The manufacturing sector is experiencing a different form of crisis less than 15 years after the Great Recession. Manufacturers in many industries rushed to negotiate the new normal as the impact of the coronavirus pandemic echoed throughout the globe in early 2020.
The manufacturing industry is no stranger to the severe economic consequences of a recession. Manufacturing, in reality, has suffered the majority of the financial damage in previous US recessions, according to historical data. According to a Deloitte analysis, the industrial manufacturing sector’s GDP fell by 10% between 2007 and 2009, compared to a 4% drop in overall GDP. Similarly, during the Great Recession, corporate profits in the industrial manufacturing sector fell by 53%, while total corporate profits fell by only 14%.
What industries are the hardest hit by the recession?
8 industries with the best job security during a downturn
- Health-care services. People get sick and require medical care regardless of the state of the economy, thus the demand for health-care occupations is fairly stable, even during a downturn.
What is causing the slowdown in manufacturing?
(Reuters) WASHINGTON, Sept 15 (Reuters) As the COVID-19 epidemic continues on, manufacturing in the United States slowed more than predicted in August due to Hurricane Ida’s interruptions and continuing shortages of raw materials and personnel. The Federal Reserve said on Wednesday that manufacturing production climbed by 0.2 percent last month.
Is there going to be a recession in 2021?
Unfortunately, a worldwide economic recession in 2021 appears to be a foregone conclusion. The coronavirus has already wreaked havoc on businesses and economies around the world, and experts predict that the devastation will only get worse. Fortunately, there are methods to prepare for a downturn in the economy: live within your means.
Why is manufacturing on the decline?
(Reuters) WASHINGTON, Jan 14 (Reuters) In December, factory output in the United States unexpectedly decreased, owing to a drop in output at auto manufacturers amid a global semiconductor shortage. The Federal Reserve said on Friday that manufacturing production fell 0.3 percent in December after rising 0.6 percent in November.
Medical professional
Within the medical field, there are numerous vocations and specialties. This group includes Registered Nurses (RNs), pharmacists, physicians, surgeons, paramedics, dentists, dental assistants, and even veterinarians. People and animals become ill regardless of the economy, thus they will always require the assistance of trained professionals.
Specialized care, therapy, and counseling
Consider elder care, physical therapists, occupational therapy, substance-abuse counseling, chiropractic treatment, home health aides, mental health specialists, social workers, and other professionals who operate in this field. People place a high importance on their health. They will spend money on services that will help them to be productive while also being pain-free. Some of these services are covered by insurance, encouraging consumers to use them even when they are short on cash.
Law enforcement officers
The specific link between crime and economic cycles is difficult to pin down. Some crimes predict a downturn, while others coincide with it, and still others show no link at all. Communities prefer to invest in physical safety for local companies and citizens in any economic scenario, which means that police officers and the professionals who support them are in high demand even during a downturn.
Public utility services
During economic downturns, electric, water, sewage, waste, trash, and recycling services all continue to operate. Utility personnel, after all, are essential to ensuring public order and health. Surprisingly, consultants that serve those utilities appear to get the same benefit. Many cities, for example, are obligated to undertake annual audits of their trash-collection companies. Even in a down economy, consulting businesses that undertake such audits will have work to do.
Financial services
The importance of money mobility explains why financial specialists are always in demand. Accountants, auditors, actuaries, claims adjusters, tax preparers, and insurance underwriters are just a few of the employment available in the financial services industry. Many jobs necessitate professional certificates such as Enrolled Agent (EA), Certified Public Accountant (CPA), or Certified Financial Analyst (CFA) (Chartered Financial Analyst).
Education services
Economic booms come and go, but putting money for the future is always a good idea. Regardless of the economy, jobs in primary education, secondary school, higher education, special education, and adult education are in high demand. Those interested in following this path should be aware that the method education is given is changing. New types of distant and on-demand education are becoming more relevant in addition to traditional classroom educators. As a result, a teaching career might be flexible in terms of both location and delivery manner.
