The Manufacturing Jobs Outlook

Posted on March 28, 2024 by JMJ Phillip

A different perspective on the next 12 months of manufacturing employment in the United States.

The outlook for manufacturing jobs going into the second quarter of 2024 is multifaceted, influenced by a complex interplay of economic, technological, and geopolitical factors. While some segments of the manufacturing sector may experience slowdowns due to consumer behavior and macroeconomic conditions, others could see growth spurred by strategic shifts and government spending.

Pulse Of The Manufacturing Job Market

5 Threats To Job Growth

Pull-ahead sales on durable goods from stimulus and overspending in the last 3 years.
High interest rates that could continue to dampen capital expenditures and expansion.
Crippling consumer debt that could result in decreases in demand.
Political uncertainty.
Automotive refocuses as the EV euphoria fades and new strategies develop.

5 Strengths To Job Growth

CHIPS Act will spur growth in the semiconductor sector along with growth for upstream supply chain providers.
A potential cut in rates could encourage companies to invest while debt payments may shrink for consumers, opening up more budget for consumption.
Reshoring of manufacturing as the United States rethinks its critical supply chain components for national security.
Rate cuts could spur momentum in the housing market including new home construction.
As federal spending pushes past $7 Trillion dollars, up from $4.4 Trillion in 2019, trickle down effects will affect demand.

Threats

Pull-Ahead Sales

Observing recent economic trends, it’s crucial to consider the potential implications of the pull-ahead sales phenomenon in durable goods, fueled by stimulus measures and consumer overspending during the past three years. This surge in demand, while beneficial in the short term, may result in a subsequent slowdown, with companies facing the prospect of layoffs to adjust to the diminished market demand.

The stimulus packages introduced during the COVID-19 pandemic led to an increase in disposable income for many consumers. Coupled with restrictions on travel and leisure activities, this led to a redirection of spending towards durable goods such as electronics, appliances, and vehicles. Consumers, flush with cash from stimulus checks and savings from reduced spending in other areas, advanced their purchases of these items, leading to a significant spike in sales.

However, as the economy transitions to a post-pandemic normalcy, the effects of these pull-ahead sales are starting to surface. With the earlier than usual fulfillment of consumer demand for durable goods, a natural decline in sales volume is anticipated. This downturn is expected because a significant portion of the consumer base has already made major purchases, reducing the pool of potential buyers in the near term.

The anticipated slowdown in demand could have serious implications for employment within the manufacturing sector. Companies that ramped up production and workforce to meet the heightened demand during the past three years may find themselves overstaffed in the face of reduced sales. Without the cushion of high demand to sustain the increased production levels, these companies might be compelled to consider layoffs as a strategy to balance their operational costs with the decreased revenue.

Moreover, the economic landscape is shifting, with the end of stimulus programs and the potential for increased interest rates to combat inflation. These factors could further constrict consumer spending, particularly on high-cost durable goods that are often financed through credit. As borrowing costs rise, the affordability and appeal of financing new purchases diminish, potentially exacerbating the slowdown in demand for durable goods.

Businesses in the durable goods sector need to brace for this transition by closely monitoring market trends and adjusting their production and staffing levels accordingly. Strategic inventory management will become crucial, as will the need for flexibility in operational planning to swiftly respond to the changing market dynamics.

In the medium term, companies should also consider diversifying their product offerings or exploring new markets to mitigate the impact of decreased domestic demand. Innovations that align with evolving consumer preferences, such as sustainability and technology integration, may provide avenues for growth even as traditional demand channels contract.

In conclusion, the pull-ahead sales effect driven by stimulus-induced consumer spending in the durable goods sector is likely to lead to a temporary slowdown in demand, posing challenges for manufacturers. To navigate this impending shift, companies must adopt proactive strategies, including prudent workforce and production management, to avoid or minimize layoffs and ensure sustained operational viability in a changing economic environment.

High Interest Rates

The current high-interest rate environment is a significant factor influencing corporate decision-making, particularly concerning large capital expenditures. As interest rates rise, the cost of capital increases, making debt financing more expensive for companies. This financial dynamic has direct implications for corporate investment strategies and could have a cascading effect on job growth and economic stability.

When interest rates are high, the cost of borrowing money to finance new projects, expand operations, or upgrade infrastructure escalates. For businesses, especially those requiring substantial capital investment, this means that the financial burden of taking on new debt could outweigh the potential returns from the investment. Consequently, companies may postpone or scale down their capital expenditure plans to avoid the increased financing costs associated with high-interest rates.

The hesitation or reduction in capital expenditures due to high borrowing costs can lead to a slowdown in job growth. Large capital projects, such as building new facilities, upgrading technology, or expanding production lines, typically generate a significant number of jobs, both during the construction phase and in ongoing operations once the projects are completed. Delays or cutbacks in these investments mean fewer construction jobs, reduced demand for materials and equipment, and ultimately, fewer employment opportunities in the sectors related to these projects.

Moreover, capital investments are often linked to a company’s long-term growth strategy. Investments in research and development, new product lines, or market expansion are crucial for sustaining business growth and competitiveness. When these investments are curtailed due to high-interest rates, it can stifle innovation and hinder a company’s ability to create new jobs in the future. The ripple effects can be felt across the economy, as reduced corporate spending can lead to slower economic growth, affecting employment across various sectors.

The impact of high-interest rates on capital expenditures and job growth can be particularly pronounced in industries that are capital intensive, such as manufacturing, construction, and technology. In these sectors, the need for substantial investment in machinery, facilities, and technology is essential for operational success and competitive advantage. Therefore, the increased cost of financing these investments can lead to significant reductions in capital spending, with direct implications for employment in these industries.

Additionally, small and medium-sized enterprises (SMEs), which are often more sensitive to changes in financing costs, may find it particularly challenging to access the capital needed for expansion or innovation in a high-interest rate environment. This constraint can limit their growth potential and ability to contribute to job creation.

However, it’s essential to consider that while high-interest rates can dampen capital expenditure and job growth, they are often implemented by central banks as a measure to control inflation. While controlling inflation is crucial for long-term economic stability, finding the right balance to ensure that interest rates do not stifle economic growth and job creation is equally important.

In conclusion, the current high-interest rates present a challenging environment for companies considering large capital expenditures. The increased cost of capital can lead companies to delay or reduce their investment plans, potentially slowing job growth and affecting the broader economy. Policymakers and businesses alike must navigate these complexities carefully to foster a conducive environment for sustainable economic growth and employment.

Record Consumer Debt

The current high levels of consumer debt are a pressing concern that could significantly impact economic dynamics, particularly in terms of consumer spending, demand for manufactured goods, and employment within the manufacturing sector. As consumers grapple with the burden of debt, their ability to spend freely diminishes, leading to a potential decrease in demand for a wide range of products. This shift can have a ripple effect across the economy, particularly affecting manufacturers and possibly leading to layoffs in the sector.

Consumer debt, encompassing credit cards, loans, and mortgages, has soared to unprecedented levels in many economies. While debt can fuel consumer spending in the short term, excessively high debt levels become unsustainable, forcing consumers to cut back on spending to manage or reduce their liabilities. This pullback in consumption directly impacts the demand for goods, including those produced by the manufacturing sector. As spending decreases, manufacturers may face excess inventory and reduced order volumes, straining their financial stability and operational capacity.

In response to reduced demand, manufacturers might need to adjust their production levels to avoid overproduction and inventory accumulation. This adjustment often involves scaling back operations, which can lead to workforce reductions or layoffs. The manufacturing sector, known for its significant contribution to employment and economic activity, can thus experience a downturn, affecting not only individual workers and their families but also the broader economic health of regions reliant on manufacturing jobs.

Moreover, the interconnectivity of industries means that a slowdown in manufacturing can have secondary effects on related sectors, such as raw materials, logistics, and retail. Suppliers and service providers dependent on the manufacturing sector may also experience decreased demand for their products and services, potentially leading to further economic contraction and job losses in these areas as well.

The impact of high consumer debt on manufacturing is further exacerbated by the cyclical nature of the economy. During periods of economic downturn or uncertainty, consumers are even more likely to reduce spending, deepening the challenges faced by manufacturers. Additionally, if high debt levels lead to increased default rates, the resulting financial strain on banks and credit institutions can lead to tighter credit conditions, further reducing consumer spending and investment in manufacturing and other sectors.

However, it’s important to note that the relationship between consumer debt, spending, and manufacturing is influenced by a variety of factors, including government policies, global economic conditions, and technological advancements. For instance, fiscal stimulus or policy measures aimed at debt relief can alleviate some pressure on consumers, potentially stabilizing or increasing spending and demand for manufactured goods.

In conclusion, the current high levels of consumer debt are a significant concern for the manufacturing sector due to the potential for reduced consumer spending, leading to decreased demand for manufactured goods. This situation can strain manufacturers, possibly resulting in production cutbacks and layoffs, and can have broader economic implications. Addressing the challenges posed by high consumer debt requires a multifaceted approach, including sound economic policies, financial education, and support mechanisms to help consumers manage debt effectively and sustain economic growth and employment in the manufacturing sector and beyond.

Political Uncertainty

Political uncertainty, particularly during an election year, can significantly influence corporate decision-making, with manufacturing companies often becoming cautious about making large capital expenditures and expansions. This hesitancy stems from the unpredictability of policy direction, regulatory changes, and economic strategies that can arise with potential shifts in political leadership.

