State of the Profession: How Bad Is It?

July 8, 2008
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The last time the U.S. economy suffered a recession was in 2001. While economic conditions today are similar, the overall outlook remains much healthier.

The last time the American economy suffered a downturn was seven years ago. The headline of the 2001 State of the Profession Survey was “Worried, Wondering and Waiting.” Just a year earlier, manufacturing was experiencing a boom period.

For instance, 2000 was a record year for automobile and light truck sales, with 17.2 million vehicles sold in the United States. But, the first few months of 2001 were entirely different than the same period a year before. The squeeze on profits from higher costs and sagging demand prompted many manufacturers to cut hours, eliminate overtime and trim staff through layoffs.

That’s exactly what happed during the first half of 2008. So, does that mean that things are the same, worse or better today than they were seven years ago? That depends on how you look at it.

For instance, if you listen to all the news reports on TV or scan the headlines in newspapers or Web sites, things look pretty bleak. In recent weeks, there have been numerous layoffs and plant closings, especially in the automotive industry.

But, at the same time, there are also a lot of positive signs out there that often don’t get the big headlines reserved for “doom and gloom” news. For instance, several major manufacturers have recently announced plans to invest billions of dollars in their U.S. assembly plants:

  • ArvinMeritor Inc. (Troy, MI) is investing more than $32 million in its Fletcher, NC, plant to build a new assembly line.
  • Caterpillar Inc. (Peoria, IL) plans to invest $1 billion to expand production capacity at its Illinois assembly plants in Aurora, Decatur, East Peoria, Joliet and Mossville.
  • Deere & Co. (Moline, IL) is investing $125 million to expand production capacity at its combine and tractor plants in Moline, IL, and Waterloo, IA.
  • Ford Motor Co. (Dearborn, MI) plans to spend several billion dollars to retool several of its U.S. truck factories, such as its Louisville Assembly Plant, to build small cars.

That kind of news is certainly a shot in the arm for American manufacturing and it indicates that the economy may not be as bleak as some folks like to think.

“While the manufacturing sector is currently facing severe head winds, the current situation is much milder than [economic conditions] seven years ago,” says David Huether, chief economist at the National Association of Manufacturers (NAM, Washington, DC). “[Manufacturers are] in a better position today than in 2001, when dual declines in both domestic demand and exports sent the manufacturing sector into a sharp contraction.”

Data gleaned from ASSEMBLY’s 2008 State of the Profession survey supports that sentiment. If our barometer is accurate, economic conditions today are much healthier than they were during the recession seven years ago.

For instance, in 2001, manufacturers were planning to invest 11 percent less in assembly operations vs. the previous year. In 2008, that number is down only 2 percent from a year ago.

Also budget cutbacks were more severe that last time assemblers faced economic hurdles. In 2001, 63 percent of respondents cited budget cuts as a barrier to success vs. only 45 percent in 2008.

However, assemblers appear to be a little less satisfied with their jobs today than they were seven years ago. Indeed, 37 percent of respondents claim to be “highly satisfied” vs. 39 percent in 2001.

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