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What is a recession-proof industry?
Healthcare, food, consumer staples, and basic transportation are examples of generally inelastic industries that can thrive during economic downturns. During a public health emergency, they may also benefit from being classified as critical industries.
Is the US industrial sector expanding?
Even as spending shifts back to services, manufacturing, which accounts for 12% of the US economy, is being bolstered by strong demand for goods. Businesses’ inventories are likewise exceedingly low. However, the Covid-19 epidemic has stressed supply systems, which is a constraint.
During the Covid-19 epidemic, spending moved from services to products, putting a pressure on global supply lines.
After increasing by 10.1 percent in October, auto plant output increased by 2.2 percent last month. However, due to a global scarcity of semiconductors, vehicle production is still 5.4 percent lower than a year ago. Manufacturing output increased by 0.6 percent in November, excluding vehicles.
Manufacturing output increased by 0.5 percent last month, while mining output increased by 0.7 percent, bringing industrial production to its highest level since September 2019. This came after a 1.7 percent increase in October. The production of utilities declined by 0.8 percent.
Capacity utilization in the manufacturing sector jumped 0.5 percentage point to 77.3 percent in November, the highest level since December 2018. Last month, overall capacity utilization in the industrial sector increased by 0.3 percentage point to 76.8%. It is 2.8 percentage points lower than the average from 1972 to 2020.
Capacity utilization indicators are often used by Fed officials to determine how much “slack” remains in the economy, or how far expansion can go before it becomes inflationary.
Is American manufacturing on the decline?
Manufacturing in the United States had a nightmare between 2000 and 2010. Manufacturing jobs in the United States, which had been largely steady at 17 million since 1965, fell by one-third during that decade, from 5.8 million in 1965 to less than 12 million in 2010. (returning to just 12.3 million in 2016). Certainly, the financial crisis of 200708 intensified the disruption, but the causes were structural as well as financial. Capital investment, output, productivity, and trade imbalances all have issues. Contrary to popular belief, productivity gains attributable to robots or automation have not been the cause of manufacturing job losses; the industry has been shrinking.
This economic upheaval has led in escalating social unrest. During the 2016 US presidential election, a working class facing diminishing salaries came into vivid, angry view, while most people in the US felt the country was becoming one huge middle class. Men without a secondary school diploma saw their median income drop by 20% between 1990 and 2013, while men with a secondary school diploma or some college saw their median income drop by 13%. The fall of US manufacturing, which was formerly a stepping stone to the middle class, affected these populations especially hard. There is now a significant concern with income disparity.
The question is whether the US industrial sector can recover. The idea that new manufacturing paradigms could alter the sector is now being researched in the United States. We’ve seen these new paradigms before: steam power in the United Kingdom, interchangeable machine-made parts in the United States, mass production in the United Kingdom, and quality manufacturing in Japan. Low-wage, low-cost producers, mainly in Asia, are now competing with the United States. Could the economy take advantage of its still-strong innovation system to develop new production paradigms that would increase production efficiency and lower prices, allowing it to compete more effectively?
Production innovation can enable more innovativeand competitiveproducts, which has its own set of benefits. Scientists and engineers are increasingly claiming that there may be breakthroughsnew paradigmsavailable in a number of sectors that might drastically alter the way we manufacture complicated, high-value technology and goods, allowing for tremendous production efficiency. Advanced materials, digital manufacturing, photonics, lightweight composites, 3D printing, assistive robotics, revolutionary fibers, nano and biofabrication are all examples of new manufacturing paradigms. To put these new technology advancements into practice, new processes and business models are required. While new jobs may not be produced at the point of production, given manufacturing’s function as a significant job multiplier in connected value chains, job growth upstream and downstream of production is likely.
