Industrial Employment Still On YOY Growth Track But Some Negative Trends Emerge

EM’s editors have been hearing some concerns about the health of the industrial market, so we decided to dig into the data to find out what the numbers might reveal. We discovered a bit of a mixed bag. Some trendlines are definitely worth watching. The Institute for Supply Management’s Purchasing Managers Index has been in a downward glide since August’s high-water mark of 60.8 points (anything over 50 points indicates a bullish industrial purchasing environment), and in April it declined a rather large -2.5 points.

On a national basis, industrial employment was still hanging tough on a year-over-year basis in March with a 2% increase to 12.8 billion employees over March 2018. The preliminary employment data for 1Q 2019 came in with a slight decline (-0.2%) from 4Q 2018, and recent history tells us that once employment slips in a quarter, it often follows that up with a few quarters of further declines.
But to most industrially oriented electrical distributors and independent reps, local or regional data is more important. Leading the hit parade is Reno, NV, which despite Tesla’s troubles is still enjoying big-time employment growth because of the Tesla gigafactory and related feeder industries in that metro. According to a post on www.theverge.com, the facility now has more than 10,000 workers, 7,000 employed by Tesla, and 3,000 by Panasonic, which makes battery cells for Tesla in the gigafactory. If things go as Tesla CEO Elon Musk plans, more hiring may be in order, because apparently, the facility is only 30% complete.

According to that post, “The Gigafactory isn’t yet fully operational. Though it already contains 4.9 million square feet of manufacturing and office space (across all three floors), the factory is only about 30% complete. The goal is for the Gigafactory to draw its power from solar panels on the roof, plus geothermal heat and wind (as well as Tesla’s own batteries).”
Other metros with industrial employment increases at well above the national rate include Houston (+7%); Sacramento (7%); Asheville, NC (6.2%); Bergen-Hudson-Passaic Counties, NJ (5.8%); Orlando (5.8%); and Virginia Beach-Newport News.

EM’s editors watch employment data closely because we have found that over the years the sales-per-employee multipliers published annually by EW are a good tool to estimate sales potential for the industrial markets. Our 2019 sales-per-employee multipliers for the industrial market area as follows: industrial MRO ($789); OEM ($825); and Factory automation ($108).