Demystifying Data

Manufacturing activity stayed the same in the Tenth District in January, with the month-over-month composite index remaining unchanged at 0 from December. Meanwhile, expectations for future activity stayed positive but declined 3 points to 7. The month-over-month activity remaining constant was due to an increase in durable manufacturing offsetting a decline in nondurable manufacturing. At the same time, the new orders index inched up, while shipments turned negative in January. New orders for exports decreased at a slightly faster pace than the prior month. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico.

The production index remained negative but inched up from -3 to -2, while the new orders index moved up from -2 to 0, indicating new orders were constant over the month after declining for two consecutive months. The employment index rose in January from -4 to 0, while the average employee workweek index ticked up from 3 to 4. The backlog of orders fell further into negative territory, dropping from -5 to -11. The pace of growth for prices received weakened, while growth for prices paid accelerated over the month, with raw materials prices increasing 3 points to 44, and prices received falling from 24 to 19. Over the year, the indexes for prices received and paid both decreased, moving down from 54 and 67, respectively.

In January, survey respondents were asked special questions about changes in labor demand and factors negatively affecting business. Over half of the firms (57%) reported little to no changes in labor demand over the past year, while 14% saw reduced labor demand and 17% experienced increased demand. When asked about business concerns, more than one-third (39%) noted concerns about domestic demand for goods and services, 24% were concerned about geopolitical uncertainty and 21% cited worries about worker availability.

U.S. import prices rose 0.4% from September to November, while increasing 0.1% over the year in November. Meanwhile, U.S. export prices stepped up 0.5% from September to November, while growing 3.3% over the year in November. Since the Bureau of Labor Statistics was unable to collect survey data in October due to a lapse in appropriations, indexes for that month were missing.

In November, U.S. import prices for manufacturing rose 0.2% over the year, as a surge in metals manufacturing prices offset declines across other sectors of the industry. Primary metal manufacturing experienced the most significant over-the-year U.S. import price increase in November, jumping 17.4%. On the other hand, the greatest yearly decrease in U.S. import prices occurred in beverage and tobacco product manufacturing, which fell 14.7% from November 2024. At the same time, U.S. export prices for manufacturing grew 4.0% over the year, with primary metal manufacturing exhibiting the largest rise (32.0%). Meanwhile, U.S. import prices for nonmanufacturing decreased 3.8% from November 2024, while U.S. export prices for nonmanufacturing edged down 0.6% over the year.

Fuel import prices decreased 2.5% from September to November. Over the past year, fuel import prices have dropped 6.6%, the largest over-the-year decline since August. Import petroleum prices declined 8.4% year-over-year in November, while natural gas prices surged 51.4% over that period. Nonfuel import prices ticked up 0.6% from September to November and 0.7% on an over-the-year basis. Higher prices for nonfuel industrial supplies and materials and for capital goods more than offset lower prices for foods, feeds and beverages; automotive vehicles; and consumer goods.

Agriculture export prices rose 1.3% from September to November and 2.6% over the past 12 months, driven by higher prices for vegetables, nuts and fruit. Meanwhile, nonagricultural export prices grew 0.4% from September to November and 3.3% over the year. Higher prices for consumer goods, capital goods and nonagricultural industrial supplies and materials drove the 12-month increase.

Manufacturing activity in New York state increased in January, with the headline business conditions index climbing 11.4 points to 7.7. The new orders index turned positive, rising 7.6 points to 6.6, while the shipments index jumped 21.3 points to 16.3, its highest level in over a year. Unfilled orders improved from -14.9 to -8.2, while inventories slipped 6.1 points to -2.1, indicating business inventories have started to decline. Delivery times lengthened, and supply availability improved but remained negative, increasing 2.8 points to -4.1.

Employment fell in January, with the index for the number of employees plunging 16.5 points to -9.0. Meanwhile, the average employee workweek declined to -5.4 from 2.5, signaling a decrease in hours worked from December. The prices paid index stepped down 1.4 points to 42.8, while the prices received index dropped 11.0 points to 14.4, a reflection of a slower pace of increase in both prices received and prices paid.

