If you ever want to see how worldly the Upstate is, check out the Greenville Area Development Corp.’s Excel spreadsheet that lists more than 1,000 manufacturers here. From around the world and around the corner, they make a mind-boggling array of things, from cakes to complex compounds.
Everyone knows the area’s marquee manufacturers, so the Upstate Business Journal looked at some lesser-known companies that make things we can’t live without: food, pharmaceuticals, and advanced materials, such as the high-tech paint that coats airplanes.
The companies we talked to all reported growth, despite news reports of a manufacturing decline nationwide. Here’s a roundup of how they’re making it in the Upstate.
Local links prove resilient in the global supply chain
Although the R-word’s now appearing in headlines about U.S. manufacturing, someone evidently forgot to share the news with the Upstate, where factories hum right along, appearing ready for what’s coming — if anyone can guess what that is.
On Sept. 17, the same day that MarketWatch proclaimed “U.S. manufacturing remains in a recession due to weakness in the global economy and Trump’s trade war with China,” John Lummus, president and CEO of the Upstate SC Alliance, told the Upstate Business Journal that while manufacturers here are linked to the world’s supply chain, “In the event of a global slowdown, our area will likely see effects, though they may not be as deeply felt here as in other areas of the country.”
Numbers can be slippery — even in the same news story. For instance, MarketWatch’s report of a manufacturing “recession” also noted that U.S. production rose 0.5% in August after a 0.4% drop in July.
Likewise, the Richmond Fed’s September “Snapshot” showed manufacturing in South Carolina posting the largest monthly gains among 11 labor-market sectors, adding 1,900 jobs for a 0.7% increase.
“Many global factors are contributing to mixed economic signals,” Lummus says, also citing tariffs and China’s slowdown, as well as uncertainties over Brexit and the U.S.-Mexico-Canada Agreement.
Lummus says project announcements — one growth indicator — slowed in the first half of 2019, while Mark Farris, CEO and president of the Greenville Area Development Corp., says foreign direct investment, which normally accounts for half of GADC’s projects, fell about 20%.
“And for the first time in GADC history,” Farris adds, “we announced more office projects than manufacturing in 2018. While manufacturing still dominates the project count, I think this signals an evolution in our economy and towards more industry diversification.”
Think tech: Lummus points out that it took 25 people in 1980 to manufacture $1 million worth of goods, but only five people in 2018.
“Some see automation and robotics as a bad thing, though if Upstate companies embrace innovation, it can really strengthen their output while increasing the caliber of associated career opportunities,” he says.
Farris adds: “Manufacturing headcounts will continue to decline, especially when looking longer term. Profitable and globally competitive companies will continue with technology upgrades, making many jobs redundant while simultaneously increasing productivity.”
With the Greenville-Anderson MSA unemployment rate at 2.9% — a full percentage point lower than the nation’s in September, the Richmond Fed says — Lummus also points out the Upstate’s population from 2013 to 2018 outpaced the nation.
“Population change, number of jobs available, the rise of jobs at young firms, and the gross regional product — I’m hopeful that these factors will temper the effects of a slowdown.”
Although Farris notes that “many of the companies we work with, both new and existing, are frustrated primarily with labor availability, especially for certain technical-skill sets,” he adds, “We have been growing so fast for so long, any slowdown probably feels more dramatic, although there is a definite deceleration, especially when compared to the past eight years.”
Food manufacturers feed on Upstate’s hunger for growth
Dewey Armstrong wants to know when the sign’s going up on the massive plant that, a fewweeks before Thanksgiving, will start churning out 24 decorated cakes per minute.
“Where’s my sign!” Armstrong, the CEO of Simpsonville-based Muffin Mam, yells through playful chiding during a mid-September tour of the 100,000-square-foot facility that’s rising like one ginormous baked product on a Laurens County tract.
Amid the construction flurry, dust puffs around the 125 construction workers and heavy equipment. Armstong’s assured the sign’s going up soon, certainly before the November opening. By then, too, the 20,000-square-foot freezer will be brought down to minus-15 degrees.
Meantime, Armstrong sees plenty of signs showing continued growth for Upstate food manufacturers.
“The more people that come in, the more food that’s going to be sold,” he says, stating something of the obvious to a visitor trailing him in his excitement and trying to keep up alongside Katie Key, marketing and communications director. “I see the food business in the Upstate continuing to grow faster than the overall marketplace.”
