U.S. Factories Are Laying off Workers Amidst Booming Employment

AriensCo Factory Workers

Dan Ariens laid off 20% of the employees last summer at AriensCo, an equipment company known for its orange snow blowers and lawnmowers. The current headcount of the company now stands close to 1,600. According to Reuters, AriensCo has also cut shifts and paused all hiring due to continuously slumping sales, and no improvement is expected until 2025.

Other U.S. factories have also factored in, including Deere & Co, Whirlpool Corp, 3M Co, and many large manufacturers. They have also announced layoffs, although these are not recent mass cutbacks in technology.  

Last month, Deere announced it would lay off 150 workers at its Iowa campus. This was a relatively low-impact hit for a factory with a workforce of 1,700 people. A few days later, Tyson Foods Inc. revealed it would close its pork-packing plant, resulting in 1,200 jobless workers.

More U.S. factories, like Kondex Corp., a blade manufacturer for farm machinery, have also opted to curb or halt hiring. The company previously paid 3x its normal wage to attract talent from Georgia and stayed them in hotels near its main plant in Wisconsin. Unfortunately, that’s over now. 

As reported by Reuter, Keith Johnson, the president of Kondex, said that the headcount is expected to cut down due to attrition by 5% this year without layoffs.

This news points to a clear difference between factory employment in the USA, which has been standing at a flat line for more than a year now, and the boom in the general job market for the past four years.

Joe Biden’s Policies for the Manufacturing Industry

Earlier in 2022, President Joe Biden passed legislation for industrial policies to boost manufacturing in many sectors, including semiconductors, electric vehicles, green technologies, and more. It resulted in a noticeable surge in factory construction.

Even though the construction industry is booming, the overall number of manufacturing jobs is looking weak. Experts blame high-interest rates, a slumping economy, and the increasing demand for manufactured goods after COVID-19. 

However, the Biden government does not seem too worried about this situation. According to Reuters, a member of the White House Council of Economic Advisors says that manufacturing investments will take six to eight quarters to show results in the form of more factory jobs. Also, the Federal Reserve may cut interest rates later this year, so more job opportunities are expected to arise.

In the words of Elisabeth Reynolds, a manufacturing and economic development researcher at Massachusetts Institute of Technology, who also served on Biden’s National Economic Council,

“If you look in different pockets of the country – in North Carolina or Georgia – companies are already hiring before they’re breaking ground. That’s a sign of things to come.”

The Current and Future Outlook of the U.S. Factories

The compounded impact of current halted hiring and large-scale layoffs is more likely to be visible if they occur at several locations in the rural region and small towns. Manufacturing accounts for roughly a third of all employment opportunities available in the U.S. after World War II.

For decades, the industry has been in steady decline for two primary reasons: the economy’s reorientation around services and the low demand for human workers on production lines due to automation. 

In 2022, U.S. factories provided 2,000 of around 250,000 job opportunities on average monthly. However, in February, the work at factories decreased to a record low 8.2% of employment in the country, which is a 13.8 point drop from 22% in 1979.

In fact, this week’s data from the Institute for Supply Management indicated a shrinkage in manufacturing employment for six consecutive months in March. That’s an unusually long period outside of a recession. 

New technologies can still boost manufacturing jobs in America. Consistent efforts can make this sector a small part of the total economy, considering the rapid growth of other industries in the country.

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