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The tide of job losses in US manufacturing appears to be ebbing, but few industrial sectors are actually adding significant manpower. And among the manufacturers that now need more labor, many are minimizing hiring and instead are either boosting hours of existing workers or outsourcing offshore.
So what can you do if you're either a laid-off factory worker or a manufacturing employee trying to hang on to your job in the face of challenges as diverse as your own high productivity and low-cost production in Asia? Pay attention to which industrial sectors are choosing to boost their investments in human capital, and how.
How Manufacturers Are Sourcing Labor
Manufacturers aren't necessarily making new hires when they see a need for more people on the factory floor.
"Most capital-intensive manufacturers are probably trying to make as much use of the current workforce as possible," says Cliff Waldman, an economist with the trade group Manufacturers Alliance/MAPI in Arlington, Virginia.
"It's probably cheaper to have good workers working overtime, up to a point," says Peter Cohan, a management consultant and venture capitalist in Marlboro, Massachusetts. "Then the lines cross, and it becomes cheaper to hire a new person -- or outsource."
The Offshoring Trend
Where manufacturers don't take up the slack with overtime hours, they increasingly ship production work overseas. Major US manufacturers' purchases from offshore suppliers will nearly quadruple over the next three years, according to a survey by online marketplace FreeMarkets, as reported in Manufacturing & Technology News.
So no one expects anything like a return to the profligate hiring that marked the '90s. "The companies that are still in business are really lean and really mean," says Scot Montrey, spokesperson for the National Association of Manufacturers in Washington, DC. "Once things start to pick up, they don't go back to being fat and lazy."
Many observers are thoroughly pessimistic about the future of manufacturing employment. "Nobody expects an upturn in jobs, even if there's a robust recovery," says McCormack.
What Industries Are Hiring?
Nonetheless, a few manufacturing sectors are showing signs of life. For guidance by sector, Cohan, the management consultant, looks to a statistic called capacity utilization, the percentage of factory capacity that's actually being used to produce goods.
The industry with the highest capacity utilization is petroleum and coal products, notes Cohan. The hardest-hit sector is communications equipment, where only 50 percent of production capacity is in use.
The healthcare and defense industries have been relatively strong through the economy's sluggish recovery, according to Richard McCormack, editor of Manufacturing & Technology News. "Defense, pharmaceuticals and medical equipment are doing OK," McCormack says.
Further areas of strength suggested by the ISM report include:
- Transportation.
- Wood and wood products.
- Fabricated metals.
- Industrial and commercial equipment and computers.
- Food.
"With rare exceptions, job growth is going to be in export-oriented manufacturing," says Montrey. This most often translates to materials such as wood products, metals and food, he adds.
