U.S. manufacturers want global certainty, policymakers can help

The future success of the manufacturing industry is tied to the future of its workforce, and the Labor Department’s jobs report, released the first Friday of the month, is an important economic indicator monitoring the pulse on the U.S. labor market.

While the unemployment rate fell to 3.5 percent, the lowest since December 1969, and wages experienced solid growth, last month the U.S. added a modest 136,000 jobs. These jobs numbers continue a soft downward trajectory over the past few years. For manufacturers, economic indicators have fluctuated, but the fact remains that manufacturing job openings are at an 11-year high—despite manufacturing employment falling by 2,000 in September. 

This is underscored by the Institute for Supply Management’s® U.S. Manufacturing Purchasing Managers’ Index® reading from earlier this week, which reported the lowest reading since 2009, driven in part by contractions in employment and hiring.

What explains this slowed manufacturing job growth and the overwhelming need for more qualified workers in the industry?

Namely, manufacturers are increasingly impacted by two headwinds that have begun to take their toll on the industry: a slowing global economy and uncertainty surrounding federal policies out of Washington. The good news is that there are things lawmakers in Washington can do to immediately kick-start the industry to rev the manufacturing engine back to the record-setting levels we’ve seen recently.

First, lawmakers must swiftly ratify the United States–Mexico–Canada Agreement. Canada and Mexico are the United States’ largest trading partners, purchasing more U.S.-manufactured goods than our next 11 trading partners combined. Trade with these two countries also supports 2 million American jobs and 40,000 small and medium-sized businesses.

The USMCA improves and modernizes the 25-year-old North American Trade Agreement with stricter intellectual property protections and enforcement, as well as a world-class digital chapter that helps manufacturers in the United States reach more consumers. Congress should ratify the agreement to ensure manufacturers across the country can continue to grow, compete globally and support millions of well-paying jobs.

Second, we must reach an enforceable, rules-based, bilateral trade agreement with China. For the past 15 months, the U.S.–China trade war has been at the center of an unstable global economy. Manufacturers across the U.S. certainly agree with the Trump administration that China needs to end its unfair and harmful trade practices, but manufacturers in America are also unfortunately feeling the negative impacts of tariffs from both sides. Put simply, the trade war with China needs to become a trade deal with China.

Congress can also help restore manufacturing certainty by passing a robust, long-term reauthorization of the Export-Import Bank. This agency serves as the “lender of last resort,” helping manufacturers get funding to reach markets that they otherwise would not be able to penetrate. With more than 100 foreign export credit agencies around the world, a strong Ex-Im Bank is essential to ensuring manufacturers in the United States can compete—and win—in the global economy.

And last, but certainly not least, we need to address the skills gap in manufacturing and inspire more people to join the industry. For the eighth consecutive quarter, the National Association of Manufacturers’ outlook survey found the inability to attract and retain talent is the top concern among business leaders. Manufacturing job openings reached an all-time high of 522,000 in July, and a report from The Manufacturing Institute—the education and workforce partner of the NAM—and Deloitte estimates that the manufacturing industry will need to fill 4.6 million jobs over the next decade.

Today and throughout the month, thousands of manufacturers across the country are celebrating MFG Day by opening their doors to students, parents, teachers and educators to show the rewarding, well-paying careers that modern manufacturing has to offer. The NAM also recently launched a member-driven, multimillion-dollar campaign for the newly established “Creators Wanted Fund” to educate Americans about career opportunities in manufacturing. This campaign, which aims to cut the skills gap by 600,000 workers by 2025, follows the NAM’s signing of the Pledge to America’s Workers, committing to provide training opportunities to 1.186 million manufacturers over the next five years.

Some experts will warn that the September jobs report is indicative of a looming recession around the corner. However, the manufacturing industry remains resilient. Lawmakers in Washington have the opportunity to provide business certainty that will allow manufacturers to continue growing and investing in the future of their workforce—and the future of our country.

Chad Moutray is chief economist at the National Association of Manufacturers in Washington, D.C.

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