Fewer Manufacturers Are Planning Layoffs
Although much attention is being paid to big corporate layoffs, a survey released Monday predicts that the vast majority of U.S. manufacturers plan to either boost employment or hold it steady this year.
Only 11% of the 500 manufacturing executives surveyed said they plan to cut staff through firings or attrition or other means, versus 21% a year ago, according to the survey by the National Assn. of Manufacturers.
Meanwhile, 55% said they plan to hold employment at current levels, and an additional 30% intend to increase the number of full-time, permanent jobs.
“The worst of the downsizing in the manufacturing sector appears to be over,” NAM President Jerry Jasinowski told a Chicago news conference. “While employees are rightly concerned about job security, the reality for manufacturing workers is far more positive than political rhetoric and news accounts would lead you to believe,” he said.
Still, many experts say that layoffs have become an entrenched business practice and, even if the pace slows, they are sure to continue at a substantial rate. “It’s become an ongoing activity,” said Eric Greenberg, research director of the American Management Assn., a nonprofit group representing major businesses.
Greenberg added that major companies consistently underestimate their layoffs when they make predictions for the coming year.
Many businesses, struggling with increasingly global competition, have resorted to layoffs to cut costs. Others have replaced workers with machines to try to improve productivity. In 1995, factory employment declined 149,000 to 18.3 million, according to U.S. Labor Department figures.
The NAM survey found 52% of the executives want the Fed to lower interest rates by at least an additional one-half of a percentage point to fuel more growth in the economy. “Real interest rates are at a historical high and are choking off growth,” Jasinowski said.
The Fed’s policymaking Open Market Committee next meets March 26, but most analysts suspect the panel will hold the overnight bank lending rate at its current level after a reported surge in employment growth in February of 705,000.
Nonetheless, 41% of the executives said they see the economy growing at a 2% to 2.5% annual rate this year. Also, 63% plan to hold inventories at current levels this year, and 54% plan to increase capital spending--which had been a driving force for the economy--by less than 5% this year.
As for prices, 35% of the executives in the NAM survey expect inflation to rise at a 2% to 2.5% rate this year while another 35% expect prices to increase at a 2.6% to 3% pace.
