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Factory employment is back to pre-pandemic levels, but will it continue to rebound?

SACHA PFEIFFER, HOST:

And we have good news to report on one sector of the economy. It's been a strong year for U.S. manufacturing. Factories added nearly a half-million jobs in the last 12 months. And numbers this week show factory production in September was the highest in 14 years. NPR's Scott Horsley is covering this. Hi, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you.

PFEIFFER: Good to have you. And, Scott, rising interest rates have been having an impact on many industries, but it seems like factories keep humming along. What's going on?

HORSLEY: Yeah. Early in the pandemic, when a lot of service-oriented businesses like travel and entertainment saw demand drop off, people were still buying a lot of stuff. And it turns out they're still buying a lot of stuff, even though spending on travel and restaurants has now picked up again. September was an exceptionally good month for manufacturing, better than forecasters expected. And a lot of that has to do with automakers. Drew Greenblatt runs a factory in Baltimore, and about 10 months ago, he bought a second plant in Indiana that supplies automakers, among other customers.

DREW GREENBLATT: Since we've bought them, we've grown the company from 33 employees to 53 employees. We've invested in new technology, robotic press breaks, new bathrooms for the employees. It's aggressive push to reinvest back into the factory because we're so enthusiastic and optimistic about the future.

HORSLEY: And, you know, auto production has been up and down as carmakers have struggled with a shortage of computer chips. But September was an up month. And that helped push overall manufacturing to its best performance since 2008.

PFEIFFER: Scott, those chip shortages are one of many challenges factories have been facing in getting the parts and supplies they need. Is that getting any better?

HORSLEY: It's getting better. Although the factory managers I talked to say it's not back to normal. BJ Parrott runs Milwaukee Metal Products, a family-owned business that's been around more than a century. She says it's still a challenge to get supplies, and it's also a struggle to find qualified workers.

B J PARROTT: A lot of the baby boomers retired during COVID, and they were the ones that had, you know, years and years of experience. We've been looking for qualified welders for probably a year. The skilled people, the trained people are very, very hard to find.

HORSLEY: Factories did add 22,000 jobs last month. That's a slowdown from July and August. But for now at least, factory payrolls are still expanding.

PFEIFFER: And how does factory employment compare to what it was before the pandemic?

HORSLEY: As of June, factory employment is fully back to where it was before the coronavirus struck. That was actually two months earlier than the overall employment in the U.S. President Biden likes to boast about what he calls a manufacturing comeback.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT JOE BIDEN: Some people gave up on American manufacturing - not me, not the secretary, not the American people. Make it in America is no longer just a slogan. It's a reality in my administration.

HORSLEY: If you zoom out, though, factory employment is still only about two-thirds of what it was at its peak back in the late 1970s. Some of the decline since then is the result of foreign competition, especially from China. But economist Betsey Stevenson at the University of Michigan says it's also because today's factories are really efficient, so they just don't need that many workers to generate a whole lot of stuff.

BETSEY STEVENSON: Every president wants to increase manufacturing, OK? But the future of jobs is in the service sector because we've become so much more productive at making things. We just only need to spend, you know, a small share of our resources, our people, our time, our factories, our equipment, making stuff.

HORSLEY: Factory work is also generally more skilled these days, so workers have to know how to handle all that advanced equipment.

PFEIFFER: Scott, as you know, we keep hearing warnings of a possible recession coming. What would that mean for manufacturers?

HORSLEY: Well, this week's data says factory production is still growing. There are anecdotal signs that orders might be slowing down. Some factory managers are getting more cautious. A survey earlier this month found that when factory workers quit or retire, they're not necessarily being replaced right away because managers are nervous about slumping demand. We have seen a slowdown in the housing market as interest rates climb, and that's likely to curb demand for some manufactured goods like furniture and appliances. Also, factory exports could be hurt by the strong dollar, which makes U.S. goods more expensive for customers in other countries. All that said, though, factory owners are still optimistic. Drew Greenblatt, who we heard earlier, is expanding his Baltimore factory by more than 50%, and he's installing some additional robots next month.

GREENBLATT: We're just seeing the demand, and we want to have the best technology for our people to make it through potentially stormy times.

HORSLEY: There are undoubtedly some storm clouds ahead, but factories have shown they can weather a lot of challenges.

PFEIFFER: That's NPR's Scott Horsley. Thank you.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.
Ashley Brown is a senior editor for All Things Considered.
Lisa Lambert
Sacha Pfeiffer is a correspondent for NPR's Investigations team and an occasional guest host for some of NPR's national shows.