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Vol. 79/No. 40 November 9, 2015
US manufacturing contracts
as world depression grinds on
BY EMMA JOHNSON
In September one-third of all containers leaving the Port of Long Beach,
California, were empty, a more than 20 percent increase from a year ago.
Figures are similar or worse at other large ports on the East and West
coasts.
This is a graphic illustration of what is essentially a recession in
manufacturing — marked by stagnant exports, falling production, fewer
new orders and rising inventories — in the midst of a slow-burning
worldwide capitalist depression. U.S. factories are working at just 77.6
percent of capacity and exports are at their lowest levels in three
years. Manufacturing is contracting in China and stagnant in the
European Union. Brazil, with the largest economy in Latin America, has
entered a full recession.
The Institute for Supply Management reported that seven of the
industries it tracked showed growth in September while 11 contracted,
among them oil, coal, electrical equipment, machinery, computers,
transportation equipment and chemical products.
These facts help expose the bosses’ lie that the economy is approaching
full employment and better times are ahead.
In response to the 2008-2009 steep economic downturn, Washington
implemented “stimulus” measures aimed at getting production going again.
Interest rates were slashed to zero and the government pumped trillions
of dollars into the financial system over six years. But capitalists
found bigger profits in speculation in stocks, derivatives and other
paper “assets.” Industrial production did not reach pre-recession levels
until 2013 and has now contracted for eight of the last nine months.
Over the past year oil prices have declined 50 percent. The industry has
slashed 78,000 jobs so far this year and the Energy Information
Administration lowered its growth forecast for oil production both for
this year and next. In oil-producing states such as Texas and North
Dakota tens of thousands of workers have lost jobs.
Steel production nationwide dropped 9 percent from a year ago. U.S.
Steel has closed plants or cut production in Ohio, Illinois, Indiana and
Alabama. At its Granite City, Illinois, plant more than 2,000 workers
are on notice that they might be laid off around Christmas. On the Iron
Range in northern Minnesota, the company plans to close taconite mines
in Mountain Iron and Keewatin, laying off 1,100, roughly a quarter of
the miners in the area.
Coal exports have dropped for nine quarters in a row and production this
year is projected to be the lowest in 29 years. It has slumped most in
the Appalachian coalfields of Kentucky, Pennsylvania and West Virginia,
with wide-ranging social effects. Martin County, Kentucky, couldn’t
afford to open its swimming pool last summer. Officials in Boone County,
West Virginia, are considering ending free garbage pickup. Across the
region school budgets are being cut and stores closed down.
The labor force participation rate — the percentage of the working-age
population with a job — is just 53 percent in West Virginia and 56
percent in Kentucky. The national average is 62.4 percent, the lowest
rate since October 1977.
Bosses in the U.S., Europe, Japan and Australia had looked to rapid
growth in China for salvation. But the Chinese “miracle” is drying up.
The manufacturing sector there contracted for the seventh straight month
in September, shrinking at its fastest rate in six and a half years.
The manufacturing recession will exacerbate the depression conditions
that are grinding on working people with no end in sight. To boost their
profits bosses push to lower wages, cut the workforce, speed up
production and drive out unions. U.S. manufacturing production today is
20 percent higher than in 2005, with roughly 2 million fewer workers.
The pressure on profits in the race to get a competitive edge against
rivals is a reality throughout the economy. In October Walmart, the
world’s largest employer, announced it expects profits to drop up to 12
percent next year. The company blamed higher wages and stiff competition
with Amazon for online sales. Amazon’s competitive edge is based on
massive speedup and use of robots in its warehouses.
Warehousing in general has gone through a rapid transformation, with a
smaller number of workers handling an increasing number of items and
orders. Many grocery chains have contracted out distribution to big
operators, who have relocated to areas with lower minimum wages and no
union protection. Teamsters officials estimate that 6,700 union jobs
have been eliminated in grocery warehouses nationwide over the past 20
years.
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