- About Us
- Contact Us
We have had several blogs about manufacturing rebounding since the 2008 recession and its effect on unemployment. This blog digs a little deeper into the trends.
Below is a chart showing GDP since 2003
The recession started Q3 2008, but the previous two quarters averaged out to be negative GDP so all of 2008 was in decline. In October of 2008 a series of events took place that shook the foundations of the financial industry, caused the largest drop in the stock market since the depression. The housing market literally crashed and launched the US and much of the rest of the world into a deep recession that we still have not recovered from. Unemployment soared to over 9% and the US is still not anywhere near employment levels experienced in 2003. The manufacturing sector while hit hard was a bright spot in the post 2009 recovery.
In analyzing the employment numbers for manufacturing, one needs to keep in mind the forces that affect these numbers:
The following charts look at employment levels by manufacturing segment from 2003 to 2012.
All the data is from the US Bureau of Labor statistics. We have created 2 charts for ease of use, the first chart is manufacturing industries that employ less than 10,000,000 and the second chart is manufacturing segments that employ over 10,000,000. The charts are normalized to compare as a percent to employment in 2003, so each line will start at 100%.
The first chart is the minor employers, not to say they have a minor impact on the economy, but each segment employs less than 10,000,000 workers.
The categories in this chart are Apparel, Electrical Equipment, Petroleum and Coal, Plastics and Rubber, Primary Metals, and Wood Products. The following is the trend analysis by segment
The apparel manufacturing subsector consists of these industry groups:
The trend in the apparel industry was in a rapid decline before the 2008 recession as this industry has been one of the hardest hit by off shore sourcing. Given the high labor content and relative lack of automation, it is doubtful that this segment will ever rebound. The recession probably made little difference in the trend.
The segment consists of electrical equipment, appliance, and component manufacturing subsector consisting of these industry groups:
This segment was in a slight decline before the recession, probably because a significant amount of appliance manufacturing was being out sourced, The Electrical Lighting segment is still manufactured domestically but the housing crash deeply impacted this. The segment is rebounding slightly but appears to be leveling off at about 80% of its 2003 levels.
Petroleum and Coal:
This segment is domestic petroleum and coal employment. This segment was not scathed by the recession as employment trends are flat. Since there are not a huge number of refineries being built and coal is being restricted by environmental regulations, it would seem reasonable to assume this area to be fairly stagnant.
Plastics and Rubber:
The plastics and rubber products manufacturing subsector consists of these industry groups:
This industry is also affected by off shoring as China has become a major center for injected molded plastic components. One can see that this industry was in slight decline but was hit hard by the recession. Currently it is gradually increasing, but still down to around 80% of what it was in 2003.
The primary metal manufacturing subsector consists of these industry groups:
This segment was hit hard by the recession, but is recovering at a fairly decent rate and is currently employing about 85% of what it was in 2003. A quick peak at 2013 data shows that this rebound has flattened out. China did take a bite out of the steel industry as new equipment and lower wages made it more cost effective. One wonders if the energy advantage the US has will help bring some of the steel industry back.
The wood product manufacturing subsector consists of these industry groups:
This segment was actually increasing during the housing boom up until the crash of 2008 as a significant amount of wood products goes into new housing construction. Employment in this industry was as severely effected as just about any other industry segment. Wood products are currently at about 60% of its 2003 levels which pretty much mirrors the housing situation.
This next chart is for major employers that employ over 10,000,000 people in the US.
The categories in this segment are Chemicals, Computer, Metal Products, Food, Machinery and Transportation.
The chemical manufacturing subsector consists of these industry groups:
The chemical sector was in decline before 2008, with the recession accelerating the decent a bit. Currently the employment change has leveled off. This segment has a broad range of products and one would be hard pressed to pick a reason why this segment was in decline as most of it is not labor intensive and shouldn’t be subject to off shoring.
The computer and electronic product manufacturing subsector consists of these industry groups:
This segment was in rapid decline before 2008 because of a significant level of off shoring. There has been a lot of talk about reshoring in this segment but the data does not show a great change. Currently the computer segment is at about 81% of the levels achieved in 2003.
The fabricated metal product manufacturing subsector consists of these industry groups:
This segment was rapidly increasing before 2008, and had a steep drop from the recession. It has been on a steep increase since 2010 and is at about 95% of its 2003 levels. Very little of this industry was off shored and is related to some of the industrial segments that are currently thriving such as heavy equipment. This is one segment that the US should continue to exploit.
The food manufacturing subsector consists of these industry groups:
The food industry employment has been modestly affected by the recession and is currently at around 96% of its 2003 employment levels. Cost cutting measures taken in the 2009 time frame has probably kept employment levels from increasing.
The machinery manufacturing subsector consists of these industry groups:
The graph shows how closely related machinery and metal products are trending. This segment was a rapidly growing segment before 2008. It took a hit from the recession but is rapidly increasing again. It was at 95% of 2003 levels in 2012 and 2013 (not shown on graph) appears to be trending at closer to 97%.
The transportation equipment manufacturing subsector consists of these industry groups:
The transportation industry took the biggest hit of all segments from the recession and dropped to about 75% of its 2003 levels. It has rebounded a bit in the last 2 years and is around 82 % of 2003 in 2012 and looks to be about 85% in 2013. While the motor vehicle segment might be closer to 100% of 2003, the other segments are not flourishing since the recovery.
In summary, the following industries were minimally affected by the recession.
The following industries were affected by the recession but are close to recovery (if you factor in productivity gains).
The following segments are still well below 2003 levels even with productivity gains.
Of the industries that are still struggling, apparel and computers would seem to be destined to remain at low employment levels relative to 2003 numbers. We are hopeful that transportation could continue its rebound. Wood products and electrical equipment could come back strong as the housing market continues to rebound and the government makes major investment in infrastructure.