In January, firms’ optimism regarding the future declined slightly but remained high. The future business activity index edged down 3.2 points to 30.3. In the next six months, new orders are expected to rise but at a slightly slower pace compared to the prior month at 33.3. The future employment index rose 7.1 points to 14.9, suggesting an anticipated faster pace of employment growth over the next six months. Meanwhile, input and selling price expectations are forecasted to increase at a slower pace, falling from 55.4 to 52.6 and from 41.6 to 36.5, respectively. Furthermore, capital spending plans strengthened from December, up from 6.9 to 10.3.

In January, Philadelphia’s regional manufacturing activity rose to its highest level since September, with the index for general business activity jumping from -8.8 to 12.6. This month, 23.1% of firms reported increases in activity, while just 10.5% of firms noted decreases. The indexes for new orders and shipments both moved up, rising from 5.7 to 14.4 and from 3.2 to 9.5, respectively. Meanwhile, the employment index declined to 9.7 points as the average employee workweek shrunk 3.4 points to 9.1.

The prices paid index decreased from 49.3 to 46.9, its second consecutive monthly decline, while the prices received index rose from 26.0 to 27.8. As has been the case for many months, the prices received index remained lower than the prices paid index, indicating that manufacturers have been absorbing a portion of higher costs paid.

Looking ahead, indicators showing expectations for future growth declined for the second consecutive month but remained positive. After decreasing 8.0 points in December, expectations for future business activity fell 12.6 points to 25.5 in January. The drop came from a loss in the proportion of firms expecting an increase in activity (34.9%). At the same time, the number of firms anticipating a decrease in activity (9.3%) was down from 12.6% in December. The future new orders index slipped from 39.1 to 32.9, but the future shipments index edged up from 39.9 to 40.8. At the same time, the capital expenditures index grew from 29.1 to 30.3. The future prices paid and prices received indexes increased from 64.6 to 66.6 and from 57.2 to 61.8, respectively. Additionally, the index for future employment rose from 24.7 to 28.8.

In January, firms were asked to estimate changes in various costs over the past year and anticipate changes coming in 2026. Of those responses, firms said their costs for wages, health benefits and non-health benefits rose 5.3% during 2025. Looking forward, firms expect the average costs for these to climb 6.5% in 2026. Meanwhile, firms anticipate the increase in the cost of energy, other raw materials and intermediate goods to slow over the next 12 months. When asked about factors influencing their pricing decisions for their products, maintaining steady profit margins (77%), wages and labor costs (75%) and strength of demand as well as nonlabor costs (both 74%) were cited as most important to firms.

The Producer Price Index for final demand (also known as wholesale prices) rose 0.2% over the month in November, after prices inched up 0.1% in October. Over the year, producer prices moved up 3.0% in November, up from 2.8% in October. Meanwhile, prices for final demand excluding foods, energy and trade services increased 0.2% over the month in November after rising 0.7% in October. Prices for these goods advanced 3.5% from November 2024, the largest 12-month increase since March.

Within final demand, prices for services stayed the same in November after rising 0.3% in October. Meanwhile, prices for goods jumped 0.9%, the largest increase since February 2024. Within the final demand services index, prices for bundled wired telecommunications access services moved up 4.6%, while margins for health, beauty and optical goods retailing fell 4.3%. Within the final demand goods index, prices for final demand energy climbed 4.6%, accounting for over 80% of the November increase. The price for gasoline was the primary contributor of that increase, surging 10.5%, while prices for residual fuels declined 8.6%.

Processed goods for intermediate demand stepped up 0.6% in November, the largest increase since July. Nearly three-fourths of the November advance can be attributed to a 12.4% jump in the prices for diesel fuel. The indexes for gasoline, primary nonferrous metals, commercial electric power, utility natural gas and jet fuel also rose. On the other hand, the prices for sugar and confectionary products decreased 1.3%. Over the year, the index for processed goods for intermediate demand rose 3.6%.

Meanwhile, prices for unprocessed goods for intermediate demand advanced 0.4% in November, the first increase since July. The growth was led by a 1.4% rise in unprocessed energy materials, with the 10.8% gain in the index for natural gas being a major factor. At the same time, prices for unprocessed foodstuffs and feedstuffs declined 0.9%. Over the year, prices for unprocessed goods for intermediate demand inched up 0.1%.

