Employment and the Industry Outlook
In June the U.S. economy added 80,000 jobs. While this is better than a decrease in the overall number of jobs, the growth in employment continues to fall short of the 200,000 jobs per month at which an economic recovery is seen to be self-sustaining. Looking at unemployment rates by education levels provides an interesting perspective on the persistent level of unemployment among the likely holders of manufacturing jobs. Overall unemployment currently stands at 8.2 percent. Unemployment rates for individuals with a high school diploma or less and for those with some college or an associate degree are two to three times higher than unemployment rates for individuals with a bachelor’s degree. While there are exceptions, we would think of manufacturing jobs as being held by individuals without a bachelor’s degree. Thus, unemployment levels for manufacturing workers continue to be higher than for workers employed in professional services, technology and other areas that typically require a bachelor’s degree.
The good news for the building products industry is that this appears to be gradually changing. Anyone who is a close follower of the various trade publications in this industry would agree that companies announcing hiring initiatives finally outnumber companies regretfully announcing the layoff of workers. I’m fortunate to be part of a series of conversations that act as another leading indicator for the future of this industry. They often begin with an email or a phone call from a door or window manufacturer asking me, in one way or another, “Who’s for sale out there right now?” The level of interest in making acquisitions continues to grow in this industry segment and in other building products sectors. These types of calls did not occur in 2009, because most companies were barely holding their own. When I asked companies in that “darkest before the dawn” time period whether they were interested in making acquisitions, many of them replied, “I’ve got enough problems of my own.” Now, however, companies are stable enough and have access to sufficient credit to consider making acquisitions again. Again and again at recent industry conferences, companies have shared with me their belief that the tide seems to have turned and that conditions are improving. In summary, the current view from the trenches indicates that we should be seeing these employment numbers improve more steadily before too long as the recovery become more broad-based.