North Carolina has led the nation in lost manufacturing jobs each of the last three years.
Counties with large manufacturing sectors, such as Rowan and Gaston counties, already sense that they’re in a recession. Rowan County, for example, has seen thousands of jobs disappear in textiles and in layoffs at its biggest employer, Freightliner Corp.
The monthly unemployment rate has recently approached 10 percent.
“We’re clearly feeling the pain,” said First Union Corp. economist Mark Vitner, who spoke Wednesday night to the Salisbury Sales & Market Management Association.
While the state’s larger metro areas still show fewer job losses, the smaller metro regions such as Salisbury-Rowan are hurting, Vitner said. In terms of manufacturing jobs, the future doesn’t seem much brighter.
Traditional industries’ share of the gross state product has dramatically — and steadily — declined since 1981 when it represented 26 percent. By 2005, agriculture, tobacco, furniture, textiles and apparel will decrease to about 6 percent of the gross state product, according to projections.
Textile and apparel employment — always a major job supplier in Rowan County in years past — will continue its sharp decline, forecasters say.
North Carolina’s textile and apparel industry, which employs 187,000 today, probably will decline to about 20,000 workers in the next 20 years, Vitner predicted.
In the early 1970s, textile employment was more than 400,000 people in North Carolina.
Vitner acknowledged that, for now, Rowan County sits in a tough spot between two metro areas where the trend has been for people to work in the large cities where the job opportunities are.
As for the future, Vitner said potential growth industries for Rowan County may be in areas such as financial management (because of all the baby boomers nationwide reaching retirement age), wholesale trade and distribution (Interstate 85 and the Norfolk Southern rail line are advantages here) and industrial machinery and machine tools (because the county has an experienced manufacturing sector).
Overall, Vitner warned that the first half of 2001 could be rough for the state and country, believing signs of a recession began as early as last October. Over the last two months, the nation has seen its sharpest two-month decline in consumer confidence since the last recession.
The index based on the National Association of Purchasing Managers’ survey experienced one of its sharpest drops late last year. The number of hours worked in manufacturing fell more in December than any single month during the last recession.
Industrial production statistics for December had a sharp decline, and the decline in October, November and December marked the first consecutive three-month drop since the recession.
“It looks like a recession to me,” Vitner said of all of these economic indicators. “it doesn’t look like anything better.”
But Vitner also sees some good economic news in the future.
The Manpower Employment Outlook and Non-Farm Employment survey shows companies with record-high hiring plans for this year’s first quarter. That’s inconsistent with a recession, Vitner said.
Another encouraging survey shows that a record number of people surveyed (51.3 percent) believe jobs are plentiful vs. only about 11 percent who perceive jobs as hard to get.
With the Federal Reserve’s recent reduction in interest rates, Vitner notes that mortgage applications and housing starts have increased in recent weeks.
The weekly sales of chain stores are higher in the past two weeks. Car sales at companies such as Chrysler and General Motors also have rebounded recently.
Vitner’s economic forecast predicts a slow first half of 2001, with things picking up some by the last half of the year. He bases much of those predictions on anticipating that Federal Reserve Chairman Alan Greenspan will cut interest rates at least three more times by this summer.
“That should get the economy going,” Vitner said.
Vitner also expects major national tax cuts to take effect by Jan. 1, 2002. North Carolina might feel the effects of the initial economic slowdown moreso than other states because 18 percent of its workforce is in manufacturing jobs, Vitner said.
Vitner joined First Union in 1993 and is responsible for tracking U.S. and regional economic trends. He also writes First Union’s monthly economic newsletter.
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