As the Country begins to Reopen, Some Factories Take a Turn For the Worse

Factories are closing across the United States. Companies of all stripes have tried different approaches to stay open amidst the coronavirus pandemic, from operating at reduced capacity to moving everything online. For some, it hasn’t been enough. Now, after a very rough April, many factories are being forced to close their doors permanently.

Goodyear Tire is closing a plant in Alabama and dishware producer Lenox is doing the same in North Carolina, and the Wall Street Journal reports that numerous smaller companies are closing plants as well.

Last week, unemployment numbers for April came out, and it was not pretty. A staggering 20.5 million people lost their jobs in that month alone, up from 870,000 losses in March. Total unemployment reached 14.7%, a post-World War Two record. For some context, unemployment peaked at 10.0% during the financial crisis of 2008-2009. So, not great for an economy that had record low unemployment at the end of last year.

Within the unemployment report, we also learned that factories shed 1.3 million jobs in April, completely decimating the 1.4 million industry jobs created during the recovery. Of that, 914,000 positions were in durable goods manufacturing. 382,000 were in cars and car parts. Nondurable goods, such as office supplies or cosmetics, gave up 416,000 positions. Average weekly hours dropped by 2.1 to a 38.3 hour workweek. The coronavirus delivered a one two punch to manufacturing, both by diminishing capacity as companies amp up worker safety, and by slowing down demand for manufactured goods.

When unemployment figures first came out, 18.1 million respondents reported that they were laid off temporarily. Sadly, as factories shutter, some workers’ statuses are changing from temporarily furloughed to permanently unemployed.

Estimates suggest that unemployment may have crested in April, and will begin the long road to recovery in May. Prospects of a quick turnaround are dimming, however. Economists briefly predicted that the recovery would take a ‘V shape,’ bottoming out rapidly, and then turning around almost as quickly. That idea has mostly been shelved in favor of longer, shallower improvement that stretches out for a while.