The Militant (logo)  

Vol. 79/No. 40      November 9, 2015

 
US manufacturing contracts
as world depression grinds on

 
BY EMMA JOHNSON  
In September one-third of all containers leaving the Port of Long Beach, California, were empty, a more than 20 percent increase from a year ago. Figures are similar or worse at other large ports on the East and West coasts.

This is a graphic illustration of what is essentially a recession in manufacturing — marked by stagnant exports, falling production, fewer new orders and rising inventories — in the midst of a slow-burning worldwide capitalist depression. U.S. factories are working at just 77.6 percent of capacity and exports are at their lowest levels in three years. Manufacturing is contracting in China and stagnant in the European Union. Brazil, with the largest economy in Latin America, has entered a full recession.

The Institute for Supply Management reported that seven of the industries it tracked showed growth in September while 11 contracted, among them oil, coal, electrical equipment, machinery, computers, transportation equipment and chemical products.

These facts help expose the bosses’ lie that the economy is approaching full employment and better times are ahead.

In response to the 2008-2009 steep economic downturn, Washington implemented “stimulus” measures aimed at getting production going again. Interest rates were slashed to zero and the government pumped trillions of dollars into the financial system over six years. But capitalists found bigger profits in speculation in stocks, derivatives and other paper “assets.” Industrial production did not reach pre-recession levels until 2013 and has now contracted for eight of the last nine months.

Over the past year oil prices have declined 50 percent. The industry has slashed 78,000 jobs so far this year and the Energy Information Administration lowered its growth forecast for oil production both for this year and next. In oil-producing states such as Texas and North Dakota tens of thousands of workers have lost jobs.

Steel production nationwide dropped 9 percent from a year ago. U.S. Steel has closed plants or cut production in Ohio, Illinois, Indiana and Alabama. At its Granite City, Illinois, plant more than 2,000 workers are on notice that they might be laid off around Christmas. On the Iron Range in northern Minnesota, the company plans to close taconite mines in Mountain Iron and Keewatin, laying off 1,100, roughly a quarter of the miners in the area.

Coal exports have dropped for nine quarters in a row and production this year is projected to be the lowest in 29 years. It has slumped most in the Appalachian coalfields of Kentucky, Pennsylvania and West Virginia, with wide-ranging social effects. Martin County, Kentucky, couldn’t afford to open its swimming pool last summer. Officials in Boone County, West Virginia, are considering ending free garbage pickup. Across the region school budgets are being cut and stores closed down.

The labor force participation rate — the percentage of the working-age population with a job — is just 53 percent in West Virginia and 56 percent in Kentucky. The national average is 62.4 percent, the lowest rate since October 1977.

Bosses in the U.S., Europe, Japan and Australia had looked to rapid growth in China for salvation. But the Chinese “miracle” is drying up. The manufacturing sector there contracted for the seventh straight month in September, shrinking at its fastest rate in six and a half years.

The manufacturing recession will exacerbate the depression conditions that are grinding on working people with no end in sight. To boost their profits bosses push to lower wages, cut the workforce, speed up production and drive out unions. U.S. manufacturing production today is 20 percent higher than in 2005, with roughly 2 million fewer workers.

The pressure on profits in the race to get a competitive edge against rivals is a reality throughout the economy. In October Walmart, the world’s largest employer, announced it expects profits to drop up to 12 percent next year. The company blamed higher wages and stiff competition with Amazon for online sales. Amazon’s competitive edge is based on massive speedup and use of robots in its warehouses.

Warehousing in general has gone through a rapid transformation, with a smaller number of workers handling an increasing number of items and orders. Many grocery chains have contracted out distribution to big operators, who have relocated to areas with lower minimum wages and no union protection. Teamsters officials estimate that 6,700 union jobs have been eliminated in grocery warehouses nationwide over the past 20 years.  
 
 
Front page (for this issue) | Home | Text-version home