Election years often bring a degree of unpredictability regarding future government policies. Companies, especially in the manufacturing sector, require a stable and predictable policy environment to make informed long-term investment decisions. The prospect of changes in trade policies, taxation, environmental regulations, and labor laws can create a risk-averse attitude among business leaders. The uncertainty about these critical factors makes it challenging for companies to commit to large-scale investments or expansion projects without a clear understanding of how future policies may impact their operational costs and market opportunities.

Manufacturing companies, in particular, are sensitive to changes in trade policies and tariffs, given their often extensive global supply chains and markets. An election could result in new trade agreements or alterations to existing ones, affecting the cost of raw materials and the competitiveness of manufactured goods in international markets. The potential for such significant changes can lead companies to postpone or scale down investment plans until a clearer picture of the trade environment emerges post-election.

Moreover, changes in environmental and labor regulations can directly affect the manufacturing sector’s operational costs and profitability. New regulations or shifts in policy focus can necessitate additional investments in compliance, technology upgrades, or changes in operational processes. The uncertainty around these potential regulatory changes can deter companies from undertaking new capital expenditures, preferring to wait until they can better assess the implications of new policies on their operations.

Economic strategies that influence interest rates and currency values also play a crucial role. Political changes can lead to shifts in economic policies, affecting the cost of borrowing and exchange rates. Since capital expenditures often require significant financial outlays and long-term planning, fluctuations in these economic factors can add to the uncertainty, making investment decisions more complex and risky.

Additionally, the domestic political climate during an election year can impact consumer confidence and spending, further influencing manufacturing companies’ decisions. If consumers are uncertain about the future, they may reduce spending, leading to lower demand for manufactured goods. This decrease in demand can prompt manufacturers to reconsider the timing and scale of their investment and expansion plans.

However, while political uncertainty can lead to postponement or scaling down of investments, it can also create opportunities for strategic planning and positioning. Companies that navigate these uncertain times effectively can gain a competitive edge by adapting more swiftly to the new political and economic landscape that emerges after the election.

In conclusion, political uncertainty during an election year can have a significant impact on the decision-making process of manufacturing companies regarding large capital expenditures and expansions. The potential for changes in trade policies, regulatory environments, economic strategies, and consumer confidence can create a cautious approach to investment. Companies often prefer to wait for a more stable and predictable policy environment before committing to significant financial outlays, affecting the overall investment climate and potentially delaying growth and development initiatives in the manufacturing sector.

Automotives Refocus

As the automotive industry navigates the shifting sands of consumer preferences and market trends, particularly around electric vehicles (EVs), the implications for employment and operational strategy are significant. The initial surge of enthusiasm for EVs has faced challenges, prompting automakers to reassess their strategies, which could lead to hiring slowdowns or even layoffs, alongside the need for retooling products and supply chains.

The automotive market’s journey into electrification was met with significant investment and optimism, driven by environmental concerns, technological advancements, and regulatory pressures. Companies ramped up their efforts to develop and produce EVs, leading to increased hiring in areas related to electric powertrain development, battery technology, and related fields. However, as the market evolves, several factors contribute to the fading enthusiasm for EVs, including consumer range anxiety, high purchase costs, and insufficient charging infrastructure, leading manufacturers to reevaluate their focus and offerings.

This reevaluation could result in a shift in employment needs within the automotive sector. If automakers decide to slow down their EV production or diversify their focus back to internal combustion engine (ICE) vehicles or hybrid models, the demand for specific skills related to EV technology might decrease, potentially leading to a hiring freeze or layoffs in these areas. Conversely, there might be an increased demand for roles related to the development and production of traditional or hybrid vehicles, reflecting the industry’s response to current consumer demands.

Retooling for new products and adapting supply chains are significant undertakings that further influence hiring trends. Transitioning production facilities and processes from EV-focused manufacturing to a more diversified approach that includes ICE and hybrid vehicles requires substantial investment and operational changes. This retooling process not only involves physical changes to manufacturing lines but also requires employees with different skill sets. Workers skilled in traditional automotive manufacturing processes might become more in demand, while those specialized exclusively in EV technologies could face uncertainties unless they adapt to the broader needs of the industry.

Moreover, the supply chain for EVs, heavily reliant on specific components like lithium-ion batteries and rare earth elements, is different from that of ICE vehicles. A strategic shift in product focus necessitates a corresponding adjustment in the supply chain, affecting relationships with suppliers, procurement strategies, and logistics. These changes can have workforce implications, as companies may need to hire professionals with expertise in these new supply chain dynamics or upskill existing employees to manage these transitions effectively.

The broader economic context also plays a critical role in how automotive companies manage their workforce in response to changing market dynamics. In periods of economic uncertainty or downturn, consumers may be more hesitant to invest in new technologies like EVs, preferring the familiarity and perceived reliability of ICE vehicles. This economic sensitivity can lead manufacturers to prioritize flexibility in their product offerings and operational strategies, impacting their hiring and employment practices.

However, it’s important to recognize that the automotive industry’s long-term trajectory still leans towards electrification and sustainability, driven by global environmental goals and regulatory mandates. While there may be short-term adjustments in response to market demand and consumer preferences, the industry’s overarching direction is likely to necessitate continued investment in EV technology and related skills development.

In conclusion, the automotive industry’s response to the fading enthusiasm around EVs and the consequent strategic reevaluation could lead to a slowdown in hiring or layoffs, particularly in EV-focused roles. The need to retool for new product lines and adapt supply chains further complicates the employment landscape, requiring a careful balance between current market demands and long-term strategic goals. Automakers must navigate these challenges with a focus on flexibility and adaptability, ensuring they can respond to immediate market trends while still preparing for the future of mobility. This balancing act not only affects their product offerings and market strategy but also has significant implications for workforce management and development in the evolving automotive sector.

Strengths

CHIPS Act

The CHIPS Act, standing for Creating Helpful Incentives to Produce Semiconductors for America, represents a significant legislative effort to bolster the semiconductor industry in the United States. This act is expected to have a profound impact on manufacturing job growth, driven by substantial investments in semiconductor production and research. By providing financial incentives, including grants and tax credits, the CHIPS Act aims to stimulate the domestic production of semiconductors, which are essential components in a wide array of products from automobiles to consumer electronics and critical military systems.

The direct effect of the CHIPS Act on job growth in the manufacturing sector is substantial. With the act’s implementation, semiconductor companies are encouraged to establish or expand their manufacturing facilities in the United States. This expansion necessitates a significant increase in the workforce to manage and operate these facilities. Jobs in semiconductor manufacturing are not only numerous but also tend to be high-paying and skilled positions, including engineers, technicians, and production workers. The creation of these jobs can stimulate local economies and contribute to broader economic growth and stability.

Furthermore, the CHIPS Act is set to spur secondary job growth in related industries and supply chains. The increase in semiconductor manufacturing capacity will require support from a wide range of ancillary businesses, including materials suppliers, equipment manufacturers, and service providers. This expansion of the semiconductor manufacturing ecosystem will create additional jobs across these related sectors, further amplifying the employment impact of the CHIPS Act.

The act also includes provisions for research and development (R&D) in the semiconductor industry, which is crucial for maintaining technological leadership and competitiveness. Investing in R&D not only fosters innovation but also creates high-quality jobs for scientists, researchers, and engineers. These roles are essential for developing new semiconductor technologies and processes that can enhance productivity and efficiency in manufacturing.

Moreover, the CHIPS Act is expected to have a long-term positive effect on the manufacturing job market by enhancing the stability and resilience of the U.S. semiconductor supply chain. The COVID-19 pandemic exposed vulnerabilities in global supply chains, particularly in the semiconductor industry, underscoring the importance of domestic production capabilities. By strengthening the domestic semiconductor industry, the CHIPS Act reduces reliance on foreign suppliers, mitigates supply chain risks, and ensures a more stable and secure supply of these critical components for various industries, thereby supporting sustained job growth in manufacturing.

The strategic importance of semiconductors in national security further emphasizes the significance of the CHIPS Act. Semiconductors are vital for defense systems, telecommunications, and critical infrastructure. By fostering a robust domestic semiconductor industry, the act not only contributes to economic and job growth but also enhances national security, ensuring that the U.S. remains self-reliant in producing these essential technologies.

In conclusion, the CHIPS Act represents a pivotal move to revive and strengthen the U.S. semiconductor industry, with far-reaching implications for manufacturing job growth. Through substantial financial incentives for semiconductor production and R&D, the act is set to create a multitude of skilled jobs, stimulate secondary employment in related sectors, and bolster the overall economy. The strategic focus on semiconductor manufacturing also serves broader national interests, including economic stability, supply chain resilience, and national security, making the CHIPS Act a cornerstone of future manufacturing and technological advancement in the United States.

Rate Cuts

A potential cut in interest rates presents a significant opportunity for both manufacturing companies and consumers. For manufacturers, lower interest rates can reduce the cost of borrowing, making capital investments more affordable and attractive. This financial environment encourages companies to invest in new projects, expansion, and technological upgrades, fostering growth and innovation within the manufacturing sector. For consumers, a reduction in interest rates can lead to smaller debt payments, freeing up disposable income for increased consumption, which in turn can stimulate demand for manufactured goods.

