December 1, 2003	Monday	Shawwal 6, 1424

After a bloodletting that cost 2.8 million jobs in just over three years, the US factory payrolls are expected to soon start inching higher, economists believe. But many manufacturing jobs may never come back.

“The declines are just about over,” said UBS economist Jim O’Sullivan. He predicted the first rise in factory employment since July 2000 could come as early as next week, when November payrolls are released, or perhaps one month later.

While employment outside of manufacturing has begun to grow after a long jobless recovery from the recession, factory jobs have remained elusive — particularly in rust-belt states which could be key to President George W. Bush in the 2004 election.

But the pace of factory layoffs has finally begun to ease. During the slump, job cuts averaged 134,000 a month. Since August, that has dropped to just 30,000, and October’s 24,000 decline was the smallest in nearly three years.

Factory data also suggest jobs are poised to expand, with the Institute for Supply Management’s employment index hitting 47.7 in October — inches from the break-even mark of 47.8. O’Sullivan said payrolls tend to rise when the index is above 47.8 and fall when it is below.

But just try telling that to an unemployed factory worker.

Kerry Battles, 51, was laid off from his job at a Boeing Co. aircraft plant in Wichita, Kansas, in May 2002 after 12 years with the company.

His wife, Mary, an electrical panel assembler at competitor Raytheon Co., worried she too, would lose her job. The factory cut costs, and six months ago the couple began to hope Mary had escaped the massive layoffs devastating the industry. But this month the axe fell, and Mary was laid off too.

“It’s not getting better, it is getting worse. It is definitely getting worse,” said Kerry Battles. “All three of the aircraft companies here in town are still laying off, still sending work out of the country. It’s not good.”

A dying sector: Economists agree most of the factory jobs lost during and since the 2001 recession are gone for good and warn that no one should expect a huge rebound in employment even when the layoffs finally come to an end.

Goldman Sachs economist Andrew Tilton said while about a million jobs have gone to cheaper overseas labour markets, most layoffs can be chalked up to a 12.8 per cent gain in productivity in the last three years, allowing employers to eliminate more than a tenth of the factory work force.

“Nearly two-thirds of the jobs lost did not ‘go’ anywhere; they simply disappeared as more efficient production processes reduced the labour needed to produce a given amount of goods,” Tilton said. O’Sullivan believes factories will rehire long enough to allow businesses to restock depleted inventories, boosting payrolls for a few months into early 2004. But in the long run, he warned, jobs will remain hard to come by.

“I think it’s like farming — where over time, a smaller and smaller share of the population are in manufacturing, even though output continues to grow rapidly, helped by stronger productivity,” O’Sullivan said.

The decline of the factory sector is not lost on Kerry Battles. After his layoff, he returned to school to study computer science and will soon have a degree. In the meantime, he’s found a short-term job with the Machinists Union helping newly unemployed workers grapple with retraining options.

“Every day, all my clients are laid-off aircraft workers, and there’s thousands of them. Probably after the first of the year, or maybe even before then, we’re going to have so many people we’re not going to be able to take care of them,” he said.

“And if they don’t turn things around soon, this whole town’s just going to be nothing.”—Reuters