A Manufacturing Close Up From the Federal Reserve

The Changing Gears team is getting ready to take a look at manufacturing in September. And, there are some eye opening numbers about manufacturing, the auto industry and our region in a new report from the Federal Reserve.

Federal Reserve of Chicago

According to Paul Traub, senior economist for the Chicago Fed’s office in Detroit, auto industry employment in the Fed’s 7th district — Michigan, Indiana, Illinois, Iowa and Wisconsin — is now just below 204,000 people, or about 9.3 percent of manufacturing jobs here.

The district does not include Ohio, which is one of the nation’s biggest automotive and manufacturing states.

In 2000, auto industry employment in those states alone was 474,000, or about 14.4 percent of all manufacturing jobs here. That loss of 270,000 jobs represents a 57 percent decline in auto jobs over the past decade in those states.

“It’s quite dramatic,” Traub said. “The question is whether we’ll see some recovery.”

When it comes to overall manufacturing jobs, Traub sees a depressing historic picture. Over the past 20 years, the region — and the country — have seen manufacturing employment drop by about 35 percent. The nation lost 6 million manufacturing jobs; our region lost 1.1 million manufacturing jobs.

Although many people think Midwest manufacturing employment has been on the decline in the United States for decades, it actually peaked only 10 years ago. In 2000, manufacturing jobs in the Midwest made up 19.1 percent of all the manufacturing jobs nationwide. Now, manufacturing jobs in the region make up 18.6 percent of the manufacturing jobs held across the country.

So, is there any good news? Traub sees some in job growth. In the first six months of 2011, the states in the 7th district saw jobs grow at an annual pace of 0.9 percent — better than the national rate of 0.7 percent.

Michigan actually led these states with non-farm job growth of 1.9 percent over six months. That was followed by Iowa, with 1.3 percent growth; Wisconsin, with 1.1 percent; Illinois, up 0.5 percent and Indiana, which saw job growth decline by 0.4 percent.

But that job growth isn’t bringing the area anywhere close to its past levels. The economist notes that non-farm, payroll employment is about where it was in 1996. That compares with the nation, where non-farm employment is around 2004 levels.

Traub says he’s doing further analysis about automotive employment and its prospects for playing a role in the nation’s economy.

He’s looking at a number of factors, such as how many cars each household will have, and whether housing, which is a big factor driving auto sales, will bounce back. He’s also looking at whether environmental awareness and the growing use of public transportation will have an impact on auto sales.



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