When interest rates are cut, the cost of acquiring new loans or servicing existing debt decreases. For manufacturing companies, this reduction in financial burden can be a catalyst for investment. Lower borrowing costs make it economically viable to finance large-scale projects such as expanding production facilities, investing in research and development, or adopting new technologies to improve efficiency and productivity. These investments not only drive the growth and competitiveness of individual companies but also contribute to the broader economic development and job creation within the manufacturing sector.

The impact of reduced interest rates on consumer debt is another critical factor. As interest payments on mortgages, car loans, and credit cards decline, consumers find themselves with more available cash. This increase in disposable income can lead to greater consumer spending, which is a vital driver of demand in the economy. As consumers spend more, manufacturing companies benefit from the heightened demand for their products, whether they are consumer goods, automobiles, electronics, or other manufactured items.

The interplay between increased investment by manufacturers and higher consumer spending can create a virtuous cycle of economic activity. As companies invest in expanding their operations and improving their offerings, they generate more employment opportunities and potentially increase wages. This, in turn, supports further consumer spending, creating more demand for manufactured goods and services.

Moreover, a cut in interest rates can improve business and consumer confidence. For businesses, the lower cost of capital can signal a good time to undertake new ventures or expand operations, knowing that the financial conditions are favorable. For consumers, the easing of debt pressure and the potential for better employment prospects can lead to increased confidence in their financial stability, encouraging them to spend more.

However, it’s essential for policymakers and businesses to navigate the interest rate environment carefully. While a cut in rates can stimulate investment and consumption, it must be balanced against the risks of inflation and potential overheating of the economy. Manufacturing companies should strategically plan their investments to ensure they align with long-term market demand and operational efficiencies, rather than merely taking advantage of short-term financial conditions.

A potential cut in interest rates could serve as a significant stimulus for the economy, particularly beneficial for the manufacturing sector and consumer spending. By lowering the cost of borrowing, it encourages companies to invest in growth and innovation, while also easing the debt burden on consumers, thereby freeing up more of their budget for consumption. This dual effect can lead to increased demand for manufactured goods, fostering a cycle of economic activity that supports sustained growth and development in the manufacturing sector and the broader economy.

Reshoring Manufacturing

The reshoring of manufacturing to the United States, driven by a strategic reassessment of critical supply chain components for national security, stands poised to create a significant boom in manufacturing jobs. This movement, catalyzed by recent global disruptions and geopolitical tensions, emphasizes the need for the U.S. to regain control over its essential manufacturing capabilities and supply chains, ensuring reliability, stability, and security.

The COVID-19 pandemic exposed vulnerabilities in the global supply chain, highlighting the risks of over-dependence on foreign manufacturing, particularly from geopolitical rivals or in regions prone to disruption. Essential items, ranging from medical supplies and pharmaceuticals to electronics and automotive parts, faced critical shortages, underlining the strategic imperative for the U.S. to bring key manufacturing sectors back home. This necessity for reshoring is not just about economic benefits but also national security, ensuring that the country has immediate and unfettered access to vital products and materials in times of crisis.

Reshoring manufacturing involves relocating production facilities and supply chains back to U.S. soil from overseas. This transition is anticipated to generate a surge in demand for a skilled workforce to operate these newly established or expanded manufacturing facilities. Jobs in production, engineering, supply chain management, and quality control, among others, are likely to see substantial growth. The influx of manufacturing operations would necessitate a large, skilled workforce, leading to job creation across various levels, from entry-level positions to highly specialized roles.

Moreover, the reshoring initiative is expected to extend beyond merely creating direct manufacturing jobs. It will likely stimulate growth in ancillary industries, including construction, logistics, and services, which support the manufacturing sector. The establishment or expansion of manufacturing plants will drive demand for construction services, transportation, warehousing, and other logistical needs, further amplifying job growth in these related sectors.

The focus on critical supply chain components underscores the strategic sectors that could benefit most from reshoring, such as pharmaceuticals, semiconductors, telecommunications, and defense manufacturing. These industries are crucial for national security and economic stability, and their revitalization within U.S. borders can lead to high-value job creation, given the technical and specialized nature of these sectors.

Additionally, the government’s role in facilitating this shift through policy measures, incentives, and infrastructure development can accelerate the reshoring process. Investment in research and development, training programs to build a skilled workforce, and modernization of manufacturing facilities to incorporate advanced technologies like automation and AI will be critical in enhancing the competitiveness and attractiveness of U.S. manufacturing.

However, the transition to a reshored manufacturing landscape must be strategically managed to ensure long-term sustainability. It involves not just the relocation of production but also building a robust domestic supply chain, fostering innovation, and developing a skilled workforce capable of operating in the advanced manufacturing environment.

In conclusion, the reshoring of manufacturing as the United States rethinks its critical supply chain components for national security could indeed spark a manufacturing jobs boom. By bringing key manufacturing sectors back to American soil, the U.S. can enhance its economic and national security, create a multitude of jobs across various levels, and stimulate growth in related industries. This strategic shift promises to revitalize the manufacturing sector, ensuring resilience and sustainability in the face of future challenges and uncertainties.

Rate Cuts & Real Estate

Rate cuts can significantly impact the economy, particularly in the home building sector, which in turn affects manufacturing industries related to construction. Lower interest rates reduce the cost of borrowing, making mortgages more affordable for consumers and financing more accessible for home builders. This financial environment can spur growth in home construction, leading to increased demand for a wide range of components used in building homes, from raw materials to finished products like sinks, cabinets, and appliances.

When interest rates are cut, potential homebuyers find it more cost-effective to obtain mortgages, leading to an increase in the demand for new homes. This surge in demand encourages home builders to initiate new construction projects, boosting the construction industry. As these projects get underway, there is a corresponding rise in the need for various building materials and components. Lumber, concrete, metals, and other raw materials see increased demand, directly benefiting the manufacturing sectors that produce these materials.

The growth in home building extends beyond raw materials to impact the manufacturing of a wide array of home components and fixtures. Manufacturers of windows, doors, roofing materials, insulation, and plumbing fixtures experience heightened demand as more homes are built. This increase in production can lead to job growth within these manufacturing sectors, contributing to overall economic prosperity.

Furthermore, the interior finishing of new homes boosts the demand for products like sinks, cabinets, and appliances. Manufacturers of these items, along with those producing flooring, paint, and lighting fixtures, find their products in higher demand as the rate of home construction rises. This demand can lead to an increase in manufacturing output, necessitating more labor and potentially leading to job creation in these industries.

The downstream effects of home building growth on manufacturing are substantial. As new homes are constructed, the entire supply chain from raw materials to finished home products is activated, creating a ripple effect that stimulates manufacturing across various sectors. This interconnection means that growth in the home building sector can lead to widespread increases in manufacturing activity, supporting industries and economies at both local and national levels.

Moreover, the increase in construction and manufacturing activity can have positive secondary effects on the economy. For instance, as more homes are built and outfitted with necessary components and appliances, there is also a corresponding increase in services such as transportation, retail, and installation. This broad-based economic activity can lead to overall job growth and increased consumer spending, further stimulating the economy.

However, it’s crucial for policymakers and industry stakeholders to monitor the pace of growth and adjust strategies accordingly to avoid potential overheating of the market or the creation of a housing bubble. Sustainable growth in home building and manufacturing should be the goal, ensuring long-term stability and prosperity in these interconnected sectors.

In summary, rate cuts can serve as a catalyst for growth in the home building sector, with significant downstream effects on the manufacturing of home construction components, from raw materials to interior fixtures and appliances. This interlinked growth not only boosts the respective industries but also contributes to broader economic development, highlighting the importance of strategic interest rate policies in fostering economic activity and stability.

Federal Spending

The growth of the United States annual budget from approximately four trillion dollars in 2019 to a proposed seven trillion dollars marks a significant fiscal expansion that has had, and will continue to have, substantial implications for the American economy. This increase in federal spending acts as a form of economic stimulus, injecting liquidity into various sectors, spurring consumption, and potentially affecting manufacturing demand. However, the burgeoning national debt and the possibility of new taxes on corporations and high earners introduce complexities into the economic landscape that merit careful analysis.

The escalation of federal spending is, in part, a response to unprecedented challenges, including the COVID-19 pandemic, which necessitated substantial government intervention to stabilize the economy. Fiscal measures, including direct financial assistance to individuals, support for businesses, and investments in healthcare and infrastructure, were critical in mitigating the economic downturn. These interventions, while increasing the national debt, helped to maintain consumer spending and business operations, thereby cushioning the economy against the worst impacts of the pandemic and subsequent recovery period.

The proposed increase in the annual budget to seven trillion dollars suggests a continuation of this fiscal strategy, aimed at sustaining economic growth and addressing long-term priorities such as infrastructure, healthcare, education, and climate change. This expansion of federal spending can stimulate the economy by creating jobs, enhancing public services, and investing in future-oriented projects and industries.

The direct effect of increased federal spending on the economy is the creation of federal jobs, which adds to employment numbers and puts more money in the hands of consumers. This increase in employment and income leads to higher consumer spending, which is a significant driver of economic growth. As people have more disposable income, they are likely to spend more on goods and services, thereby boosting demand across various sectors, including manufacturing. This heightened demand can lead to increased production, investment in new manufacturing capabilities, and potentially, job creation within the sector to meet the growing needs of the economy.