He mentions having just read a news report about three subdivisions coming soon to the area. Earlier that day, the papers said an 848-home subdivision, by itself, would spike nearby Mauldin’s population by 8% when it opens after 2020.
All those consumers live a half-hour away from the $20 million plant that Greenville’s Azalea Capital built to grow the company, Armstrong says, adding that the equity owners that bought Muffin Mam in July 2018 are planning fivefold growth.
Muffin Mam celebrates its 30th year since Stephanie Croley opened her cafe in Greenville in 1990 — Croley died in 2014 — and now sells to what Armstrong calls the nation’s largest club-store chain and second-largest group of grocery stores.
Like the other sectors showcased here, the Upstate’s 150-plus food manufacturing companies generally don’t grab headlines. That’s fine with Armstrong, whose company makes frozen cakes, crème cakes, pound cakes, angel food cakes, and more — most under private label.
“We don’t need a fancy BMW emblem on everything we make,” he says, adding that of the 20 sites he considered, including at least one in Florida, he chose Laurens County specifically to be away from the corridor of manufacturing behemoths.
“I didn’t want to compete in that corridor for teammates,” he says of the 116 employees who will earn $13 to $15 per hour.
Labor’s what keeps Chancey Lindsey-Peake from expanding her tiny company.
Her Banana Manna operates at the other end of the spectrum among the Upstate’s mega-manufacturers, such as Keurig Green Mountain, which announced in May its $350 million expansion in Moore, a year after Ace Bakery’s $31.9 million investment in Gaffney.
Lindsey-Peake opened 15 years ago and bakes as many as 200 2-by-4-by-6-inch loaves a day: “Chocolate banana bread, blueberry banana bread, cranberry banana bread, banana banana bread, banana nut bread,” she says.
She and her husband, Dennis, bake those and other products from their small storefront bakery themselves because with labor costs, “I had to humbly let my help go,” she says.
Still, she says she sees food manufacturers adding to a homemade recipe of steady growth.
Asked whether she’s considering expanding, she says she’s considering it, but for now, she’s happy to sell her goods to three Lowes Foods locations, as well as in Port City Java downtown and at area farmers markets.
Sounding a bit like Armstrong, she says, “When the economy slacked, Banana Manna still did well because, when I’m out at an event, I let people sample, and if you can get it in their mouths and let them taste it, they will buy.”
Advanced materials make material advances in Upstate manufacturing
Carlos Rhys’s plant produces about 50,000 gallons of paint a year. This ain’t just any paint. This stuff’s big league, from the “secret sauce” on Louisville Slugger’s MLB Prime wood bat—as Baseball America calls it—to coatings for airplanes and Army tanks.
Rhys, 72, could be considered among the patriarchs of advanced manufacturers in Greenville, having moved to Greenville in 1990 and starting or leading—or both—three companies, the last of which, Axon, he sold to Milwaukee-based Hentzen Coatings Inc.
He remains a consultant at Hentzen, which is part of an ecosystem of companies that produce “engineered materials,” as the Upstate SC Alliance refers to some 880 businesses that employ more than 40,000 brainiacs—80 percent higher than the national average. In the last five years, 42 such companies announced new locations here, pouring nearly $4 billion in capital investment, the Alliance says.
“Initially, I thought, ‘What have I done?’” Rhys, a California native, recalls when he arrived here with a physics degree from Andrews University in Michigan. “And, I’ll tell you what, you couldn’t move me away from Greenville now because of the changes here. In 1990, there was nothing here.”
He’s right, the Hyatt Regency had opened eight years before and Main Street was still lined with shuttered storefronts. By then, Michelin, itself a player in advanced materials, was heralding the end of textiles’ dominance in Greenville.
Don’t try to understand what Haydale makes. The Chinese can’t figure it out; even they couldn’t crack Haydale’s proprietary processes for materials like silicon carbide microfiber, which is a “very high modulus rigid rod nanotube.” No idea what that means, but Quantrille says it’s used in ultra-high-performance cutting tools.
“We had six Chinese companies try to copy us and they all have failed,” he says of products whose strength is second only to a diamond’s.
That’s the thing about advanced materials—they’re … advanced.
“Manufacturing has moved from what I would say is low-skill, low-cost into high-skill, high-tech,” he says, “but that means you’re going to run into a labor workforce problem, finding manufacturing staff and specialists who are capable of doing the work.”
