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Supply Chain News: US Manufacturing Jobs have Snapped back Sharply from 2020 Recession



What Makes this Time Different versus Recessions since 1970

Oct. 4, 2022
SCDigest Editorial Staff

Something a little strange is happening with regard to US manufacturing jobs.

Since the 1970, US manufacturers have rapidly shed jobs during recessions.

Supply Chain Digest Says...

Even factory jobs in the US furniture industry have broken from their pattern of heavy job losses to offshore production that never returned after the recession is over.

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Some of those job would come back when the recession ended – but never reaching the level seen before the recession. That meant an inevitable decline in total manufacturing jobs in the US over these recession-recovery cycles.

But this time, it’s different.

US manufacturers eliminated some 1.36 million jobs from February to April of 2020, as the pandemic-induced recession took hold.

But now through August, according to Bureau of Labor Statistics data, manufacturers had added back about 1.43 million jobs, resulting in a net gain of 67,000 workers over the period.

A New York Times article on this phenomenon notes that it is not the result of significant reshoring strategies, or mostly seen in heavy industry.

Rather, the catalysts in this recovery “include pharmaceutical plants, craft breweries and ice-cream makers. The newly created jobs are more likely to be located in the Mountain West and the Southeast than in the classic industrial strongholds of the Great Lakes,” the Times article notes.

The pandemic led to a different kind of recession. With a stay and work from home economy due to the infection risk, plus substantial Federal stimulus added on top, there was a shift in Americans’ buying habits “away from services like travel and restaurants and toward goods like cars and sofas, helping domestic factory production - and with it, job growth - to bounce back much faster than it did in the previous two recessions,” the Times article, written by Jim Tankersley, Alan Rappeport and Ana Swanson, observes.

And the trend continues on, as manufacturers create jobs at a rate that has surprises even some longtime promoters of American factory jobs.

(Article Continues Below)



In most previous recessions over the last 50 years or so, manufacturers have used recessions to speed the outsourcing jobs to low cost countries and to add automation and other labor-saving technology.

This time, a few months to the pandemic and recession in 2020, manufacturing jobs quickly rebounded at a much faster rate than has been the norm for manufacturing job growth post-recession.

Even factory jobs in the US furniture industry have broken from their pattern of heavy job losses to offshore production that never returned after the recession is over. This time, furniture makers have nearly returned to their pre-pandemic employment levels, the Times reports.

There is also hope that a reshoring wave might actually arrive, as companies look to avoid the supply chain disruptions plaguing many of them over the last two years, constraining production, most famously seen in a shortage of computer chips.

But US imports from China and other countries continue at high levels, leaving questions about whether reshoring will ever really be a force.

The Times article cites research finding that just 8% of companies reported moving segments of their supply chain out of China to the United States in the past year, while an additional 16% had moved some operations to other countries. However, a solid 78% of the companies said they had not shifted any business away from China.

One potential bit of good news: it could be that given the shortage of US manufacturing jobs, a recession could lead to lower level of job losses than normal, as companies just cancel job hiring, rather than lay off current employees.

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