However, the substantial increase in government spending and the consequent rise in national debt raise concerns about long-term economic sustainability. Financing the debt often involves borrowing, which can lead to higher interest rates over time. Higher interest rates can increase the cost of borrowing for consumers and businesses, potentially dampening economic growth and investment, including in the manufacturing sector.

Furthermore, to manage the national debt and finance ongoing spending, there may be considerations for new taxes, particularly targeting corporations and high earners. While such tax measures can provide necessary revenue for the government, they also carry the risk of reducing investment capital for businesses, including manufacturing firms. Higher taxes on corporations can lead to decreased profits, potentially leading to cuts in operational costs, including layoffs or reduced capital expenditure.

Despite these challenges, the reality remains that increased government spending injects significant financial resources into the economy, acting as a stimulus that can accelerate economic activity and growth. For the manufacturing sector, this can translate into increased demand for manufactured goods, as government spending in areas like infrastructure requires substantial inputs from this sector. Moreover, as federal projects get underway, they often necessitate the procurement of a wide range of materials and products, further bolstering manufacturing demand.

In the broader economic context, the expansion of the federal budget reflects a strategic choice to invest in the country’s future growth and stability. By addressing critical areas like infrastructure, healthcare, and education, the government aims to lay the groundwork for sustained economic development and improve the quality of life for its citizens. However, managing the delicate balance between stimulating economic growth through increased spending and ensuring long-term fiscal responsibility remains a pivotal challenge.

In conclusion, the significant growth in the U.S. annual budget from four trillion dollars in 2019 to a proposed seven trillion dollars acts as a form of economic stimulus, with far-reaching effects on the economy, including the manufacturing sector. While this increase in spending has the potential to boost manufacturing demand and economic activity, it also necessitates careful consideration of the implications for national debt and fiscal health, especially in light of potential new taxation measures. The government’s expanded fiscal role underscores its impact on economic dynamics, highlighting the need for strategic planning to harness the benefits of increased spending while mitigating the risks associated with rising national debt.

Summary

The manufacturing jobs outlook for the next 12 months presents a mixed picture, with several threats and strengths shaping the landscape. Key threats include the impact of previous pull-ahead sales due to stimulus measures and overspending, which may lead to a temporary decrease in demand for durable goods. High interest rates pose another significant challenge, potentially curtailing capital expenditures and expansion efforts within the manufacturing sector. The burden of consumer debt could further dampen demand as households prioritize debt repayment over new purchases. Political uncertainty, especially in an election year, can create hesitancy among manufacturers to commit to large-scale investments due to potential policy changes. Additionally, the automotive sector faces a period of readjustment as the initial excitement around electric vehicles (EVs) settles, prompting companies to rethink their strategies and product lines.

Conversely, the manufacturing job market is buoyed by several positive factors. The CHIPS Act is set to drive substantial growth in the semiconductor sector and benefit upstream supply chain providers, signaling a boon for manufacturing jobs in this high-tech area. There is optimism that a potential cut in interest rates could rejuvenate investment and consumer spending, thereby stimulating demand for manufactured goods. The reshoring of manufacturing, driven by national security concerns and the desire for supply chain resilience, is expected to generate significant job growth as companies bring production back to U.S. shores. Additionally, lower interest rates could invigorate the housing market, leading to increased demand for construction and related manufacturing activities. Finally, the substantial increase in federal spending, rising to over seven trillion dollars, is likely to have trickle-down effects on the economy, boosting demand across various sectors, including manufacturing.

While the manufacturing jobs outlook faces challenges from economic, political, and sector-specific shifts, there are also considerable strengths buoyed by legislative actions, potential monetary policy changes, and strategic reshoring initiatives. These dynamics underscore a period of transition and adaptation in the manufacturing sector, with significant implications for job growth and economic activity in the coming year.

JMJ Phillip Featured In Wall Street Journal

Posted on February 15, 2023 by JMJ Phillip

In 2022, JMJ Phillip Executive Search was named one of the nation’s Best & Brightest Places to Work. The award, which is given on a city-by-city basis, was achieved across each of JMJ Phillip’s nationwide offices, including Detroit, Dallas, Denver, and Chicago.

What makes achieving this recognition even more meaningful is that the award is given to companies after a company-wide survey of employees. It is always rewarding to know our staff members enjoy working at the company, and achieving national recognition for our organization’s culture and work style is an honor.

As a result of winning Best & Brightest Places to Work, JMJ Phillip was recognized in the Wall Street Journal today.

JMJ Phillip Executive Search Recognized in the Wall Street Journal

How to select a retained executive search firm to hire in 2021

Posted on March 23, 2021March 23, 2021 by JMJ Phillip

What is a retained executive search firm?

A retained executive search firm offers services that requires upfront payments to retain their firm – this fee is credited towards the total referral fee for finding the desired candidate. Typical fee agreements are 30-33% of a candidate’s total compensation and will require the client to put 1/3rd of the estimated total referral fee down before the search can begin. Then, the second payment of 1/3rd is required when the search firm achieves the hurdle metrics, such as the submittal of 5 candidates that meet the ideal search criteria. Then, the final payment is made based on the “settled” amount which is the balance left over once the total compensation is estimated. In the case of a flat fee agreement, all three payments will be agreed upon at contract signing without the need to calculate total compensation.

Typical guarantee periods for retainer-based search agreements can range from 60-90 days to as long as one year or more depending on the risk profile of the industry and location.

When do companies typically bring in an executive search firm? What are the benefits? Disadvantages?

If you ever worked closely with a law firm, you’re used to “having them on retainer.” The same way great attorneys require you to put some money up to buy their dedicated time, executive search firms work in the same way. Think about this for a moment. If you want the absolute best in the market, do you think they are going to get to work without you having skin in the game? Well OK, we know the answer to that.

The greatest benefit of hiring a top retained executive search firm is having dedicated resources from one of the top companies in the business. When you put your money down, you’re buying focus and a sense of urgency. You’re also usually getting the top billers in the firm to work on your project. Knowing that human capital is your greatest resource to stay competitive in 2021, especially as fast as the world is changing, hiring a retained search firm makes complete sense.

Companies that often hire retained executive search firms are doing so because they cannot afford to compromise on quality of hire. Whether the search is a discreet replacement of an incumbent, a key executive placement or they have the desire to bring someone in, at any level, with experience from their competition, then retained services are the only option.

For example, at JMJ Phillip Executive Search we get calls every week from new and old clients asking us to find them someone from Tesla, Amazon, Apple, Facebook, GE, Google, and so on.

Which, not surprisingly, this is what everyone seems to want in the year 2021. And who doesn’t want to make a hire from one of the leaders in the industry? If you’re a Fortune 500 then this is commonplace and often easier to attract that kind of talent.

But what if you’re a $250,000,000.00 manufacturing company that isn’t a big brand name on the PR scene? Then how do you attract that level of talent? That is often why companies choose to hire an executive headhunter to go strategically target and sell top talent on their company.

Because, if you haven’t learned this lesson yet, if your name doesn’t ring as Elon Musk’s does, those online job ads you keep wasting your money on never seem to bring in that top 5% of talent you need to survive in this world.

But wait a minute, here is that one pesky disadvantage. What happens if you put down the first or second payment but decide not to make a hire or you put the position on hold. Well, to be honest, the firm spent their money working on your search, and that money is gone. So you do risk losing out on those retainer payments. This is why retained executive search consultants take retained searches so seriously, they know you wouldn’t cut that check unless you were nearly certain a hire would be made.

But, things happen and no one can predict the future. The good news is, depending on how transparent you are with the search firm on why the search is on hold, often they may be willing to work out a credit of some sorts because the smart firms understand lifetime customer value and want to continue doing business with you.

Why a retained search versus a contingent search?

While they seem like the same service, at the end of the day they are not the same “level” of service. In the contingent search world, the recruiter only gets paid if a hire is made. Somehow that rhymes, but say it with me: the recruiter only gets paid if a hire is made. So step into a contingent recruiter’s shoes for just a moment. You spend months working on a search, then the company decides to put the search on hold.

What a minute. What?

What is a retained executive search firm?

Yes, it happens. It often happens more than 50% of the time actually. So knowing this, contingent recruiters are always going to put the most effort into the recruiting projects that they feel will result in a hire. And you can’t blame them. Who wants to spend months working on something and then not get paid? Sounds silly, but that’s the game and if you have enough contingent deals to work on, you can still make a good living.

You can also learn more about the Executive Search industry through the AESC.

Whereas a retained search, especially an executive search where you have the direct ear of the hiring managers is going to have a success rate far into the 90%+ range. So when you hire a retained executive search firm in 2021, you know you’re getting their full attention and sense of urgency because they know they have your full attention as well.

How does a white-glove approach differ from standard executive search firms?

Think about this: how many good customer service experiences have you had in the last 2 years? Not great, just good. Regardless of the product or service, when polled, most have had very poor experiences across the board.

In fact, there is a reason why they say customer service is dead. But when it comes to working with JMJ Phillip, that is not the case. We are a customer-centric brand that understands our customers are everything. We don’t wait days to return emails or phone calls. We send weekly status updates. We understand scope-creep is part of the process and work with you to understand that sometimes the goalposts move as the search develops.

And that’s what you’re coming to one of the top retained executive search firms in the business that is also widely known for their high levels of customer service.

