Economic Insider

Manufacturing Industry Manages to Grow Amid Economic Hurdles

The United States manufacturing sector performed well this year, nearing record-high and evidenced by its growth and consistency.

In the last 12 months, factories in the country added around 467,000 jobs. Moreover, the Federal Reserve said the factory production in September achieved its highest in 14 years. The accomplishment happens amid the country’s economic downturn, characterized by high-interest rates, oil price hikes, and investors’ low confidence in the market. However, the manufacturing sector kept producing cars, candy bars, and computers, satisfying consumers’ demands.

Wall Street experts and economists have already expected a recession is coming to the globe. However, the conditions do so little for the manufacturing sector to back down on expansion and improvement. Labor scarcities and supply disruptions present a problem for the industry, but executives stay confident they could expand manufacturing amid increasing demand.

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A see-saw in the manufacturing industry

Auto production saw a back-and-forth trend in its sales. And this is primarily due to the shortage of semiconductors. However, production in September rose by 1%, which implies despite the hurdles, the sector is capable of defeating expectations.

“Since we bought them, we’ve grown the company from 33 employees to 53 employees. We’ve invested in new technology, robotic press brakes, and new bathrooms for the employees. It’s an aggressive push to reinvest back into the factory because we’re so enthusiastic and optimistic about the future,” said Drew Greenblatt, a manufacturing company, following its purchase of the Madsen Steel Wire Products factory.

The semiconductor shortage

The disruption of the supply of semiconductors remains a problem for the manufacturing sector. For example, semiconductors are essential for creating automobiles, and during the pandemic, companies struggled to find adequate sources of semiconductors. However, now that the pandemic has come to a close, the condition somewhat eased. But company managers think the condition is still far from normal.

“I try to keep enough parts on the shelf. But if I have two on the shelf and I sell two, I can’t sell another one till I get a new one back. And with four or five months’ lead time, I can’t anticipate that far in advance what I’m going to need,” says Betty Jane Parrott, CEO of a family-owned business.

“A lot of the baby boomers retired during COVID, and they were the ones that had years and years of experience. We’ve been looking for qualified welders for probably a year. The skilled people, the trained people, are very, very hard to find,” she added.

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The industry bounces back

Factories employed more than expected. It approaches the employment levels from its pre-pandemic rates, employing an average of 20,000 individuals monthly. The sector welcomed around 27,000 new employees in August and added another 22,000 the following month.

“Manufacturing is roaring back, the strongest manufacturing job recovery since the 1950s,” said President Joe Biden.

“Every president wants to increase manufacturing. But the future of jobs is in the service sector,” Betsey Stevenson from the University of Michigan said.

“We’ve become so much more productive at making things, and we just only need to spend a small share of our resources — our people, our time, our factories, our equipment — making stuff,” he added.

“We’re just seeing the demand. We want to have the best technology for our people to make it through potentially stormy times,” Greenblatt concluded.