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12/18/11 - State-funded SEWN works to save Pa jobs

State-funded Strategic Early Warning Network works to save PA jobs
Posted:  December 18, 2011

Bill Wallace's company, William J. Labb Sons Inc., a small manufacturing firm in Philadelphia, survived the recession - but barely.

Whether it would make it through the recovery was another question entirely, one extremely important to the 20 people who work at Labb's Bridesburg factory.

"Our industry came back to life," said Wallace - and when it did, he said, he needed help to switch gears from survival to revival before his family-owned company got chewed up in the process.

Labb was nearly out of cash and some key employees had left by October when Wallace, the plant manager and owner's son, called the Strategic Early Warning Network.

Funded by the Pennsylvania Department of Labor and Industry, the network tries to save jobs before they are lost.

"Saving a job is significantly cheaper than creating one," said Greg Olson, a business consultant who heads the network's new Southeast Pennsylvania office.

The math seems simple.

The network, with a statewide $1 million budget, estimates it saved 1,017 jobs at 25 businesses last year at a cost of $976 per job.

Pennsylvania's weekly unemployment benefit averages $302. So in less than a month, the taxpayer cost to fund a lost job tops what the network might have spent to save it. Olson, however, points out that not every job can be saved. Six months of benefits cost the state $7,852.

Each manufacturing job also feeds the economy by generating as many as four other jobs, the American Alliance for Manufacturing estimates.

The network's niche is privately held, family-run manufacturing businesses.

Often, Olson said, the owners are focused so myopically on keeping their stressed businesses alive that they lack the perspective or energy to handle ongoing damaging business issues.

"They've done a good job hanging on by their fingernails over the last two years," he said, "but their fingernails are being worn to the bone."

That was Mike Ross' situation at Henry Ross & Sons, a custom countertop fabricator in Lititz, Lancaster County.

When the 55-year-old family-owned company contacted the network in early 2009, it was in its second year of unprofitability and four to six months away from closing down and putting 27 people out of work, Ross said.

The network's consultants persuaded the company to lay off a few people who were being kept on out of loyalty but who no longer fit the company's strategic plan. Headcount fell to 22.