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WHY HIRING LAGS BEHIND EVEN AS U.S. FACTORIES HUM

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This is a guest post from Glenn Levar’s Shared Time Human Resource Managementnewletter. You can reach Glenn at grlevar@sthrm.com

Brian Feeney has moved cautiously when expanding the small crown-molding and baseboard plant he runs in Arkansas, and that helps explain why the U.S. economy is taking so long to add jobs.

When Mr. Feeney expanded the plant's capacity in 2011, he automated work once done manually, reducing by about a quarter the number of employees needed at closely held Prime-Line Inc. Now, guardedly optimistic after two years of brisk demand, he is adding a second automated production line to support a fifth weekly shift, creating seven production jobs.

Across the country, companies like Prime-Line have been slow to add capacity to meet growing demand as the U.S. economy has picked up. And even when they are investing, they often take pains to add as few jobs as possible.

Xerox Corp. has broken ground on a $35 million expansion of a sophisticated plant making high-tech toner for printers and copiers. It decided to make the investment at an existing Xerox facility in Webster, N.Y., about 12 miles outside Rochester, in part because it would require adding fewer jobs than at the other sites it considered. Fertilizer maker Mosaic Co. had planned to build a $700 million ammonia plant. But last fall it dropped those plans and decided to buy the product from a supplier instead.

Mr. Feeney is just now taking the leap of faith to invest in the housing recovery that has kept his plants at capacity after the housing crash six years ago. "It's that beaten-dog mentality," said Mr. Feeney, Prime-Line's chief executive. "We were thinking, 'this is too good to be true.' "

As public companies continue to unveil their year-end results this week and offer insight into prospects for 2014, the future of many of America's job seekers rides on how many executives are willing to take the plunge Mr. Feeney took last fall. The news so far is mixed.

Computer-chip maker Intel Corp. said last week that it won't increase capital spending and will cut its workforce by 5% this year amid flat sales. Macy's Inc. said it will invest in online operations and build new stores, laying off 2,500 workers but keeping overall employment flat in the process. Best Buy Co. said it plans to more aggressively to cut costs after a weak holiday season.

Companies large and small have balked at hiring and expanding since the financial crisis, fearing the halting recovery would falter. The U.S. added just 74,000 jobs in December, according to the Labor Department, far fewer than economists had expected.

Other indicators suggest executives have become more optimistic in recent months. A Business Roundtable survey of CEOs in December showed 39% expected to boost capital spending over the next six months, up from 27% in the third quarter, though hiring expectations were little changed. Much depends on whether that optimism translates into action, and whether companies choose approaches that keep a lid on hiring. Theo Francis online.wsj.com January 22, 2014.

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