In December, consumer prices increased 0.3% from November and 2.7% over the year, unchanged from the 2.7% annual rise in November. Core CPI, which excludes more volatile energy and food prices, rose 0.2% from November and 2.6% over the year, also unchanged from the 2.6% 12-month increase in November.

Energy costs advanced 2.3% over the year in December, after rising 4.2% year-over-year in November. Within the energy index, gasoline prices declined 3.4% over the year, while fuel oil prices jumped 7.4%. Meanwhile, electricity prices increased 6.7% year-over-year, and natural gas prices surged 10.8%.

In December, food prices grew 3.1% over the year, after increasing 2.6% year-over-year in November, while prices for food at home advanced 2.4%. Meanwhile, prices for food away from home climbed 4.1% from December 2024, up from the 3.7% year-over-year increase in November. Of the different food groups, beef and veal and coffee continue to rise at the fastest pace, soaring 16.4% and 19.8% over the year, respectively.

The shelter index grew 0.4% from November and 3.2% over the year, the greatest factor in the all-items monthly increase and ticking up from the 3.0% annual gain in November. Meanwhile, prices for used cars and trucks decreased 1.1% over the month but rose 1.6% over the year, while new vehicle prices stayed the same over the month and ticked up 0.3% from December 2024. Relatedly, prices for motor vehicle maintenance and repair jumped 5.4% year-over-year.

Although the headline inflation rate did not accelerate from November, it is still elevated from earlier last year. Federal Reserve officials cut their interest rate target at their prior three meetings, but markets anticipate that the Federal Open Market Committee will not lower its interest rate target at this month’s meeting. While risks to the Federal Reserve’s employment mandate remain elevated, so do risks to inflation, and those two risks may be coming into balance again.

Industrial production rose 0.4% in December, while manufacturing output increased 0.2% after moving up 0.4% in November. At 97.4% of its 2017 average, manufacturing production advanced 2.0% from December 2024. Capacity utilization for manufacturing was 75.6%, unchanged from November but up 1.1% over the past year. Capacity utilization remains 2.6 percentage points below its long-term average from 1972 to 2024.

In December, most major market groups posted gains. Consumer goods production grew 0.7%, while business equipment output increased 0.8%. The decline in production of consumer durables (down 0.7%) was led by home electronics’ output falling 1.4%, while the index for consumer nondurables rose 1.1%, experiencing gains in all but two of its categories. Among business equipment, the 1.7% gain in defense and space equipment more than offset a 0.2% loss in the index for information processing equipment. At the same time, the index for materials ticked up 0.2%, while the index for construction supplies inched down 0.3%, and the index for business supplies remained unchanged in December.

Durable goods manufacturing advanced 0.1% in December and 3.1% from the year prior. Monthly growth was greatest for primary metals (up 2.4%), while wood products posted the largest decline (down 2.3%). Meanwhile, led by a 1.8% gain in petroleum and coal products output, nondurable goods manufacturing increased 0.3% in December and 1.0% from December 2024.

Nonfarm payroll employment ticked up by 50,000 in December. Meanwhile, October and November’s job gains were revised downward by 76,000 to a loss of 173,000 jobs and a gain of 56,000 jobs, respectively. Following the government shutdown, employment is still down by 67,000 from September. The 12-month average stands at 49,000 job gains per month. On the other hand, the unemployment rate edged down 0.1 percentage point from November to 4.4% in December, while the labor force participation rate also ticked down 0.1 percentage point to 62.4%.

Manufacturing employment decreased by 8,000 in December, the eighth consecutive month of job losses, after slipping by 2,000 in November. On the other hand, the collective job losses in September and October of 14,000 were revised upward by 3,000 jobs to a decrease of 11,000 jobs. Manufacturing employment is down 68,000 over the year. Durable goods manufacturing employment edged down by 3,000 in December, while nondurable goods employment fell by 5,000. The most significant gain in manufacturing in December occurred in miscellaneous manufacturing, which added 1,800 jobs over the month. Meanwhile, the most significant loss occurred in plastics and rubber products manufacturing, which shed 4,900 jobs over the month.

