7-10-18 4:53 PM EDT | Email Article
By Eric Morath 

A historic decline in the number of layoffs is providing a renewed level of job security to factory workers, who had seen their ranks thin since the late 1970s.

In the 12 months ended in May, the manufacturing sector accounted for 6.6% of all involuntary discharges in the U.S., according to the Labor Department data released Tuesday. That is down from 9.9% during the last economic expansion between 2001 and 2007.

The declining share of layoffs for the sector underscores a turnaround for manufacturing. During the last expansion, factories shed more than two million jobs, even as all other employers added workers. Then, two million more manufacturing jobs were lost during the recession. But since 2010, the sector has added more than one million jobs.

Manufacturers say that in a tight labor market -- the national unemployment rate was 4% in June -- they are motivated to hold on to existing workers.

"We've become much more careful about letting people go," said David Nicholson, chief executive of PVS Chemicals Inc., a Detroit manufacturer with 850 employees. "Most manufacturing jobs today are technology jobs. It takes a long time to train someone for that role, so you're reluctant to let them go for what could be a short-term slowdown."

Manufacturing layoffs fell sharply from more than 300,000 a month in early 2009, during the recession, to around 100,000 a month in recent years, the lowest pace in Labor Department records back to 2000. In May, a seasonally adjusted 117,000 manufacturing workers were let go, a slight decline from April.

The decline in manufacturing layoffs coincides with broader involuntary discharges trending at near-record lows. Overall, 1.5 million private-sector workers were let go in May, the Labor Department said. That is just above a record-low level of layoffs recorded in late 2016. Another proxy for layoffs -- weekly applications for unemployment benefits -- have been at the lowest levels since the 1970s for more than three years, and continue to edge down.

The low overall level of layoffs is related to the stable but not spectacular rate of job growth since the recession ended in 2009, said Josh Wright, chief economist at iCIMS Inc., a recruiting software company.

"The upside of a cautious expansion may be less need to reverse course," he said. "Measure twice, cut once."

Manufacturing employment peaked in the late 1970s at nearly 20 million. The sector fell below 12 million employees by 2009, but has slowly added jobs since. Lower layoffs in the sector in part reflect that there are fewer factory workers. But the rate of layoffs has also been lower during this expansion than it was before the recession.

Now, many manufacturing employees are finding renewed opportunities in the sector.

A dozen years ago, China Coleman worked two part-time factory jobs to make ends meet. At the time, she was uncertain about making manufacturing her career. Now the 34-year-old is a shift supervisor at Jergens Inc., a Cleveland, Ohio, manufacturer. She oversees the group where she once worked part-time.

"Back then, the market was just horrible," she said. "But the past few years, we've been so busy and growing, I feel very secure about manufacturing."

She oversees production of quick-lock pins, which are used in defense and aviation applications. Jergens paid for Ms. Coleman, who holds a high-school diploma, to become certified as a machinist and pursue additional training.

President Donald Trump has geared his trade and tax policies around expanding the manufacturing sector. Recent growth suggests that is possible, but also highlights that a lack of workers could be an impediment to growth.

A shortage of workers has caused some smaller manufacturers to turn down work, said Chad Moutray, chief economist for the National Association of Manufacturers trade group. Overall, leaner operations have helped eliminate the need to frequently lay off workers, he said.

"We're growing rapidly and hiring is robust," Mr. Moutray said. "Finding qualified workers is the No. 1 issue our members complain about."

Factories could draw employees from other industries. That's a benefit to workers because manufacturing typically pays higher wages than food-service and retail jobs. And it's already happening in some states. For example, about three-quarters of manufacturing workers hired from other jobs in Ohio since the recession came from other industries, according to Census Bureau data.

Another possibility is factories continue to turn to automation to produce more without significantly ramping up hiring. Manufacturing output has increased about 7% since 2000, but the total number of labor hours fell 26%, according to the Labor Department.

A tight labor market doesn't ease all fears for manufacturing workers, who have long been accustomed to layoffs, said Owen Herrnstadt, chief of staff at the International Association of Machinists union.

"A lot more needs to be done to restore manufacturing where it should be, " he said. "Are these jobs going to be subject to layoffs if there's another recession?"

--David Harrison contributed to this article.

Write to Eric Morath at eric.morath@wsj.com

 

(END) Dow Jones Newswires

July 10, 2018 16:53 ET (20:53 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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