While he calls the area fantastic—his word—for this kind of manufacturing, he says “It’s getting so high-tech that people need to have some better education to even run these machines.”
Talk about automation. Haydale’s two buildings, totaling 70,000 square feet, house only 15 employees who make products so, well, incomprehensible, it’s why the sector doesn’t garner the same attention as, say, that huge German auto plant just 3.5 miles down the road.
Quantrille mentions a major defense contractor, which buys Haydale’s ability to custom cut ceramic parts using lasers that will “allow them to do a whole lot more things, but that you’ll never see in the press.
“I would call it a quiet industry, where there’s a lot of stuff going on, but it’s niche, it’s high value and, truthfully, it’s kind of confidential, where we’re doing stuff for customers and you really can’t tell people.”
Mark Johnson tells everyone about this high-tech hotbed where the Upstate SC Alliance says more than 14,000 resident inventors have registered U.S. patents since 2000.
Here’s how Johnson, Director of Clemson University’s Center for Advanced Manufacturing, describes Greenville and environs:
“This is a place where the idea of using technology to compete on an international basis with a level playing field is actually done, not just talked about.”
Health-sciences manufacturing’s good medicine for the Upstate
Kelly Shumaker says one of the buildings where she works is haunted. Not because the plant once manufactured a well-known pharmaceutical to treat diarrhea and nausea, but because the squat red-brick facility sits on a site that was once a military hospital.
“People claimed to have been in the restrooms and looked up in the mirror, and a nurse in an old-timey white uniform would be staring back, and they’d turn around and there’s nobody there,” says Shumaker, Director of (still-living) Human Resources at PAI, or Pharmaceutical Associates Inc.
PAI is also among more than 400 life-sciences manufacturers in the Upstate, according to the Upstate SC Alliance, along with CPT Medical Inc., which manufactures custom procedure trays and packs for use in hospitals and surgical settings and whose CEO, Connie Liesman is one of the only—if not the only—female head of an Upstate medical-related manufacturer.
PAI claims 70 percent of the “unit dose cups market in the U.S., Shumaker says of the company that makes nearly 90 products from A to Z, all liquid prescriptions and over-the-counter therapies. Their generics range from Artane, which treats symptoms of Parkinson’s disease, to Zarontin, an anticonvulsant.
The Alliance reports that the sector is good medicine for South Carolina, with $338 million in investments the last five years. The biggest came in 2017, when Arthrex, makers of orthopedic devices, spent $69 million on a 200,000-square-foot facility in Anderson.
“That is a game-changer for life-sciences manufacturing in the Upstate, in the state of South Carolina and specifically in medical-device manufacturing,” says Erin Ford, Executive Vice President of SCBio, a Greenville-based industry association.
“More announcements like that will continue to put South Carolina on the map for manufacturing innovation and growth in our sector.”
Greenville turned out to be the best spot on the map for Liesman, thanks to South Carolina’s manufacturing tax incentives.
She says she considered Tennessee, Kentucky, Alabama and Georgia before deciding to stay where she had been working in garment manufacturing since 1994. She and a partner started CPT Medical in 2009.
Before that, she says, “I actually spent a year and a half and a couple hundred thousand dollars in research in the industry, and I decided to go into this industry because it was more of a cottage industry. I felt like the international market would never be able to completely come in and take over.”
And neither could a downturn in the economy overtake health-sciences manufacturing—at least, not in Greenville—although Shumaker says that while PAI employs 350 people in its 300,000 square feet of plant space, the continuing labor shortage here poses the biggest challenge.
“As far as manufacturing jobs go, we’re also having to compete with automotive and everything else for those jobs,” she says, “and as the new life-sciences companies are coming in, now we’re also starting to compete for professional labor, so it is a little bit different environment, obviously, than it was even five to 10 years ago.”
Liesman adds that these days, too, more start-up capital is available than since she arrived in Greenville.
“There are a lot of people that consistently are joining together to bring new types of medical devices, to be able to help offset certain diseases,” she says, “but it takes money to be able to do that and it’s high-risk money.”
The reward? Returns on investment in a sector that’s growing in a region that also continues to.
“I’m seeing more than anything that manufacturing is going on a rise just simply because of the fact that there’s more product that’s required out there.”