Retained search services aren’t cheap, in fact, they are very expensive so why would you accept anything less than a high touch, white-glove type of search service? Our executive search consultants will never forget that you are always the highest priority on our list.

What are the benefits of having an in-house recruitment research team?

In 20 years we have built this company from the ground up to the powerhouse that it is now in 2021 with no signs of slowing down this decade. One thing we understand that is if the search consultants aren’t on the phone, things aren’t moving forward.

So we built a research company that is focused on recruitment research. Think of the ultra tech-savvy cybersleuths that comb the internet with great vigor to find the resumes, profiles, email addresses, and phone numbers of the worlds top talent. In a world where no one wants to pick up the phone anymore, our research teams relentless pursuit of data allows our retained executive search consultants to reach the unreachable while spending more time on the phones convincing the world’s top 5% of talent to come work for you.

Imagine how time-consuming it is to do all of your own research plus spend 3-4 hours a day on the phone speaking with clients and candidates. It makes for a very unproductive day that also leads to a lower satisfaction rate at your job.

Combining our in-house research team with our executive recruiters allows you to get the highest level of service in the business.

What is the retained executive search firm process for convincing passive and active candidates?

When you think of the recruiting process and attraction of top talent, it really comes down to the opportunity and contrasting that with the candidate’s current position and how it aligns with their future goals or vision. While many people will make a move just for the money, many others have far different intrinsic motivators.

Someone in the Midwest may want to move to California for the weather. Someone may want to move from Seattle to Boston to be closer to their children. Someone may be willing to commute 90 minutes a day if they get the chance to go work for a company they have always dreamed about working for. So the first step of going after top candidates is understanding what makes them tick and then helping them understand how your client’s opportunity can align with their life’s greater plan.

A retained executive search firms process

Again, when you think about the amount of time spent getting to know a candidate, building rapport with them on top of having to do that with multiple candidates you see how time-consuming this process is. So when you ask why should I use a retained firm over a standard contingent one, this is the answer.

Are the top 5% of talent passive candidates usually?

Not always, but often. One of the top things all hiring managers, human resources boards, and executive hiring committees look for is some kind of tenure. If the person can’t a job for more than a year it usually tells you something. That isn’t something people like to talk about anymore in 2021 so they brush it under the rug but like it now, the realist in all of us knows that tenure matters.

And knowing great talent often sticks around for 3-5 or more years, that means they are on the market a lot less often than those with lesser tenure. So you often find that people aren’t looking and they are very passive. Now, that doesn’t mean great talent can’t be active candidates. Sometimes it is just time to make a move for any reason and yes, great talent may not have such long tenure, it really comes to each person’s story and you have to figure it out from there.

Amongst non-founder \ family-owned businesses, some top executives’ tenure can explain a lot. Lee Iacocca spent most of his professional life working only for Ford and Chrysler. Indra Nooyi spent over 20 years at Pepsi Co. Alan Mulally spent over 30 years at Boeing. Sundar Pichai more than 15 years at Google. Mary Barra over 30 years at General Motors. Ursula Burns more than 35 years at Xerox. Jack Welch, GE over 40 years.

Now that we have you thinking about those names, imagine if your retained executive search firm consultant brought them to your organization at some point in their career. Top talent is hard to attract, and again, great names like these are not applying to ads online.

They must be headhunted. Executives also move up through various ways.

What is the typical timeline to complete a retained executive search?

Typical Timeline for Retained Executive Search Services

This depends greatly on the type of company, the position, their compensation, and how fast or slow they want to move internally. This also becomes even more complex if the candidate has to relocate. If the company is in a reasonably desirable area and it’s not a one-off, niche position, we find that with our in-house research team we can see a good amount of candidate flow in 2-4 weeks.

From here on, it depends on the company. Pulling from over two decades of experience we can say that many companies struggle to get internal feedback in a timely matter especially when there are multiple people involved in the interviewing and decision-making process. Add in travel and covid to this conversation and it’s really hard to get everyone in one place at one time to make it happen quickly.

Between group interviews, individual interviews, onsite interviews, location scouting with the family if it’s a relocation search, things can stretch out for 6-8 months for some of the more complex recruiting projects.

But we also have had a retainer payment hit on Monday and the client had an offer out to a candidate in less than 30 days.

So to answer this question, we can move as fast or as slow as a client wants. This is the beauty of retained executive search services, we are here to take care of you.

To learn more about our retained executive search firms services, call 877-500-7762 today.

2020 Hiring Trends

Posted on January 7, 2020January 7, 2020 by JMJ Phillip

2020 is here. The 2019 year of hiring has come to an end, and recruiters and hiring managers are jumping headfirst in the 2020 job market. After a tough climate for hiring in 2019 and just 6 days into the new year, what trends can recruiting firms expect to see over the course of 2020?

Recruiters and Hiring Managers looking to increase and grow their business with top talent candidates in 2020

Before we get into that, let’s take a look back and rewind to 2018 with some stats.

In 2018, on average, 12% of candidates who applied for jobs were asked for an interview. Out of those interviewed, 28% received a job offer. (Jobvite 2019 Recruiting Benchmark Report)
Recruiters estimate they will pay entry-level employees an average of $56,532 in 2019 and 2020—a jump of over $10,000 compared to 2018
The average time to fill a position was 40 days in 2018 (Jobvite)
91% of tech companies planned to invest in sourcing tools and technology in 2018 (Entelo 2018 Recruiting Trends Report)
Channels such as Facebook and Instagram, are gaining popularity in recruitment. Especially Instagram: 35% of millennial recruiters and 63% of recruiters working in the tech industry used Instagram to source candidates in 2018—double the numbers from the previous year (Jobvite)

Now, before we get into 2020, let’s take a look at this article from Jobbatical on current 2019 hiring statistics, job market trends and data.

A total of 31% of recruiters list the quality of the hire as the measurement of their success, while 23% of recruiters consider the retention rate as their primary measurement. One- to three business days are dedicated to training prospective hires by 39% of recruiters in order to improve the retention rate.
It takes an average of 27 working days to acquire a new hire.
Of recruiters, 45% are having difficulty filling positions due to a shortage of talent.
At least 84% of organizations are currently using social media for recruitment and 9% of those who don’t use it yet are planning to.
Requirements for strong conversational skills and enthusiasm have declined by more than 20% among recruiters.
A four-year college degree makes an entry-level candidate competitive in the job market according to 87% of recruiters.
Video technology is being used by 60% of hiring managers and recruiters. A survey of 506 companies showed 47% use video interviewing to shorten the hiring timeframe, and 22% would consider it for interviewing candidates that aren’t local.
Through recruiter negotiations, 68% of businesses “have increased the average salary offer for candidates in the last year.”
75% of recruiters have experienced a candidate “change their mind.” In 53% of the cases, it was because they received a better offer.
Reportedly, 77% of recruiters go back and hire someone who didn’t appear to be a fit initially.

Based on data gathered from JMJ, here are some key things we’ve seen over the course of the year, and how we can see them trending into the new year.

What we saw in 2019: An increased desire by hiring committees to see a diversity of candidates. Even if it meant delaying the extension of an offer to a stellar candidate who completed the interview process already and performed well. There was also a dynamic of not wanting to miss out on someone that didn’t surface in the initial search efforts.

2020 Trend: Clients will continue to wait to ensure that they have the perfect person for the role.

What we saw in 2019: More and more emphasis was placed on “culture fit” and personality traits that aligned well with the company’s current executive staff. These organizations wanted to hire someone that would play nicely with the rest of the team. Furthermore, they wanted to avoid hiring someone that would rock the boat too much. This played into turnover and retention improvement plans as well.

2020 Trend: Companies will continue to put a heavy emphasis on hiring a candidate with the personality traits to fit into their culture. In many cases, hiring an aggressive change agent can lead to a ruffled staff who decide to look for work elsewhere.

What we saw in 2019: We saw a slowdown of hiring around holidays such as the 4th of July and Christmas. With the economy being stronger, it seemed like more people were traveling for vacations, which can ultimately slow the interview process down a bit.

2020 Trend: Candidates will continue traveling around the holiday seasons, slowing down the interview and hiring process. Recruiters and hiring managers will need to adjust accordingly.

What we saw: We worked more on executive level (VP and above) searches, as we plan to continue doing this year. We saw that companies were extending the interview process (vetting process) with candidates. 4-9 interviews were typically conducted before an offer would go out, getting multiple people involved in the hiring process. They weren’t only involving the leadership team the individual will be reporting to, but also the future direct reports of the candidate to get full buy-in. This made it a bit more challenging to place someone as one bad review throughout the process from one out of the many interviewers could remove someone from the process. Like our Managing Director Dennis Theodorou had mentioned before, this was not favorable to get a placement – too many cooks in the kitchen.

2020 Trend: Interview processes will shorten over the course of 2020, as companies will look to avoid getting a bad review on sites such as Glassdoor.

What we saw: Mediums like Skype and Teams were still popular, but also the prerecorded video interviews that allowed candidates to complete them on their own schedule and submit them when finished had been used by a few companies with mixed reviews from candidates. Some really liked the flexibility, others felt it was awkward.

2020 Trend: Jobs will conduct interview processes in this manner, and video interviewing will continue to grow in popularity.