The primary goal behind advanced manufacturing in the United States is to create such new paradigms. 14 new advanced manufacturing institutes, each organized around a prospective paradigm, are now being investigated in depth as a means of nurturing such paradigms. They are doing joint research on breakthrough technologies, shared test beds and demonstration facilities, and novel ways in workforce training. They were created through cooperation between industry, universities, state and federal governmentsand all costs are shared by all. They are an attempt to adapt Germany’s Fraunhofer Institute model for use in the United States, as well as a nod to the older US Sematech collaborative approach, which used innovative manufacturing methods to reclaim semiconductor leadership in the 1980s and 1990s.
This is a complicated model: each institute often brings together over a hundred small and big businesses, regional universities and community colleges, state and regional agencies, and government research and development organizations. These R&D agencies pay single scientists as primary investigators, rather than a swarm of different collaborators. Creating a manufacturing institute, according to one federal official, is akin to founding a new country. Because manufacturing enterprises are anchored in regional ecosystems, the institutes must work at a regional level, but they must also execute their new production methods at a national level, a difficult regional-national balancing act.
The institutes have also become a new delivery method for workforce education, which is becoming an increasingly difficult task for US industries. If modern manufacturing is to be adopted, the workforce and engineering communities must be prepared. The US labor market is likely the most decentralized of any modern country, making such a large-scale “up-skilling” effort impossible. The institutes are already pursuing this goal, thanks to their ability to bring together manufacturers, community colleges, state programs, university curricula, and online resources, as well as new technology development and testbed facilities.
The wide range of technologies targeted by various institutes is perhaps the most intriguing aspect of the US advanced manufacturing endeavor. While other countries are focusing on single-shot efforts to integrate the internet of things into manufacturing, the United States is taking a shotgun strategy, targeting a wide range of technologies ranging from materials to digital, bio, and nanotechnology. Pulling the many institute strands together into a new system will be a major challenge in this diverse approach. The future factory will be organized around a range of technologies rather than a single one. ManufacturingUSA is a network of institutes that are starting to come together. The transformation of the institutions’ sophisticated technology strands into an altogether new manufacturing system will be a major undertaking for this new network. Hopefully, this new innovation model’s potential will be further explored.
Advanced Manufacturing: The New American Innovation Policies, MIT Press, Boston (forthcoming). Bonvillian, William, and Singer, Peter (forthcoming).
OECD Publishing, Paris, 2016. OECD Science, Technology and Innovation Outlook 2016.
When did manufacturing in the United States begin to decline?
“The United States was the king of production coming out of WWII,” says William B Bonvillian, an expert in US innovation policy and a lecturer at Massachusetts Institute of Technology (MIT).
In fact, by 1945, the state of Pennsylvania alone had produced more steel than Germany and Japan combined. This golden age, the heyday of ‘Made in America,’ lasted well into the Cold War era as well yet something eventually gave way.
By the millennium, the United States had lost its global dominance in mass-scale industrial production, technology, and efficiency. Between 2000 and 2010, the US lost one-third of its manufacturing jobs, bringing long-standing crises to a head. “This was a very difficult decade, a very dramatic transformation,” Bonvillian explains. “Millions of jobs have simply vanished.”
What is the state of our economy right now?
Indeed, the year is starting with little signs of progress, as the late-year spread of omicron, along with the fading tailwind of fiscal stimulus, has experts across Wall Street lowering their GDP projections.
When you add in a Federal Reserve that has shifted from its most accommodative policy in history to hawkish inflation-fighters, the picture changes dramatically. The Atlanta Fed’s GDPNow indicator currently shows a 0.1 percent increase in first-quarter GDP.
“The economy is slowing and downshifting,” said Joseph LaVorgna, Natixis’ head economist for the Americas and former chief economist for President Donald Trump’s National Economic Council. “It isn’t a recession now, but it will be if the Fed becomes overly aggressive.”
GDP climbed by 6.9% in the fourth quarter of 2021, capping a year in which the total value of all goods and services produced in the United States increased by 5.7 percent on an annualized basis. That followed a 3.4 percent drop in 2020, the steepest but shortest recession in US history, caused by a pandemic.