Manufacturing Job Cuts Have Begun. Here’s What to Expect.
The manufacturing industry has had a tumultuous year, all things considered. Thankfully, while the first and second quarters were nothing short of miserable, the economy is rebounding in the third quarter and showing signs of strength headed into the end of the year, according to the most recent Report on Business. Orders are up, as are imports and exports. In fact, just about every metric indicative of the health of industry is on the rise. So why are manufacturing companies starting to cut jobs?
Some attribute the cuts to the cyclical nature of the industry. Others point to COVID-19, citing off-kilter supply and demand. Still more believe the job cuts are affiliate with strained global supply chains and the efforts of many manufacturers to slim down. Who’s right?
A little bit of everything
The job cuts, layoffs, and buyouts plaguing the manufacturing industry right now are the result of a perfect storm. Complications from COVID-19 are driving most of the turmoil among domestic manufacturers, including uncertainties ahead. Job cuts are indeed a sign of slim downs from producers who want to preempt economic downturn. And, of course, there are complications with restructuring, reshoring, and supply chain realignment.
Above all, manufacturing’s job losses are part of a larger trend of lagging employment stemming from COVID-19. U.S. employers announced 262,649 job cuts in July. According to Reuters, “July’s job cuts brought the total so far this year to 1.848 million, up 212% from the same period in 2019. The year-to-date layoffs are just 109,180 away from the record 1.957 million job cuts announced in 2001.”
Unfortunately, manufacturing bears a large bulk of these lost jobs. And while unemployment is dropping in the third quarter, fewer people are going back to work in manufacturing. According to the August Report on Business, manufacturing employment is still in contraction territory.
Who’s cutting jobs?
Although there will always be ebbs and flows in the hiring and downsizing of an industry as large as manufacturing, the reason current layoffs are making headlines is because of the names attached to them. In just the past 30 days, some of the industry’s biggest titans have announced their plans to downsize workers.
- Auto manufacturer Ford has announced plans to buy out 1,400 jobs. While the program is voluntary, it’s nonetheless a step toward a slimmer workforce. The cuts primarily affect white-collar jobs.
- Coca-Cola has followed Ford’s lead. The food and beverage manufacturer will offer a voluntary buyout program to 4,000 employees in an attempt to downsize its workforce and consolidate operations.
- Defense manufacturer Raytheon is cutting a whopping 15,000 jobs at its headquarters in response to the beleaguered airline industry and its rippling effects on the company’s MRO (maintenance, repair, overhaul) and servicing capabilities.
Each company has its reasons. Ford is looking to sell off its credit division. Coca-Cola is consolidating its brand portfolio. Raytheon is at the mercy of an industry being absolutely hammered by COVID-19. Nonetheless, the real casualty for each are the manufacturing employees who will lose their jobs.
Will the cuts continue?
Almost definitely. Companies will continue to shore up their operations ahead of election season and, depending on the outcome, immediately afterward. Whether it’s fears of economic turndown, economic uncertainties in 2021, or post-COVID-19 efforts to reestablish operations, companies want leaner operations. Manufacturing workers will be the ones to pay the price.