What we saw: Hiring with an emphasis on succession planning. More than ever, clients wanted to hire someone who could be successful in the positions we were recruiting for as well as the position above it. In many cases, this lead to identifying someone who was overqualified for the job we were recruiting for but was also interested in the long-term opportunity to grow with an exciting company.

2020 Trend: Companies will look to develop new leaders when hiring by implementing more leadership training programs

How do you have to plan to be successful in 2020?

In order to be successful in the 2020 job market, there will have to be a strong emphasis on continuing current practices while also finding new ways to attract the top talent in the market. The company that is open-minded in its hiring approach will be the company that will come out on top in acquiring top talent in the 2020 job market. Even in a time where there’s an evident shortage of talent, tackling the market with a hawk’s eye and changing your recruitment process by taking a more flexible approach to recruiting to cater to the candidate will have a positive impact on your recruitment team’s efforts.

Oakland County Annual Economic Outlook Luncheon 2018

Posted on April 28, 2018April 28, 2018 by JMJ Phillip

Business, education, and community leaders from around Oakland County, Michigan met in Troy last Thursday for the Oakland County Annual Economic Outlook Luncheon 2018. Representatives from JMJ Phillip Group were in attendance to monitor the economic pulse of the county and state. Oakland County Executive L. Brooks Patterson along with the Oakland County Department of Economic Development & Community Affairs teamed up with “respected University of Michigan economists [to] present their three-year forecast on the county’s economic future.” Presenters included Dr. Gabriel Ehrlich and Donald Grimes.

Ehrlich, the Associate Director of the Research Seminar in Quantitative Economics at U of M, held a positive outlook for the coming years in Oakland County. While the 1990s saw vigorous job growth, the next decade slingshotted back down and experienced over 150,000 lost jobs. Most of that 150,000 has been recovered since 2010 and last year the unemployment rate of 3.5% was 0.9% lower than the national average.

Wage growth is up across the board as well; jobs with salaries higher than $75k grew by 22.3%, between $35-75k by 15.4%, and lower than $35k by 24%. Ehrlich attributed the slower growth of the middle wage bracket to job loss in the government sector. The real GDP growth of the 1.25 million person county grew from 1.5% in 2016 to 2.3% in 2017 and Dr. Ehrlich believes that federal fiscal stimulus will be the main focus to continue that growth in the next several years.

Grimes, a senior research area specialist at U of M’s Economic Growth Institute and the assistant director of the Center for Labor Market Research, had more cautious views of the county’s economic future. He believes the greatest risk for the economy is a trade war resulting in 1400 lost jobs but the greatest local risk is exhausting the workforce before the 30,000 jobs lost before the recession are recreated. Grimes stated that the recession hit Oakland County harder than the rest of the state but recovery has also been stronger in the county and he predicts to see a record number of jobs in 2020.

Grimes then gave a breakdown of the county’s growth by industries. Although the government sector experienced job loss up until 2016, it is expected to slowly gain 1900 jobs over the next three years. The private sector is witnessing the fastest gains at 5.9% while the greatest gains are in professional and technical services, health care and social assistance, leisure and hospitality, administrative support, waste management, natural resources, mining, and construction. Grimes also believes the automotive sector will enjoy modest growth.

An unemployment rate of 3.4% is expected for this year and Grimes predicts a rate of 2.6% in 2020 which would be the lowest in the history of their data collection. With a well-educated workforce, low cost of living, and good leadership over the next few years both Grimes and Ehrlich see a prosperous economic future in Oakland County with real wage growth and lower unemployment.

Crain’s Chicago Manufacturing Summit Cliff Notes And Insights

Posted on March 3, 2016April 9, 2016 by JMJ Phillip

Tom Pellette, group president of Caterpillar, was encouraged by the change that the manufacturing industry is seeing as it adopts more automation.
China’s slowdown has hurt its trading partners more than it has affected American Manufacturing.
Manufacturers of affordable luxury goods have seen strong growth in the Midwest and are excited for the coming year.
Growth for the industry as a whole is expected to be at a moderate 1-3%

The Crain’s Manufacturing Summit, the industries forum for the leaders of some of the most recognizable manufacturing firms in the midwest, wrapped up this week in Chicago, IL. Featuring a guest list that would make even Rockefeller blush, the forum allowed for invitees to discuss with local manufacturing leaders about how the market was, how it is, and how it will be.

The summit could not have come at a better time, as when one turns on the financial news, one may suddenly feel a longing for a large blanket to hide under and a drink. “We are about to enter another recession,” one pundit may state as several other armchair economists nod in agreement. Even if one changes the news source, you’ll be met with graphs of the plummeting value of the Yuan or the “catastrophic” affect the “brexit” might have if x happens, on a full moon, in the middle of winter.

However the feeling from the panel was that of cautious optimism, not that of an economic armageddon. Firms aren’t quite ready to state that 2016 is going to be the best year ever, however, from an automation revolution to America’s need for updated infrastructure, things seem to be looking bullish.

A is for Automation

The profile for the manufacturing industry has begun to change. Today’s assembly plants, and the jobs inside, are evolving as the industry enters a technological evolution, pioneered by the rise in automated machinery. And due to the struggle of firms on finding the right workers, Tom Pellette, group president of Caterpillar, was incredibly encouraged by the change. After discussing how 3D printing and the now digital connecting world has lead to a successful push for affordable technology, Mr. Pellette spoke about the boons that this new technology brings – how it reduces downtime, increases productivity, and most importantly, improves safety.

The Caterpillar president was, however, most excited by CAT connect technology. CAT connect makes smart use of technology and services to improve job site efficiency. Using the data from technology-equipped machines, Mr. Pellette hopes to aid clients by getting more information and insight onto their equipment and operations to boost productivity, reduce costs, and improve safety.

The road to autonomy is not a process that will happen over night. It will take time for conventional construction to bring in the capital it needs to purchase and implement automation equipment. However, as more manufacturing firms enter the automated age, Mr. Pellette excitedly spoke about the future and how, from his perspective, we will see a movement towards semi-autonomy, followed by full autonomy in the manufacturing marketplace.

The Challenge of China

While the panel agreed that Europe is a bright spot, China still proves to be a difficult nut to crack. The Chinese government is doing good job at focusing on keeping their economy a consumer country rather than allowing exports to rise. This means that it’s becoming increasingly difficult for foreign manufacturers to compete with domestic Chinese companies for the many lucrative Chinese contracts.

Tom Pellette mentioned that China is currently only at 80% peak in terms of construction, and that there is still room to grow the market space which could allow American firms to theoretically enter. He went on to say that the United States still retains the top spot for manufacturing.

While China’s economy may still be growing at unprecedented levels, it has begun to slow down, which has had serious consequences on many of its trading partners, such as Brazil. The combination of a slowdown in Chinese imports, draught, and corruption have not left the country of Brazil in a good spot. Overall, Mr. Pellete could not respond when asked when he believes their economy will turn around. He did, however, point to Caterpillar group’s profits in the region, which have dropped from 65 billion to 47 billion this year. He went on to speculate a potential 10% decline over the course of this year, which could leave this once promising economy to resemble more of a stray cat than the tiger it was once reported to become.

The Return of the Republic

When discussing the situation on the United States’ own domestic front, the panel’s response was mixed. Jason Asure COO of Vosges Haut, a super premium chocolates manufacturer based in the US, said that Vosges Haut was seeing high single and even double digit growth. As an affordable luxury, their business is looking incredibly strong.

Chris Clawson, executive of Life fitness, a health and fitness brand, also stated that their brand business was looking positive with distributors in 120 countries. Mr. Clawson also spoke about his excitement for growth in the developing year, and the hope to expand to a greater number of countries.

However, both Tom Pellette of Caterpillar and Sagar Patel, president of Woodward, an aerospace and energy parts manufacturer, stressed that while business is mediocre they expect to see slow growth. The numbers discussed were in the range of 1-3% instead of a projected 7% growth in 2016. Mr. Pellete then suggested that due to the fact 54% of Caterpillar’s contracts are now abroad, a changing foreign scene could potentially lead to repercussions domestically.

Regardless of how the 2016 market performs, there are a few steps that we can all take to help keep all manufacturing and related firms healthy.

Remember that innovation is key. When you’re a company that’s innovating, you attract the new generation. Long gone are the days when the labour force was happy to get its hands dirty. This generation of students that are entering the workforce no longer want to work traditional 9-5 jobs. They need to see how the companies of yesterday are in the future today. Firms must show how they have already incorporated today’s technology.

Business leaders must also never forget how you run within your four walls. Always look at cost during the bull or the bear and never allow waste to creep into your business. Work like you’re going bankrupt everyday.

Visit More About The Economy In 2016

Say The Economy Is OK, It’s Not A Crime!

Posted on February 28, 2016March 8, 2016 by JMJ Phillip

Let’s start a new trend this week as we have reached a tipping point. The same kind of tipping point in which Malcolm Gladwell described so vividly in his book on the topic. That tipping point is going to start with everyone waking up tomorrow, looking in the mirror, and saying “the economy is ok” and for the remainder of the day, you quell anyone saying otherwise.

You don’t have to say that the economy is great, amazing or that the boom times are here! Just say, it’s actually OK. Can we, for just one day, not talk about a “recession” even if we can only enjoy it for 24 hours?

