The Bureau of Labor Statistics reported that job openings in the manufacturing sector pulled back in May from April’s pace, which was the best reading since January 2001. Manufacturers posted 441,000 job openings in May, down slightly from 452,000 in April. In the latest figures, there were fewer job openings in both the durable (down from 281,000 to 272,000) and nondurable (down from 171,000 to 169,000) goods sectors. More importantly, the number of manufacturing job postings has remained highly elevated even with the easing in May, exceeding 400,000 for the fifth consecutive month (and in nine of the past 12 months). Monthly job openings in the sector have averaged 430,400 year-to-date in 2018, up from averages of 341,250 and 389,667 for all of 2016 and 2017, respectively. Moving forward, continued strength in job openings is anticipated in the coming months.
Net hiring among manufacturers remains encouraging, even with some slower activity over the past few months. There were 346,000 hires in the sector in May, down from 358,000 in April. Hiring eased a bit for both durable (down from 213,000 to 202,000) and nondurable (down from 145,000 to 143,000) goods manufacturers, but the numbers have still trended in the right direction. At the same time, total separations—including layoffs, quits and retirements—declined from 343,000 to 333,000. As a result, net hiring (or hires minus separations) edged down from 15,000 in April to 13,000 in May. It was the 13th consecutive monthly increase in manufacturing net hiring, averaging 18,538 over that time frame.
Meanwhile, job openings for nonfarm payroll businesses declined from April’s all-time high, dropping from 6,840,000 in April to 6,638,000 in May. It remained the second-highest reading, however, and job openings in the U.S. economy continued to exceed the number of people looking for work (6,065,000 in May and 6,564,000 in June). This is a sign of a very tight labor market and helps to explain why workforce recruitment and retention are such large challenges right now.
“The tax reforms they’ve adopted place US companies like Lilly on a level playing field with our global peers.”
The Bureau of Labor Statistics reported that manufacturers added 36,000 workers in June, the industry’s fastest pace of job growth since December. More importantly, it was the ninth consecutive month with robust hiring growth in the sector, with an average 27,111 jobs added per month over that time frame. As such, the latest jobs numbers confirm that the labor market has tightened significantly. Since the end of the Great Recession, manufacturing employment has risen by 1,260,000 workers, with 12,713,000 employees in the sector in this report. That is the highest level of manufacturing employment since December 2008.
Today’s report is more proof that the economy is still roaring following pro-growth tax and regulatory reform. Manufacturers have now added 155,000 total jobs in just the six months since tax reform was enacted—a marked increase in the pace of job creation compared to previous years. To keep this robust growth going long-term, manufacturers need certainty, and that will depend heavily on having sound trade policy and making temporary portions of the new tax code permanent. These numbers also help to cement more Federal Reserve rate action, largely based on improvements in the overall economy and labor market, with two more federal funds rate hikes expected in 2018.
Meanwhile, nonfarm payrolls rose at a healthy pace, up 213,000 in June, extending the gain of 244,000 seen in May and better than the consensus estimate of around 185,000. In addition, the unemployment rate ticked up from 3.8 percent in May, its lowest level since April 2000, to 4.0 percent in June. The higher unemployment rate, though, was largely a function of an increased participation rate, up from 62.7 percent to 62.9 percent. This suggests that more Americans are entering the labor market, which is encouraging. In a similar way, the so-called “real” unemployment rate, which includes discouraged, other “marginally attached” workers, edged up from 7.6 percent to 7.8 percent.
Turning to income growth, average weekly earnings for production and nonsupervisory employees in the manufacturing sector rose from $899.64 in May to $902.16 in June. That translated into a modest 3.0 percent increase over the past 12 months, up from $875.70 in June 2017.
In June, durable and nondurable goods manufacturers added 32,000 and 4,000 employees, respectively. The largest increases were in the transportation equipment (up 12,500, including 12,000 from motor vehicles and parts), fabricated metal products (up 7,100), computer and electronic products (up 5,100), food manufacturing (up 4,400), machinery (up 4,400), primary metals (up 2,900) and chemicals (up 1,900) segments. In contrast, there was declining employment in several segments in June, including apparel (down 1,800), miscellaneous nondurable goods (down 1,300), furniture and related products (down 800), miscellaneous durable goods (down 800), printing and related support activities (down 700) and textile product mills (down 300).
Employees at Jamison Door Company in Hagerstown, Maryland, are feeling the benefits of tax reform in a major way—receiving two special cash bonuses, thanks to increased competitiveness under the tax law.
Jamison Door, which manufactures temperature-controlled doors, has been a family-owned business since 1906. The company’s commitment to the men and women on its shop floor means that every single employee is sharing in the benefits of tax reform.
Jamison’s 120 employees received two bonuses, each equivalent to one week’s salary—first in August, in anticipation of tax reform, and again in February, after the new law took effect.
That is just the beginning: this year, Jamison plans to do even more, offering another raise to its employees.
Jamison Door is also taking advantage of tax reform and using its tax savings to reinvest in its business. That means growing its facilities, investing in new technology and creating skilled jobs in the Hagerstown plant.
