The din at the Vulcan tool works in Dayton, Ohio, has softened to a buzz with the loss of two-thirds of its work force in the 1980s, a result of foreign competition and cost-cutting measures at the 70-year-old family-run factory.

But now that employment at Vulcan has been cut to the bone, the company -- which has shifted products frequently to find the right market -- has seen exports pick up, and a few more hands may be hired.

"I think we're about where we're going to be," said Howard Jones, president of the company founded by his grandfather. "We're not going back to 300 people," but "we're doing all right." He said employment may rise from its current 125 to 150.

Some economists are cautiously suggesting that the worst is over for the nation's manufacturers, who have lost market share -- and hundreds of thousands of workers -- because of the foreign competition during this decade.

"No, they're not out of the woods yet," said David Berson, economist for Data Resources Inc. "It's unlikely things are going to get worse, but they're not likely to improve significantly over the next few months either."

Manufacturers "are better off, but only modestly so and there are serious problems remaining," said Jerry Jasinowski, chief economist for the National Association of Manufacturers.

America's heartland has waited at least five years for its hemorrhage of work and wealth to end.

The first flicker of hope was provided by statistics suggesting that manufacturing employment, which declined by 325,000 in the first nine months of 1985, stopped its steep decline and began turning up last fall by 140,000 jobs on a seasonally adjusted basis.

However, the raw data unadjusted for seasonal changes show that unemployment at factories still is falling, although at a slower rate.

(Seasonal adjustment takes into account changes that generally take place at the same time every year. For example, every Christmas season department stores take on more employes, so the Labor Department's employment figures don't reflect that seasonal spurt. The figures record only abnormal fluctuations in the number of jobs.)

Economists are mixed about whether the continuing fall in employment means factories still are suffering or whether eliminating costly jobs is a way for manufacturers to improve productivity and stay competitive with the rest of the world.

Economists point to other factors, to suggest that manufacturing still has a long way to go: orders for manufactured goods have not been strong; production at the nation's factories, utilities and mines over the past few months has been weak, although it jumped 0.7 percent in December; profits, though improving, still are down; and imports continue to displace U.S. manufactured goods here and abroad.

"The important thing is that manufacturing employment has stopped declining and is beginning slowly to start going up on a seasonally adjusted basis," said Janet L. Norwood, commissioner of the Bureau of Labor Statistics, in an interview.

Some unusual phenomena may be taking place, Norwood said. For example, some industries, in an attempt to be more competitive worldwide, have cut costs the best way they know how, by firing people. Their payrolls are at minimum levels to keep operating, so for that reason, unemployment is unlikely to fall further, Norwood said.

Additionally, some manufacturers are beginning to control employment the same way they control their inventories. It has become too expensive to hire and fire employes every time the business climate changes, so factories are trying to closely moderate the fluctuations in hiring: there won't be massive hirings or massive firings in the future, Norwood said.

Berson, like many other economists, said that despite the more than 20 percent fall in the value of the dollar since February, manufacturing will continue to be battered by import competition for several more months and until an additional decline of the dollar. A falling dollar makes exports cheaper abroad.

Even if the dollar does fall, contracts have been signed to buy foreign goods months in advance and businesses form patterns of buying particular brands, Berson said. Foreign businesses are not likely to switch suppliers to U.S. firms just because the price may have dropped a little.

Richard Gulling, an executive at Timken Co. of Canton, Ohio, knows about the export problem only too well. The company last year lost $4 million in part because of imports and is planning by the end of the month to reduce employment by 15 percent over the level a year ago.

Beginning Feb. 1, the company will begin across-the-board salary reductions of 10 percent for all officers and 8 percent for most of its salaried workers in the United States. Spending for new plant and equipment this year and in 1987 will be substantially reduced, said Gulling of the international bearings and steel company.

"Although the company was able to increase its penetration in the steel markets and maintain its bearing market position, the volume of available business for the company's bearing and steel products in the third and fourth quarters was less than anticipated," Gulling said. "In addition, imports of finished and semi-finished products and excess U.S. steel-making capacity placed further pressure on prices for the company's products."

"Given a continuation of weak markets and competitive pressure on selling prices, there could be further losses in 1986," Gulling said.

Commerce Secretary Malcolm Baldrige said in an interview that it is unlikely that employment in manufacturing will climb much more because many jobs once classified as factory jobs, such as security guards and other auxiliary workers, now are obtained outside of the company and are considered as services employes.

But more importantly, many companies are investing in labor-saving machinery to keep costs low and be more competitive.

"The whole manufacturing base depends on technology," Baldrige said. "You're seeing it across the board at auto companies, steel mills. They're using high tech to get competitive."

Even the profit picture has improved somewhat in the last quarter. Manufacturing before-tax profits had fallen 17.9 percent in the first quarter, 22.7 percent in the second, but only 3.0 percent in the third quarter, according to figures compiled by Data Resources Inc.

Nondurables profits, after falling 19.2 percent in the first quarter, 26.1 percent in the second quarter, rose 2.1 percent in the third quarter of 1985. Profits for durables manufacturers, after declining more than 15 percent in the first half, fell a smaller 12.5 percent in the third quarter, DRI said.

Jasinowski said that manufacturing is better off than it was three to four years ago, but still there are problems. Some improvements were brought about by lower interest rates, government deregulation, and a lower dollar.

Additionally, many companies have cut costs dramatically, as much as 25 percent in some instances, Jasinowski said. "They've improved productivity, addressed the problem of quality, computerized and automated substantial parts of their operations," Jasinowski said of some manufacturers. "They've begun to get employes tuned in to the importance of excellence."

Many of the improvements were made by "fairly massive cost-cutting operations" consisting of reducing employes, cutting wages, lowering overhead and keeping better control of inventories, Jasinowski said.

The continuing decline in employment in manufacturing "in some respects reflects weakness," Jasinowski said. "In most cases, that reflects strength as manufacturing has cut back on the labor they use in the process."

The problems that still remain for manufacturers is low growth in production, and continuing competition from abroad. "Roughly 70 percent of manufacturing is exposed to international import competition," Jasinowski said. "The trends are ominous with respect to increasing penetration in a broad range of industries, both heavy equipment and high technology."