The employment-population ratio inched up 0.1 percentage point from November to 59.7% in December but is down 0.2 percentage points from a year ago. Employed persons who are part-time workers for economic reasons declined by 146,000 from November to 5.34 million in December and are up from 4.36 million in December 2024. Native-born employment is down 656,000 from November but up 2,043,000 over the year. Meanwhile, foreign-born employment is up 310,000 over the month and 383,000 over the year. At the same time, the native-born unemployment rate is up 0.4 percentage points over the year to 4.1% in December, while the foreign-born unemployment rate is down 0.2 percentage points to 4.1%.

Average hourly earnings for all private nonfarm payroll employees rose 0.3%, or 12 cents, reaching $37.02. Over the past year, earnings have grown 3.8%. The average workweek for all employees edged down 0.1 hour to 34.2 hours and by 0.2 hours to 39.9 hours for manufacturing employees.

Excerpts from Remarks Prepared for Delivery for NAM President and CEO Jay Timmons
NAM Board of Directors Meeting, Naples, Florida

…There’s a new reality in Washington and in America. You could go as far to call it a “new world order.”

And a new reality requires a new strategy. That’s what I want to lay out for you today: a plan for success. You could call this plan Make America Great for Manufacturing Again.

Leading up to the inauguration and in the past month since, I have heard from so many of you.

To be honest, it’s been quite divergent. Some of you are thrilled. Some of you are reserved. Some of you are downright panicked.

I know that you’re putting investment decisions on hold because you don’t have the confidence yet that those 2017 tax reforms the NAM shaped will be renewed.

I’ve heard your frustration about the regulatory onslaught that rained down…and your questions about how fast can we really move to make changes in a way that won’t get delayed by litigation?

I’ve heard your concerns about the workforce. Will we get the immigration policy that we deserve—and the support for the workforce programs that we need?

I know that you’re anxious for permitting reforms—so that paperwork and red tape aren’t slowing you down even more.

And, I can tell you, on the weekend of February 1 when the 25% tariffs were announced on Canada and Mexico, I took more calls, answered more emails than I ever have in this job.

Tariffs… tariffs are, simply put, part of our new reality. The President has made it very clear he will impose them.

So what does that mean for us?

I’d suggest that our message—our unified message—needs to be this: there must be a commonsense, coordinated and comprehensive manufacturing strategy from our elected and appointed officials. … one that aims to reduce the cost of doing business in America and incentivizes investment, job creation, wage growth and production here at home. I want to repeat: a comprehensive manufacturing strategy.

We all know we are a capital-intensive industry. We plan months, years, decades in advance. Uncertainty is the silent killer of manufacturing investment.

Since tariffs are on the table, … tax reform, permitting reform, and more, simply cannot be delayed.

And I’ll go a step further: those objectives need to be even more aggressive.

Our job at the NAM is to help the administration and Congress understand that all of these policies and more are intertwined and interconnected. We are telling the story about tariff impacts on manufacturing. Since they are intent on applying them…then they need a plan to offset those cost pressures somewhere else.

So, let’s talk about that comprehensive manufacturing strategy. A strategy, unlike a wish list, is focused on how to get us where we want to go within a given reality.

And I want to lay out some thoughts—and then I want to hear from you…your reactions, your questions. That will happen later on during this session after we bring the External Affairs team on stage.

Taxes

Let’s start with taxes. As I was saying on the Competing to Win Tour, we have to do this now. Every day we wait means jobs and opportunity lost.

But here’s the good news. We are the association that can bring all the key players together.

We did it in 2017. We did it again last month, as Kathy mentioned, when we brought together House Ways and Means Committee Chair Jason Smith and Senate Finance Committee Chair Mike Crapo, along with the Speaker of the House and the House Majority Leader, to release the NAM’s tax study with EY at the U.S. Capitol.

Those of you who know Capitol Hill know that it’s next to impossible to get the chairs of the House and Senate tax-writing committees to be in the same room, much less share a stage. That’s the power of your NAM.

That study we released made the stakes clear.

• Failing to renew the 2017 tax reforms will cost America 6 million jobs, …
• ….including more than 1.1 million manufacturing jobs.
• The economy would suffer a $1.1 trillion hit.

