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I spent part of the summer talking to manufacturers about the state of the economy and the trade wars. And it’s fair to say for some it’s getting grim out there.
My latest for the forthcoming issue of Bloomberg @BW:
My latest for the forthcoming issue of Bloomberg @BW:
The first 2 years of the Trump administration were good for many manufacturers. But things have definitely turned in some corners of the economy.
At Kuhn, an agricultural equipment maker, 250 employees spent the Labor Day holiday on furlough. They have another one in October.
At Kuhn, an agricultural equipment maker, 250 employees spent the Labor Day holiday on furlough. They have another one in October.
Kuhn is in Wisconsin, one of the 2020 battleground states. And in the first seven months of 2019 Wisconsin actually lost manufacturing jobs. It was one of 22 states in the US where that happened. Another big one: Pennsylvania.
Most of the companies I spoke with had one or more big investments parked because of their concerns about the direction of the economy and the trade wars.
At Klinge Corp in Pennsylvania they make specialized shipping containers. A plan to expand their small factory is on hold.
At Klinge Corp in Pennsylvania they make specialized shipping containers. A plan to expand their small factory is on hold.
Klinge dodged a bullet when shipping containers were crossed off the latest list of the Trump admin’s China tariffs. But it is already paying tariffs on plenty of components it imports. It also has been paying more for aluminum. And it exports the vast majority of its containers.
This is what the heat map looks like for manufacturing jobs in the US in the first seven months of the year. 
Most companies I spoke with were planning for things to get worse.
At Cummins they will pay some $150 million in tariffs and related costs this year. They are already seeing slowdowns in the trucking markets in the U.S. and China. That’s not good if you make Diesel engines.
At Cummins they will pay some $150 million in tariffs and related costs this year. They are already seeing slowdowns in the trucking markets in the U.S. and China. That’s not good if you make Diesel engines.
“We know that 12 months from now our sales will be significantly lower than they are now in a couple of our really important key markets,” says Tom Linebarger, Cummins’ chairman and chief executive officer.
This all has political ramifications. @Neil_Irwin has written about the 2015-16 manufacturing recession. nytimes.com/2018/09/29/ups…
And @MarkMuro1 and @robmaxim and their colleagues at Brookings have done some great work on the geography of manufacturing. Trump is far more exposed politically than Democrats, their data shows.
Nationally, manufacturing accounted for almost 12% of the jobs in counties that voted for Trump in 2016 vs. less than 7% in those that supported Hillary Clinton. In battleground states factory jobs account for more than 21% of employment in Trump counties
One of the most important factors in the 2020 election is going to be where this all goes. It seems likely the US won’t enter a recession in 2020. But geography matters. And there are corners of the economy where it already looks like a recession has arrived.
