Jan 01, 2014

The Manufacturing Revival

The latest data from the U.S. Bureau of Labor Statistics shows that for the first time since April 2009 the workforce population of the manufacturing industry was over 12 million jobs. This reveals a very optimistic anticipation of the manufacturing revival and employment generation in manufacturing.

A Senate report released in December 2013 showed that the U.S. manufacturing industry has added over 500,000 jobs since 2010, and exports of domestic-made goods rose 38 percent during this time. The industry currently accounts for almost 12 percent of the U.S. gross domestic products, contributing $1.87 trillion to the economy in 2012.

The Senate study found that during the recession, factory automation and the moving of production to lower-cost countries drove job cuts in manufacturing. However, in the past few years, the rise in shipping costs and foreign labor costs is prompting companies, such as Caterpillar, General Electric and Ford Mod Motor Co., to return to domestic production, a phenomenon known as “reshoring”. A recent article in the Financial Times pointed out that 21 percent of large manufacturers are already reshoring production to the U.S., or plan to do so in the next two years.  Additionally, foreign companies such as Lenova and BASF are opening factories in the United States.

Manufacturing giants such as 3M, Polaris, Toro, Valspar, and Ecolab have been reporting healthy sales, another indication that manufacturing recovery is underway. Manufacturing has always had a key role in the U.S. economy. According to an outlook by Habif, Arogeti & Wynne, if U.S. manufacturing were its own country, it would represent the 10th largest economy in the world. Due to the size, the trends in this industry generally have a ripple effect on the rest of the country’s economy and employment. 

Impact on Temp Workers

In 2012, the Boston Consulting Group predicted that higher exports and reshoring would add 2.5 million to 5 million manufacturing and related services jobs by 2020.

In a recent study, 83 percent of manufacturers said they were experiencing moderate to severe shortages of highly skilled workers, with approximately 600,000 high-skill manufacturing jobs currently unfilled nationwide. According to Senator Klobuchar, each manufacturing job today supports an additional 1.6 jobs, and each advanced manufacturing job, such as in engineering and research, creates 4.9 other jobs.

Research by the Society of Human Resource Management (SHRM) also indicates that most manufacturers are hiring, but have difficulty finding full-time workers with the skills they require. Due to the skills gap, manufacturers are increasingly turning to temp workers.

Lehigh County in Pennsylvania, a region where manufacturing is a major industry, has a 70 percent higher temporary workforce than the rest of the country. Manufacturing jobs have an average annual earning of $66,150 compared to the overall average of $52,789.

In November 2013, Ariens Company sought out 150 temp workers to build snow throwers and lawn-and-garden equipment, and planned to hire another 150 workers in the first two months of 2014. According to company spokeswoman, Ann Stilp, some of the jobs could be temporary, but many would stay on as year-round workers.

Recently, Harley-Davidson added 100 temporary jobs to prepare for production of model-year 2014 motorcycles. The company used staffing agencies and its corporate website to recruit temporary workers for jobs that pay roughly $16.75 to $23.30 per hour. The company is also seeking an additional 400 temp workers at its York, PA plant, and 60 seasonal workers for a 10-month work period in Tomahawk, WI.

Industry experts believe that manufacturing companies favor incorporating temporary workers into their hiring strategy for multiple reasons. First, it allows them workforce flexibility to accommodate growth fluctuations. Second, it offers them the opportunity to try out workers for highly skilled positions before offering them permanent employment. For workers, a short-term job at a manufacturing plant is a great way to sharpen workplace skills.

Manufacturing Employment Trend

Manufacturing Employment Trend

“America is a country that innovates, makes things and exports to the world, and manufacturing has long been an engine of economic growth and a key source of good jobs.” ~Senator Amy Klobuchar of Minnesota