You may say this, and the economy may go to hell the next day, it’s possible. We could be in a full blown recession by the end of the year with several quarters of contraction, and knowing that, you should still wake up tomorrow and say, “the economy is ok.”

Let that one day of positivity lead to a new idea, maybe a new way of doing something, either way, use that energy to move forward. Not taking action because you’re worried about tomorrow may cost you more than taking action (what’s the old saying, more is lost in indecision than the wrong decision?)

Why Should I?

Because as of today, the economy is ok and it has been for a couple years. We have our office full of TV’s that run news stories all day about the markets and business in general. Since 2008, people cannot stop talking about the next recession. Back in 2009-2010, all the rage was about a double dip recession, how it would be far worse than what we have already experienced, and it would drag us deeper in the hole for the next 5-10 years….. Well, yeah, it didn’t happen.

And as we stomped our way down to 4.9% unemployment, through 2010, 2011, 2012, 2013, 2014, 2015 and now 2016, 6+ years later, you keep hearing about the looming recession. You hear it from economists, from journalists, Wall Street analysts, and everyone else that is still healing from the mental scars of 2008-2009.

The big trend seems to be “I want to make a prediction and when it comes true, I can claim to be an expert, a real clairvoyant” in which they will ride out every dollar they can make off of it until they make a bunch of wrong predictions.

Which is kind of ridiculous, because saying a recession is coming is like predicting the sun will rise tomorrow. Another recession will come, they always do, in all different shapes and sizes, but we cannot fear that. And we really have no idea what our new economy looks like. With technology, industrial automation, robots, and our economy being nearly all services-based, we won’t understand today’s economy until it’s been studied for years, so maybe by 2030, we will understand how the new economy worked in the early 2000’s. Maybe our new world recession is seeing a 1-2% increase in unemployment, maybe we will be stuck at 1.5 to 2% GDP forever as our country is fairly established, at least until the next big thing comes.

Let’s face it, the American consumer likes to spend, we like new cars, new homes, eating out, bigger TV’s, and hell, you cannot wait a full 2 years for a new mobile phone. In fact, you would like that new piece of technology every 12 months!

You really can’t hold this country down, even in 3 feet of mud we keep picking our knees up, trudging forward. Even if we’re slow, we keep moving, we don’t stop, not even for a gawker delay.

Recession doesn’t mean complete financial system collapse like we experienced in 2008; that was a completely different animal. Can or will a collapse like that happen again? Well, sure! But we went from 10% unemployment to 4.9%, so it’s likely in the next 12-24 months we will see some contraction, maybe to 6.5% unemployment, maybe less, maybe more, and then we will get back to business and it will drop again. We cannot go in a straight line forever, progress has ups and some downs before we keep going up.

Here is what we see and hear

• Our manufacturing clients have called us to fill more roles in the last 45 days than we have seen in any other period last year. They note a shortage of talent and with the boomers retiring, it is only making the talent gap worse. Some say hire, then put it on hold. Then they say hire, put it on hold, then back to hire. Their customer demand says they need to hire, but depending on the news that day about oil and the stock market, they may change their mind.

• Looking at our client base across all of our brands with a clientele base ranging from retail to manufacturing to real estate, many still see growth in 2016, even if it’s not massive growth.

• Many clients are sitting on invoices for 60-90-100+ days because they used a lot of their capital to grow in the last 60 months. They were running lean from 2007-2010 and as the economy picked up, they had to make capital expenditures and add headcount again. Many want to grow more but cashflow is an issue. That cashflow isn’t because of the lack of sales, it’s because of too much growth too fast. Credit to businesses may be an issue if the commercial lending tightens up more. Credit to businesses is going to be imperative in the next 24 months.

• With everyone’s cashflow being on the tight side, that is limiting hiring, wage growth, and more capital expenditures. You cannot grow your business or hand out raises if your clients are not paying their bills, because their clients are not paying their bills. This causes a ripple effect all the way down the supply chain.

• Looking way downstream at some of the initial suppliers to manufacturing companies, we get reports that they have quoted a lot of major projects and programs that may be launched this year. They see it as the first half of 2016 being so-so and the last half picking up.

And these issues below are slowing us down

• Many business owners of all sizes note the issue with oil prices and nearly everyone will say, if we can just stabilize at $40-60 a barrel, everyone will basically shut-up and get back to business.

• Companies are not happy with the current political outlook. Not many people like the field of candidates and with this election being far from normal, everyone is going to be on edge until the election is over. Then you say ok, it is what it is, let’s keep moving.

• The sketchy start to the year for the stock market has planted some doubt for many businesses. While election years are typically good for the market, and it’s possible that the market can be down and the economy be up, there is still some doubt being held by businesses. When the stock market levels out a bit, we can still see more positivity coming.

• Ongoing geopolitical issues keep uncertainty high, but does that ever go away? Businesses were shy about being aggressive back when Greece had all their issues, and now it’s Britain and the EU. In reality, there will always be something going on somewhere. The global economic outlook for 2015 wasn’t so great and we are seeing signs that it may be better for 2016. Emerging economies, some in collapse, some on the mend, will hopefully lead to stabilized growth. China may be leveling out, and other central banks have launched negative rates that may have some positive effect on the overall outlook, but the global economy as a whole remains an issue.

Want some positive news?

• As noted, we are at 4.9% unemployment. Yeah yeah, you cannot say that without someone saying “you can’t trust those numbers, it doesn’t count the underemployed and those that stopped looking” and we can say, “fair enough.” Then we say, if you stopped looking for the last 5 years, maybe you’re not a part of the workforce anymore. And if you’re underemployed, please contact JMJ Phillip, Employment BOOST, or anyone one of our other dozen companies, because most of our clients are hurting for good people.

• It won’t be long before we approach 2 million people graduating with a 4 year degree, every year, soon. Our workforce is educated, we can do something with that!

• Oh yeah, back to those not seeking work anymore. In my 25 minute drive to the office (Metro Detroit Area), I counted 22 places with hiring signs a couple weeks ago. The most I have seen since, 2004-2005 maybe? While many may not be high paying, many business owners need people! There is money to be made if you want to make it. Talk to a small business owner and they are likely to tell you that they are looking forward to summer so that they can pick up some workers home from school.

• Hiring demand continues to tick up for most of our clients across the country.

• Every time you hear bad news about manufacturing, 4 weeks later, there is another news article talking about how manufacturing jobs are soaring. Ups and downs again, which is normal.

• Consumer sentiment report put out by the University of Michigan shows some recovery over the last 6 months.

• Automotive sales in 2015 hit an all time record.

• Mortgage rates have dropped even after the Feds 25 basis point rise and the new home industry predicts more growth to go along with that.

• We are seeing organic wage growth in the tight talent markets for manufacturing professionals, engineers, technology professions, and the all encompassing supply chain vertical.

• Durable goods orders surged in January

• Economy was stronger in the 4th Quarter 2015 than previously believed

• US companies are holding over $2 Trillion Dollars in cash, and while many note this as a negative, there are some positives. In bad times, those with capital reserves add stability to the market which is something that is often greatly undervalued. Five of the top 10 companies with the greatest savings are technology companies where often the capital investment for new products isn’t as heavy as something like automotive. Although, General Motors is hanging on to the number 10 spot on that list.

Summary

Someone can likely write an article just like this with the same amount of information, but showing why we are not in good shape. We will never be in perfect shape and there will never be an immaculate economy. But, it is time to stop talking about recession all the time even if we are in one. If you keep saying something enough, you just may get what you wished for and I doubt that no one, minus the short sellers, is wishing for a recession.

As I prefer to be a realist, I don’t want to deny some underlying issues with the economy, we have some bumpy roads ahead. But the nonstop talk of a recession can also have a negative effect on business and the economy.

Can we just say that we recovered pretty well since 2008 and that it’s not a crime to say that? Even if we are in a recession the next quarter, we have to be able to say in the prior 6 years that we were OK, that we went from complete disaster to a decent recovery. While we still have a long way to go, and we have many bumps along this road still, in the next 10 years we can have a great economy that is resilient to many of those bumps.

So for one day let’s remove the word “recession” from our vocabulary and use that brain time to be creative, develop or hone a new idea or strategy, and figure out how we can take 3 steps forward instead of worrying about taking any steps at all.

When adverse times hit, you cannot roll up in a ball and hide, that is usually the best time to strike.

Let’s keep our heads down, work hard, and do business like America always has.

Visit Manufacturing Jobs Report

Manufacturing Jobs Report | New Edition

Posted on February 21, 2016July 1, 2016 by JMJ Phillip

Manufacturing Jobs Report Key Points Executive Summary

While 2015 was a solid year for US manufacturing, the last quarter showed signs the industry shrank.
2016 has started off strong, especially with regards to the Automotive industry and its suppliers.
The NNMI has highlighted that it wishes to improve America’s manufacturing competitive edge.
The US government has pledged $70 Million to digitalize US Manufacturing and has set up a facility in Chicago, IL to accomplish this.
It will be important to keep an eye on the price of oil, but so far it has largely aided US Manufacturing.
Overall hiring should be consistent until oil markets stabilize and the election is over.
Second Quarter 2016 Outlook Summary Recently Added.

How Was 2015 For Manufacturing Jobs?

