Industrial Vendor Rides Memphis' Factory Surge
March 24--That kitchen oven plant in Memphis?
Yes, Electrolux is a customer.
So is Toyota Blue Springs, Unilever Covington and KTG Memphis.
Despite the nation's slow economic recovery, Process & Power Inc. reported sales nearly doubled in six years.
The company, a vendor of Ingersoll Rand air compressor machinery, supplies the array of factories expanding and opening in and near Memphis.
Riding the industrial surge, the firm recently diversified, by acquiring Jack Tyler Engineering Co. of Memphis.
Stuart Bassett, Process & Power president, noted the industrial boom here seems to have peaked for now, though he figures there's pent-up demand.
"We saw a lot of projects and plans last year," Bassett said. "But much of it people sat on because they were nervous about the economy and the situation with the job market."
In 2013's final three months, the nation's output of goods and services rose only 2.4 percent compared to the same 2012 period, the U.S. Commerce Department said in February.
That's a large reason why only 508,000 people in Greater Memphis were employed in December, compared to 531,000 a year earlier. For the country's jobs engine to rev up, economists say, 4-percent national growth is needed.
Gross domestic product sped up in last year's third quarter, registering 4.1 percent growth, but quickly subsided. Business was curbed nationwide by bitter cold, expired jobless benefits and food stamps and the government shut down, analysts say. As unsold inventories piled up, factory orders declined in U.S. plants. Slowing economies in China, Brazil and India also tugged at U.S. sales.
Growth averaged 1.9 percent for all of 2013 after expanding 2.8 percent in 2012. Forecasts call for first-quarter GDP growth of less than 2 percent.
Despite the hard patch for the nation, Bassett's firm prospered.
A former Ingersoll Rand salesman in Indianapolis, Bassett teamed in 2006 with partners Bruce Davis in Jackson, Tenn., and Lee Majors in Little Rock to buy Process & Power, a business founded in the late 1960s by Gaskell Co., a Memphis crane-leasing firm run by brothers Milton and Bailey Ross.
Although the 2007 Wall Street crash pushed the nation into a deep recession, Process & Power' didn't falter. Its sales, $10.6 million in 2006, peaked at $20 million in 2012, Bassett said.
Over those same years, an array of foreign manufacturers opened Memphis-area plants or expanded existing factories, including Electrolux appliances, GreenTech Automotive, KTG paper, Mitsubishi transformers, Rockwool insulation, Shulz steel and Unilever ice cream
While the city has not been considered an industrial center for decades, Memphis' inexpensive land, low wages and electrical rates along with its massive logistics hub attracted plants. They helped cushion the city's economy.
Although the region lost factory jobs during the recession, industrial payrolls in Memphis and Shelby County actually rose after the financial crash, climbing to $3.5 billion in 2012 from $2.9 billion in 2009 and $2.7 billion in 2007. The gains, which include salaried manufacturing employees, made up for losses in other sectors.
Between 2007 and 2009, annual payrolls plunged by more than $1 billion in total across other major Memphis industries, including construction, retail, transportation and hospitality.
With the industrial surge, Process & Power added eight employees. The firm employs 52 people and will keep the five from Jack Tyler Engineering, which will form a separate division headed by engineer Jack Tyler Jr.
Although orders in 2014 appear less robust than 2012, Bassett said no layoffs are in sight.
"We're well above where we were in 2006 as far as sales go," Bassett said.
The company is trying to land a $2 million order and although it will probably fall shy of the $20 million sales mark for the year, it won't be hugely under that number.
"I think the opportunity to have more is here," Bassett said.
Top Five Industries
Five sectors account for almost 60 percent of the $36.3 billion in annual compensation paid by employers in Greater Memphis.
Sector Total Compensation
Government $6.1 billion
Transportation $4.5 billion
Health Care $4.2 billion
Manufacturing $4.1 billion
Wholesale $2.6 billion
Source: U.S. Bureau of Economic Analysis, 2012 report
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