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High Demand Gives Lift to Mining Equipment Maker

Bucyrus International and rival Joy Global are scrambling to ratchet up their production.

October 04, 2005|From Associated Press

MILWAUKEE — Since summer, there's been a sign on the highway from Chicago to Milwaukee that people around here haven't seen for ages: "Jobs now" at mining equipment maker Bucyrus International Inc.

The builder of some of the world's biggest earth-moving machines is hiring shop-floor welders after years of troubles, including a bankruptcy filing in 1994 and near-bankruptcy in 2001. A two-decade-long slump in commodity prices has turned around, and now 125-year-old Bucyrus' South Milwaukee plant is starting again to hum and clang with activity.

Its competitor across town, Joy Global Inc., which accounts for the rest of the global supply of surface mining machines, is also ramping up, four years after emerging from bankruptcy protection itself.

"We decided we're staying here, we're going to do a major expansion of our facilities and we need a lot of people," said Timothy W. Sullivan, Bucyrus' chief executive.

The turnaround of both companies is a bright spot in the Rust Belt, the Midwest region that has seen manufacturing jobs leave for Asia and Latin America only to trickle back last year as the U.S. economy continued to recover. Demand for their products -- earth movers some larger than jumbo jets -- is booming, fueled by pricey oil and China's material hunger.

"They're certainly Rust Belt survivors," said analyst Barry Bannister with Legg Mason Wood Walker Inc. "Capacity lags pricing so the strongest years are still ahead for these companies. But they didn't see this coming, and have been struggling to ratchet up capacity to build more machines."

What's unclear is whether the companies can find the workers they need right away. The Institute for Supply Management reported this week increases in manufacturing activity and employment that raised fears of inflation in materials and salaries.

The added manpower is needed to crank out enough of the behemoth dirt movers for customers worldwide to dig up the coal, copper and iron ore needed to feed the insatiable Chinese economy.

Soaring oil prices -- now above $65 a barrel -- have also increased demand for digging equipment to get at Alberta's vast tar sands, which were once seen as too costly to unearth, but are now teeming with frantic activity.

"There's literally hundreds of years of oil in those tar sands and they're moving as fast as they can to expand those properties up there. So that means obviously good business for us," said Bucyrus spokesman Kent Henschen.

Both companies have gotten further behind on orders: Bucyrus' backlog more than doubled to $573.3 million in the last quarter from a year earlier, while Joy Global's surged 53% past $1 billion.

Bucyrus announced expansion plans last month to more than double its shovel-building capacity to 17 a year and it plans to hire about 335 workers in the next two to three years. Joy Global said in August that it also was boosting its shovel-making capacity 40%, from 17 to 24 per year, in the next 18 months.

Now the problem is persuading workers to sign on.

Technical college graduates in today's high-tech age no longer have the specialized skills to weld giant machines, some of which can move 120 tons of material in a single swivel.

Although Bucyrus received $3.5 million in state grants to help train new workers, Sullivan said he still had to approach area schools to get them to super-size the skills of their students for the coming expansion.

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