U.S. manufacturing is still in decline. Even with massive government intervention to prop up the industry through subsidies and tax credits. Extreme steel prices have companies such as Pilot Precision Products looking for foreign sources. They’ve now expanded down to suppliers in Austria and France. We all know American factories are having a tough time. As measured by the Institute for Supply Management (ISM), production has contracted hard and deep during those 2.5 years.
Manufacturers, including many of the industries listed above, are getting crushed by the high cost of domestically produced steel, as well. On June 23, it hit $960 per metric ton. That figure is over $440 per ton, which is more than two times the world export price. Facing a surge in production costs, companies are desperately looking for cheaper alternatives outside the U.S. Former President Donald Trump put steel tariffs in place as a tool to protect U.S. manufacturing. These tariffs have added 50% taxes on steel and aluminum, 25% on automobiles and auto parts, and 10% in new tariffs on thousands of other imports. In doing so, they’ve introduced tremendous confusion into the industry.
Some areas of manufacturing have enjoyed unprecedented prosperity in recent years. Manufacturing created a record 379,000 jobs in 2021 and 357,000 in 2022! Even as we’ve made that progress, persistent economic headwinds have again put manufacturing employment on a path to drop for a third straight year. And factory payrolls are 12.75 million, about the same as February 2020.
Eric Hagopian, CEO of Pilot Precision Products, noted the difficulties faced by manufacturers: “The past three years have been a real slog for manufacturing.” He expressed hope for improvement, stating, “There may be light at the end of the tunnel that may not be a locomotive bearing down.”
Beyond skyrocketing steel prices, manufacturers remain troubled by continued tariff-related uncertainty. As one fabricator of metal products pointed out, “Customers do not want to make commitments in the wake of massive tariff uncertainty.” This sentiment is echoed by Zuzick at Waukesha Metal Products, who remarked, “Everyone is kind of just waiting for the new normal.”
The administration hopes to overcome these challenges through a clear bipartisan agreement realized on Capitol Hill—the need for government to help, not hinder, American manufacturers. Are President Biden’s new tax incentives driving a factory-building boom in semiconductor and clean energy production? As a direct result, investments into new manufacturing facilities have skyrocketed, more than tripling between April 2021 and October 2024.
Economist Mark Zandi of Moody’s Analytics predicts that manufacturing production will flatline for the foreseeable future. With U.S. factories importing a significant amount of foreign products—including machinery, chemicals, and raw materials—many worry that reliance on international supply chains could hinder domestic growth.
Ned Hill, a professor emeritus in economic development at Ohio State University, commented on the prevailing uncertainty: “With all this uncertainty about what the rest of the year is going to look like.” Our manufacturing professionals know that what they crave most of all is stability. It assists them in making better decisions on investments and day-to-day operations.
There is no argument that there are positive advances with manufacturing but there are still some major challenges out there. Record costs for raw materials, including steel, have hit U.S. manufacturers hard. Meanwhile, unpredictable and arbitrary tariffs have made life more difficult for these companies as they battle to get back on their feet.
