Manufacturing activity in the US is booming.
As my colleague Rick Newman highlighted back in June, construction spending on US manufacturing facilities has roared higher this year with chip fabs a key impulse pushing this spending higher as buildouts take place in New York, Arizona, New Mexico, Ohio, and Texas.
But this surge in investment is, perhaps predictably, facing a problem when it comes to hiring.
The Dallas Fed's monthly manufacturing report released Monday revealed the challenges that face heavy industry in hiring — both for companies bouncing back from downturns in the industry and ones looking to meet demand for new investment.
"Rehiring after major layoffs in this industry is not like in the consumer industry," an executive in the computer and electronic product manufacturing industry said. "It is costly, laborious, and a long-term expedition. And with the lack of reforms in immigration and education, we are encountering major difficulties in running industrial operations."
If we look at manufacturing employment over the last several decades the problem for any forthcoming boom is not hard to find.
Over the last 20 years, manufacturing employment has dropped to 12,985,000 workers as of July 2023 from 14,402,000 in July 2003. Go back another 20 years and we're down from 17,059,000 manufacturing workers in July 1983.
But remember, these are also nominal figures. As a percentage of the workforce, the fall off is even more dramatic. As of July, manufacturing accounted for about 8.3% of all employment; in July 1983 that figure was 18.8%.
Political will and a corporate sector adequately incentivized to jump-start manufacturing investments are driving the story of the US manufacturing sector right now. But the cultural, technical, and practical challenges that come along with reversing an industry's decades-long decline are going to be the next leg of the story.
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