Over the next year, Jamison is adding more than 50,000 square feet in new manufacturing space.
“Right now, we’re in the process of adding a significant-sized facility to add different product lines,” added Chairman and CEO John Williams, referencing his company’s plan to expand a product line of high-speed roll-up doors. “It’s a 400 percent increase in plant size.”
“We are spending about $1.5 million on new state-of-the-art equipment in our main plant, which makes foamed-in-place cold storage doors, and more than $3.5 million on the new plant for high-speed roll-up doors. These are significant investments for a company our size, and we feel comfortable making these investments because of the favorable business climate and the benefits of the lower tax rates.”
Expanding the company’s facilities also means Jamison will need more workers, and it plans to increase hiring dramatically. Over the next three years, Jamison plans to increase its workforce by more than 115 percent.
“Tax reform has absolutely made it more feasible to undertake these projects,” explained Williams. “Tax reform is necessary for us to keep expanding and to keep our business strong.”
The U.S. Supreme Court last week struck down a Berkeley, California, city ordinance that required retailers to post misleading warnings in their stores about mobile phones. The ruling helps manufacturers by upholding their First Amendment right to choose how to speak about their own products.
The case—CTIA – The Wireless Association v. Berkeley, California—involved a Berkeley city ordinance that sought to require mobile phone retailers to post in-store signs that warn customers about the alleged dangers of radio wave emissions from mobile phones. A group of companies sued to challenge the requirement, arguing that it unconstitutionally compels speech in violation of the First Amendment to the U.S. Constitution.
The 9th Circuit Court of Appeals ruled against the companies, concluding that all compelled commercial speech is subject to the most deferential standard of judicial review (known as “rational basis” review). The plaintiffs asked the Supreme Court to review and reverse the judgment.
The National Association of Manufacturers’ Manufacturers’ Center for Legal Action (MCLA) filed an amicus brief in support of review because governments should not be able to dictate how manufacturers advertise, promote or describe their products unless there is a compelling public need for such disclosures. If such compelled disclosures are subject to merely rational basis review, then the federal, state and local governments would be empowered to force manufacturers to speak out against their own products—especially those that the government disfavors.
The Supreme Court granted review and summarily ordered the 9th Circuit to reconsider its ruling in light of another recent Supreme Court decision that reaffirmed strong protections against compelled speech. This ruling protects the right of manufacturers to speak—or not speak—about their products without unwarranted government intrusion. The MCLA is proud to have submitted a brief in support of this great result for manufacturers.
The “slam dunk” tax reform bill is leading to big bonuses, new jobs and a huge nationwide investment says the team at Wilmington, North Carolina’s, Atlantic Packaging.
The 75-year-old family-owned business specializes in commercial packaging for some of the biggest companies in the country. Thanks to tax reform, they’re making sure to pass along the savings to their employees, who Wes Carter, president of Atlantic Packaging, describes as their “number-one asset.”
Immediately after tax reform passed, “we decided to hand out bonuses right away,” said Carter. “We knew this is a once-in-a-generation opportunity. The culture of our company is all about our people. We think that the quality of our people is what differentiates us in the marketplace and makes us a unique supplier. For us, handing out bonuses was an investment in our most valuable resource: our people. Companies create culture by having happy, dedicated employees, who want to have a long-term career at a quality organization. Giving bonuses didn’t even take any debate—we all knew it was the right thing to do.”
As a result of tax reform, Atlantic Packaging employees will be joined by many new coworkers—because tax reform has allowed the company to add jobs, grow the number of facilities and take their company nationwide.
“Tax dollars will help us grow our business,” Carter said. “Atlantic is positioned to become a national company, enhancing our ability to service our clients across North America. Tax reform will help us open new facilities and hire new employees nationwide.”
That’s exactly what Atlantic Packaging is doing. A new $10 million packaging center in Charlotte opened last fall and is now the most advanced package testing facility in the world. Carter also plans to invest in new equipment that will increase productivity and efficiency, including new printing presses and die-cutters for Atlantic’s manufacturing operations.
“All of that takes cash,” said Carter. “We’re able to make these investments, in part, because of tax reform.”
The increased number of facilities means that Atlantic Packaging plans to add up to 20 to 30 jobs a year for the foreseeable future as demand continues to increase. In 2018 alone, the company already has created 25 new jobs and completed a strategic acquisition in the Northeast.
Carter told the National Association of Manufacturers, “We’ve hired sales and sales support people in Kansas City, in Los Angeles, Dallas, Texas and in Portland, Oregon. We opened a new facility in Memphis, Tennessee and in Greenville, South Carolina. Certainly, tax reform has given us the additional confidence to push ahead with these strategic moves.”
“I know tax reform became a partisan issue in Washington, but to me, it was pretty plain and simple,” said Carter. “Because we are all operating in a global economy, U.S. companies need a fair and competitive tax code to remain healthy and vibrant. To me, tax reform was a slam dunk. It’s already proving itself by bringing jobs and major corporate investment back to the United States. The future for American manufacturing is really bright, and that’s the first time in my career I can say that. I’ve never seen so much confidence in the marketplace.”