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Industrial Market Job Losses Continue with Midwest Feeling the Most Pain

July 9, 2020
Michigan's industrial market has been particularly hard hit.

While the opening of several large Michigan auto plants in mid-May was welcome news, the overall U.S. industrial market continues to see new job losses because of the COVID-19 crisis. It’s a worrisome trend that impacts hundreds of distributors, manufacturers and independent reps across the nation because the industrial market accounts for an estimated 32% of all sales through electrical distributors, according to data from Electrical Wholesaling. That’s easily over $30 billion in electrical products when you consider all of the MRO, OEM and factory automation applications for industrial products.

As you can see in the Tableau map below, the Industrial Midwest has been hit particularly hard. Local market in Illinois, Indiana, Michigan, Ohio and Wisconsin lost tens of thousands of jobs over the past year, according to the latest employment data available from the U.S. Bureau of Labor Statistics (BLS) through May. Despite the fact that assembly lines are rolling at major auto plants, Michigan is currently seeing the biggest impact.

While the state’s largest auto manufacturers started production at several facilities after BLS’ May industrial employment data was published, the decline remains severe. Through May, industrial employment was down -18.7% YOY for the state of Michigan, a full 10 points worse than the national decline in this key economic segment, which stood at -8.6% in May and improved to -5.8% in June. Overall unemployment claims in Michigan have been rising, and for the week ending June 27, Michigan logged 18,688 new initial claims, the highest in the nation.

Several metropolitan statistical areas (MSAs) are suffering with employment declines of more than -20% — Flint at 32.5%, Bay City at -31.9% and Detroit-Warren-Livonia at -24.3%. The real numbers sound even worse than these percentages. The state of Michigan lost 117,467 manufacturing jobs since May of last year, and the Detroit-Warren-Dearborn MSA alone is down over 56,000 jobs. Another hard-hit metro in Michigan is Warren-Troy-Farmington Hills, which is off 32,800 jobs.

While the economic pain in the industrial market would appear to be most severe in the industrial Midwest, Los Angeles-Long Beach-Anaheim (down 43,000 job since May 2019) and New York-Newark-Jersey City (down 39,300 jobs) have also taken major hits.

Few large industrial projects are breaking ground during the COVID-19 crisis, according to EM research. Value of New Construction data from the U.S. Commerce Dept. showed that in May, the construction of new manufacturing facilities dropped -4.1% from April to $71 billion and is down -10.8% year-over-year.

One large project that made the news was the $950-million SDI Steel Complex in Sinton, TX. According to a report at www.caller.com, the facility being built by Steel Dynamics will eventually create 600 jobs and produce 3 million tons of steel annually in its flat roll steel mill near Corpus Christi, TX. On a smaller scale, Cabot Corp. recently announced plans to invest in a $90 million expansion of a carbon black plant for the tire and rubber industry in Ville Platte, LA, according to a post at www.theadvocate.com, and Charlotte Pipe and Foundry plans to build a $325-million production facility in Oakboro, NC., according to the Stanly News & Press.