Why the Private Sector Still Isn't Hiring

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One ray of hope for Hope Global may be the auto industry. More than two-thirds of its revenue comes from the sale of auto parts such as components for the insides of car seats and the netting for cargo holds of sport-utility vehicles. Auto sales are climbing again but remain well below pre-recession levels.

Merchant draws from years of experience on assembly-line floors at General Motors (GM), Mazda, Ford Motor (F), and parts maker Lear (LEA). A native of Ithaca, Mich., she got a job as a supervisor in the paint shop for the Cadillac Fleetwood Brougham after graduating from Alma College in Alma, Mich. She was often the only woman on her shift. She ran a Ford seat-making plant in Mexico and moved to Lear when the parts manufacturer bought the operation in 1993. After supervising Lear factories in Canada and Eastern Europe, Merchant was recruited by David Casty, Hope's owner. Casty died in 2003, and his son Ronald now leads Hope's board of directors.

Hope's advantage is its ability to shift production to low-cost countries when price is a big issue. It does that now with the SUV cargo nets. Workers at the Rhode Island plant, who earn more than $11 per hour, produce the basic material, then send that to a plant in Leon, Mexico, where workers making about $3 an hour hand-weave the finishing touches. The nets are then sold to auto parts suppliers.

If Merchant hires this year, it will be largely at Hope Global's plants abroad. She added 20 workers in Mexico in December. If the economy picks up, she hopes to open a plant in Shanghai to make knitted steel that's used to reinforce the rubber seals of car doors and trunks. "People ask me how I maintain an American company," she says. "We're not doing it with a wall around ourselves. We're doing it by being global."

And for now, that means hiring new U.S. workers isn't a sure thing. "We're very solid. The banks love us," Merchant says. "You start adding a bunch of headcount without the sales, and all you're doing is taking from your bottom line."

The bottom line: For the U.S. to reduce unemployment, companies like Hope Global need to be sure the economic recovery is real.

With Bob Willis. Katz is a reporter for Bloomberg News.