2015 was another year of steady, if slightly underwhelming, growth for the manufacturing industry. There was continued growth in hiring for defense, plastics, aerospace, automation, and other specialized industries. High-tech manufacturing shall continue to see success in the next year, despite ongoing anxieties regarding the market reverberations in the oil and natural gas industry. There has also been a bit of hand-wringing over the effects that the strong dollar will have in the market, but this will not interfere with another year of respectable growth.

The expansion of automation is a sign of overall economic health has more production equipment signals that there are more goods produced and demanded. There is some fear of a recession on the horizon, but there shall be several fiscal quarters before that should become a serious worry. There is an increased demand for engineers as STEM graduates lag and there are currently more jobs than candidates qualified to find time. As the economy reaches near full-employment, there should be a general feeling of job security for the coming year for most engineers, supply chain professionals and other business critical positions.

What to Expect from 2016?

The Institute for Supply Management declared that its manufacturing index rose in the first month of 2016, up from December. This is higher than the predicted, sending out positive vibes with regards to the industries’ growth. However, it must be noted that when the index is below 50%, it indicated that more of the industry is shrinking than expanding. It has been below 50% since September 2015, which is the longest period of contraction since the last recession in 2009.

In the next year, engineers will remain some of the most sought after professionals in the market. The automotive, defense, electronic, and automation industries will require more engineers as orders increase. Engineers continue to be very hard to come by. College students graduating with an engineering degree are highly sought after since experienced engineers can often be very costly. Nearly 95% of companies polled that employ engineers responded that they need to hire engineers but expect difficulty in 2016 in terms of finding, attaining, affording and retaining them.

Another area of employment that will be experiencing a great deal of demand is materials and supply chain management. Companies in 2016 understand that in today’s global market, millions can be saved in process changes and prudent supply chain management. Experienced supply chain professionals should feel empowered in the job market. Additionally those with materials experience in SAP continue to be in great demand, with or without an APICS certification.

Where is the Growth in the Manufacturing Jobs Market?

2015 was the best year ever for automotive sales. The American consumer is finally beginning to feel confident, and the entire manufacturing economy is benefiting from it. The auto industry is continuing to drive the manufacturing market. As the economy finally seems stable, gas prices are at record lows and the Federal Reserve finally lowered the interest rates to just about zero. These two facts indicate that 2016 should be an improvement on the record setting year behind us. This is a great aspect of the forecast as automotive production will lead to more production in some related industries as well.

The tooling and the machining industry as a whole will benefit from the continued growth in manufacturing from the successful past year and year ahead for the automotive industry. Shop floor jobs continue to be understaffed for those with experience in CNC, Welding and Maintenance.

More industries are investing in automation and while robots haven’t taken over the world yet, it will have a profound effect on manufacturing jobs in the next decade. Industrial automation companies have been seeing improvements in their business, and this should continue in the next year. As domestic manufacturing increases, it can be expected that industrial automation will benefit.

Finally, defense is growing a industry again but in different ways than we have seen in the early 2000’s. There were several large defense contracts issued this year. Boeing and Lockheed both signed deals in the past month, totaling in one and half billion dollars. Much like automotive, the defense industry positively affects its adjacent industries. This industry has one of the best outlooks as it can expect constant innovation and investment year over year as the nation seeks to remain secure at home and abroad.

What are the challenges for Manufacturing?

The National Network for Manufacturing and Innovation (NNMI) is a government-endorsed collection of manufacturing industries in the United States. The NNMI have declared that the greatest threat to domestic manufacturing and the associated jobs is the increased competitively of other manufacturing nations on the global stage.

NNMI has outlined a three part plan to help keep US manufacturing competitive in the global market. The first step of this is to facilitate a more effective transition of innovation and technologies to promote a more cost effective industry. The second is to accelerate the manufacturing workforce development by training and attracting more engineers. The final step is to develop and promote a sustainable business model to help keep firms stable.

In order to implement and enforce their plan, the NNMI set up the Digital Manufacturing and Design Innovation Institute (DMDII). The DMDII’s aim is to successful digitalize America’s Manufacturing and has secured $70 million of federal funding and $104 million from outside sources over 5 years. The DMDII set up it’s first facility in May 2015 in Chicago, IL. They have also defined an R&D project management process that has enabled collaboration among the consortium members and resulted in the selection of 32 projects.

With regards to the doomsday predictions made about the oil and natural gas industry, there have been some decreases in employment, growth, and productivity, but the industry is anything but static. Many equipment producers and other firms are nervous what effects that the so-called “oil-glut” will have on the economy and the economic improvements that we’ve been seeing. It should be important to follow the market, but it will surely stabilize without significant negative repercussions.

2016 will be a good year for US manufacturing and jobs as a whole, but expectations should be humble. The strong dollar and the oil market are not disconcerting, but these factors should not be dismissed. The economy overall, though, is continuing to grow as the consumer becomes more comfortable spending. The automotive and defense industries will be the source of much of manufacturing’s success. With automotive having such a great year ahead of it, other manufacturing companies should feel confident in having a sound 2016.

Second Quarter 2016 Manufacturing Jobs Summary

Election has brought on strong debates about manufacturing jobs, tax inversions and trade agreements
Feedback from JMJ Phillip’s manufacturing customers is consistent with being stable for the 2nd quarter with stronger production numbers for the second half of the year
Hiring in engineering, supply chain \ materials continues to be strong
Retirements are driving some organization shifts and hiring
Manufacturing jobs lost a little ground in February and March, mostly to the durable goods sector and we could see some more shedding in the coming months before another ramp up period.

May Manufacturing Jobs and Economic Update

The last week of April we have seen some news change the tune of the market including Yellen’s speech and outlook for rate increases in 2016. Although GDP growth for Q1 was poor, and corporate profits are declining, the recovery in the oil market continues to ease some peoples fears.
JMJ Phillip seen an uptick in manufacturing hiring for the last week of April with many manufacturing companies still talking about the second half of the year picking up.
Feedback from the manufacturing sector brings the question: In 2017, will we look back at the last half of 2015 and first half of 2016 and say that was a recession, just not as severe as some have predicted?
If the last 12 months was the slow down, we could see continued growth of manufacturing jobs onshore, especially as companies are looking to build where they sell. This should lead to more organic wage growth as the labor markets continue to tighten.

Can we have a slight slowdown in 2016 and get back to boom times in 2017?

Check in often for new updates.

JMJ Phillip Featured on Investopedia

Posted on February 14, 2016March 5, 2016 by JMJ Phillip

The topic of salary negotiation is always heavily debated for our clients and candidates. We often see candidates play their cards too close and/or try to leverage other job offers or counteroffers from their current employers. After being in the executive search field for over 15 years and working closely with executives hand in hand, it’s pretty common knowledge that once you accept a counteroffer from your current employer, you’re likely to have a target on your back as not being loyal. And leveraging another job offer vs a job offer leaves a bad taste in your future employer’s mouth.

Candidates need to remember that your career isn’t a poker game; you’re not trying to get the most money in a short period of time and then walk away from the table. Your career can span 40+ years, so focus on choosing good companies to work for, work hard, and the salary increases will be a byproduct. Let your salary rise organically from merit, not from leverage.

A quote from Dennis Theodorou at JMJ Phillip,

“Many candidates are confident in their negotiating skills, but according to Dennis Theodorou, Detroit, Michigan-based vice president of JMJ Phillip Executive Search, this confidence is misplaced. Theodorou says, “People look for a job every three years on average and negotiate a salary once or twice every three years, which means they’re not experts in salary negotiations.”

And this lack of knowledge can result in missteps. Below are some of the negotiation strategies that have the potential to backfire”.

A quote from Kristin Scarth of Employment BOOST, which is a member of JMJ Phillip Holdings,

“You may have interviewed with more than one company. However, don’t assume that companies are willing to match another employer’s offer, and don’t make the salary the determining factor. Kristin Scarth, a career services manager at Employment BOOST in Detroit, Mich., warns Investopedia readers that trying to leverage one job offer against another offer might be a short-sighted approach. “No two jobs are apple-to-apple, and if you’re trying to get one company to come up another $5,000 just because you have a better offer, it doesn’t mean that they’re going to comply–and it doesn’t mean that you should choose the highest-paying job.” Scarth advises candidates to weigh the pros and cons of each company and choose the organization that offers the best overall employment situation.”

To read the full article visit JMJ Phillip on Salary Negotiation

JMJ Phillip Featured on SHRM

Posted on February 14, 2016March 5, 2016 by JMJ Phillip

As the war on talent continues and likely won’t slow down until in the late 2020’s, the topic of discussion comes to program hiring. Program hiring is the practice where you bring on top tier talent and you let them get their hands on a few projects to see where they will fit in. Have you ever came across an amazing candidate that you didn’t have a position for but you hired them anyway as you wanted them on the team? Welcome to program hiring, but it does have positives and pitfalls.

“Dennis Theodorou, the Detroit-based vice president of executive search firm JMJ Phillip Group, agrees. “There need to be guidelines and expectations set at the very beginning.” He recalls a program hire with an MBA from a top college who had consulting experience. The employee “did some really great things” but had a few ideas that were a bit unorthodox. His company, not wanting to suppress the worker’s enthusiasm, let the worker implement some of the ideas, but “it was a struggle on our end managing that.”

“It’s kind of a test process when you hire people like that,” said Theodorou. “It’s important that they have a passion for their work.”

To read the full story visit JMJ on the War On Talent