President Joe Biden highlights the return of manufacturing jobs to the U.S., but even with all the investments and support, the industry is struggling after only a brief recovery from the pandemic. It will be difficult for Vice President Kamala Harris or former President Donald Trump to change that, despite their big promises if they get elected.
The Biden administration has poured billions into U.S. manufacturing, like $53 billion from the CHIPS and Science Act to strengthen the semiconductor industry, and a $1.2 trillion infrastructure plan. Private companies have also been investing more. All of this has led to a sharp rise in construction spending by manufacturers.
After the U.S. economy bounced back from the pandemic, manufacturing benefited for a while, but the momentum didn’t last long.
The manufacturing industry still has a long way to go before employment reaches pre-Great Recession levels. As of August, U.S. manufacturing jobs were only 1.2% higher than they were in February 2020. In fact, manufacturers have lost jobs in four of the last eight months. Surveys of the industry aren’t looking very positive either.
While there hasn’t been a big manufacturing boom under Biden, there has been a steady recovery since the pandemic. The huge investments could pay off eventually, but with the presidential election less than two months away, it may be hard to convince voters.
Vice President Kamala Harris shared her economic plans in Pittsburgh on Wednesday. She talked about cutting middle-class taxes, increasing deductions for startups, and reforming construction regulations. Harris said they would invest in biomanufacturing and aerospace, stay ahead in technologies like AI and quantum computing, and expand clean energy innovation.
Former President Donald Trump, speaking in Savannah on Tuesday, shared his own economic ideas. If elected, he plans to lower corporate taxes, raise tariffs, and cut regulations to encourage companies to move manufacturing from places like China, Korea, and Germany back to the U.S.
The industry's many issues
The manufacturing industry is facing a lot of challenges, mostly because of the overall economic situation.
Recent surveys by the Institute for Supply Management and S&P Global show that the biggest problems are low demand and high interest rates. This has made many manufacturing companies cautious about expanding or hiring, which could spell trouble for the industry’s future.
“The combination of falling orders and rising inventory is the worst we’ve seen in the past year and a half, and one of the most concerning since the global financial crisis,” said Chris Williamson, chief business economist at S&P Global.
Even though manufacturers have received significant funding in recent years, they are still hesitant to hire more workers or increase production if demand remains uncertain. On top of that, many are waiting to see what happens with the upcoming U.S. presidential election and future interest rates, leading them to pause hiring plans. “Demand remains low as companies are reluctant to invest due to current monetary policies and election uncertainty,” said Timothy Fiore, chair of ISM’s Manufacturing Business Survey Panel.
Manufacturers are also struggling with rising costs, which are increasing at the fastest rate since last April, according to S&P Global. These higher costs either reduce profits or get passed on to customers as price hikes.
Additionally, some sectors have unique challenges. Boeing, America’s largest exporter, is dealing with its own financial problems, while U.S. automakers face stiff competition from Chinese electric car manufacturer BYD. And, despite efforts to bring production back to the U.S., it’s still cheaper to produce goods in many other countries. In the U.S., manufacturers also have to manage demands from labor unions, which can further increase costs.
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