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Bucyrus, Joy Global getting ready to cut giant swaths again
Tuesday, October 04, 2005

Morry Gash, Associated Press
Floor mill operator Michael Hundt measures a gear for one of the mammoth earth-moving machines being assembled at Bucyrus International.
Click photo for larger image.
MILWAUKEE -- There's 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 welders after years of troubles, including bankruptcy in 1994 and near-bankruptcy in 2001. After a two-decade-long slump, 125-year-old Bucyrus' South Milwaukee plant is starting again to hum and clang with activity.

"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 Bucyrus CEO Tim Sullivan.

Its competitor across town, Joy Global Inc., which accounts for the rest of the global supply of surface mining machines, also is ramping up, four years after emerging from bankruptcy itself. Joy Global, the successor to former Pittsburgh-based Joy Manufacturing, still has a facility in Marshall.

"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 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 the vast tar sands in Alberta, which were once seen as too costly to unearth, but are now teeming with frantic activity.

Morry Gash, Associated Press
A worker welds a crane assmebly at Bucyrus International. The builder of some of the world's biggest earth-moving machines is hiring shop-floor welders after years of troubles, including bankruptcy in 1994 and near-bankruptcy in 2001.
Click photo for larger image.
"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 behind on orders; Bucyrus' backlog more than doubled to $573.3 million in the last quarter from a year ago, while Joy Global's surged 53 percent 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 some 335 workers in the next two to three years.

Joy Global said in August that it was also boosting its shovel-making capacity 40 percent, from 17 to 24 per year, in the next 18 months.

Now the problem is convincing workers to sign on.

Technical school graduates in today's high-tech age no longer have the specialized skills to weld giant machines -- many of which can move 120 tons of dirt the length of two football fields in a single swivel.

The largest of the machines, called a dragline because it scoops up material with huge buckets pulled by thick cables, can command up to $70 million each. It takes about two years to manufacture the parts and assemble one in the field. Smaller shovels and drills still cost several million dollars and take months to build.

Workers have to adapt to getting inside and over single parts that can weigh 160,000 pounds and tower 70 feet in the air. Welding lines several inches thick require skills traditional welders do not have.

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

"The whole focus of training and schooling and everything else moved away from manufacturing and moved into what you call white-collar type jobs," he said. "But now that we're hiring more welders, we have to get the programs more adapted to what we need."

"You can't just put a sign out there," said state economist Eric Grosso. "You have to go out and find people with the special skills you need, just like any other industry."

Milwaukee Area Technical College spokesman Jim Gribble said students have turned away from manufacturing jobs out of fear for their futures.

"There's a perception that if you do get a job, it'll be roboticized in the next few years," Mr. Gribble said. "In some respects, it's a difficult sell."

Analysts predict, for now, the expansion will be stable as the Bucyrus and Joy Global duopoly rides the upsurge in the price of commodities until at least 2015.

World orders for draglines, which once hit 20 a year in the late 1970s, have started to come back -- three were ordered last year, the first time in four years the industry has had more than one annual order. And analysts say hundreds of aging machines that were sent to mines decades ago may soon need to be replaced.

They expect the Canadian tar sands alone to generate demand of five to 10 shovels a year for two to three years, and global demand for three to five draglines in as soon as three years.

"We feel there's little question that this is going to be the best cycle since the '70s," said analyst Robert McCarthy of Robert W. Baird & Co. Inc. "[But] nobody can predict what's going to happen 10 years from now."

   
   

First published on October 4, 2005 at 12:00 am