are closing up shop.

"Many small to medium-sized companies have not adapted to techniques that would help them compete. Subsequently, those companies continue to go out of business or get bought up," Goodreau said. "Fewer companies are doing more jobs. However, there remains a lot of opportunities for the few companies that are striving to stay on top. We're in the midst of a long term shakeup and there's no doubt about it that the playing field is changing."