American Factories Stand Strong Amid Economic Woes

Even as other industries struggle under the weight of rising interest rates, factories keep churning out products to meet consumer demands for cars, computers, and other in-demand products. Now, manufacturers are working to expand their capabilities, while at the same time struggling with supply and labor scarcities and looking to the near future, where some economists and many on Wall Street say a recession looms.

Auto production has varied in recent months, as carmakers continue to struggle with a shortage of semiconductors. But September was a good month for auto manufacturing, with production climbing by 1%. Additionally, factories added 467,000 jobs in the last 12 months, and factory production in September was the highest it has been in 14 years, according to the Federal Reserve.

The semiconductor shortage epitomizes the challenges factories have faced throughout the pandemic in getting the parts and supplies they need. While those challenges have eased somewhat, supply chains still aren’t back to normal. Meanwhile, factory employment rebounded to its pre-pandemic level in June, but only added 22,000 jobs in September, down from 27,000 the month before.
“Manufacturing is roaring back,” President Biden declared last month, describing what he called, “the strongest manufacturing job recovery since the 1950s.”

But U.S. factories still employ only about two-thirds as many people as they did at their peak, in 1979. Back then, factories accounted for nearly 22% of all the jobs in the country. Today, fewer than 9% of U.S. jobs are in manufacturing.

While some manufacturing jobs have moved overseas, U.S. factories have also become more efficient, allowing them to produce more things with fewer workers.
“We’ve become so much more productive at making things, we just only need to spend a small share of our resources — our people, our time, our factories, our equipment — making stuff,” says economist Betsey Stevenson of the University of Michigan.