Dude, Where’s My Job? Production Growth vs. Job Creation in Today’s Economy

A common complaint has arisen out of the positive manufacturing news posted at the beginning of the year. Although the production numbers have risen steadily, employment and job creation numbers still seem to be creeping along. In this economy, where unemployment is still extremely high, the dismal employment numbers haven’t been well received. If production has risen to almost pre-recession levels, then why aren’t the jobs coming back? There are a few reasons and they aren’t so negative when you really think about them.

Rehiring
Companies are coming back online, that is evident from the increase in production. However, instead of going out and finding people from the current unemployment rolls, they are rehiring workers that have been laid off. These people know the work and the plant. They are easily re-trained, even as many plants relocate before re-opening. Instead of creating new jobs, companies are slowly refilling old ones as production picks up.

Jobs are Lost even as New Jobs are Created
New jobs are being created, but old ones continue to be lost as plants update, retool, and work toward efficiency. Automation and new technology are often said to be the blame. Companies are filling these positions, many of them with rehired workers that had been laid off before. In fact, the manufacturing industry has been losing jobs while creating others since the late 90’s. The switch has come as old processes, machinery and infrastructure have gone out of service. It has just become more pronounced as the recession has taken its chunk out of the workforce and production load.

Green Manufacturing
New efficiency and automation are also being performed in an effort to  reduce the carbon output of companies and to also use more alternative energy in operations. This has naturally caused many positions to be lost, and others to be created. For example, the assembler’s positions in some plants have been largely replaced by automated systems. Instead of losing the people operating those positions, companies are putting re-training to use by teaching the assemblers how to operate the new robotics.

The economic recovery is still getting its legs, and positions within many factories are still being created and filled. The industry is expecting the recovery to extend through the next several years. But, don’t look at 2010 as a complete bust. There were over 1.2 million jobs added over the year, industry-wide. The Fed is looking for an even stronger year in 2011.