And those numbers do not take into consideration any new price pressures from tariffs.

That’s not just economic data. That’s the difference between a worker getting a raise or losing a job, between a family affording a home or struggling to get by, between a school getting new resources or facing budget cuts.

In fact, the study specifically looked at worker wages—and found that more than $500 billion in worker pay is at risk. And that’s why the study is a powerful advocacy tool.

We have had a significant number of Republican Congressmen and Senators citing the data from our study. And I’ve had some off-the-record conversations with Democrats who want our help in doing better in this area.

But let’s go a step further. If the overarching goal is to increase production in the U.S., then let’s look at additional incentives that make manufacturing in America even more competitive.

President Trump has said he wants to get the corporate rate as low as 15%—which we suggested to him back in 2016 when I met with him at Trump Tower. He was excited about that suggestion then and embraced that goal when we helped his first White House team draft the bill.

So, we’re helping him get there now. And since they’ve put additional U.S. production incentives on the table, we will do everything in our power to make sure they work to every manufacturer’s advantage—and don’t come at the expense of our other priorities.

We are working to encourage Congress to think creatively so that both large corporations and pass-throughs get the full benefit of renewing expired provisions, like R&D expensing and interest deductibility as well as any new incentives.

That’s one way to get to a more commonsense, cohesive strategy.

Regulations

But of course, regulations are also part of the picture. Right now, manufacturers are spending $350 billion each and every year just to comply with federal regulations.

That’s about $50,000 per employee, per year at small manufacturers—according to our NAM study. That’s unsustainable.

We need more regulatory clarity and consistency. And we’re helping the administration achieve that objective.

They have already acted on many of the regulatory items on the roadmap we sent them during the transition. Like lifting the LNG export ban. That was a big Day One win for us. … Like rescinding problematic ESG standards at the SEC… That was another one.

These are good first steps. We need more of it—and the urgency grows by the day.

And when activist groups inevitably try to block the administration, the NAM Legal Center will be in court defending our progress.

Permitting and Energy

Perhaps nowhere is regulatory and permitting urgency greater than in the energy sector.

From pipelines to renewable energy … from critical mineral mines to hydroelectric and nuclear power plants … from interstate transmission lines to battery manufacturing and semiconductor fabs, … we are seeing opportunities for energy dominance fade in the face of a permitting process that takes 80 percent longer than other major, developed nations. Eighty. Percent. Longer. That is unacceptable.

Our view is that America should be the undisputed leader in energy production and innovation. The President agrees—he just established a new National Energy Dominance Council, whose mission is filled with NAM priorities.

Give us the tools, and manufacturers will make it happen.

Workforce

Of course, you can have the right tax policy, smarter regulation, faster permitting, and abundant energy, but without people, nothing gets done. We are, and always will be, a people driven industry, even as we lead at the cutting edge of AI.

Over the past year, we have averaged 500,000 open manufacturing jobs in America—good-paying, life-changing careers. And by the year 2033, we face a shortfall of 1.9 million manufacturing workers.\

That’s according to research from the NAM’s workforce and education affiliate, the Manufacturing Institute. They produced that study in partnership with Deloitte.

We’ve heard from all of you what works: apprenticeships, hands-on training, public-private partnerships—and making sure people can see the reality of manufacturing careers that make a difference for families, for communities and for our country.

And as Nick Pinchuk would remind us—those careers reward people with a sense of dignity and pride. That’s why manufacturers are increasingly turning to the Manufacturing Institute for workforce solutions.

On top of workforce programs and incentives, we also need to modernize our immigration policies. The President has focused on border security. Okay, but we have to go further, because without a functioning legal immigration system, one that is based on the economic needs of our nation, we will not reach our full potential or have a talent pool big enough to do the work ahead.

Trade

Uncertainty in workforce planning … it’s just as damaging as uncertainty in tax, regulatory, energy, permitting or trade policy.

Which brings us back to where we started: trade and tariffs….

Back in 2019, everyone who sat in the seats of this board of directors and our entire organization put our credibility on the line to support congressional passage of the USMCA at the request of the president and his administration. So it seems quite logical that we will defend the USMCA.

After all, it was one of President Trump’s signature achievements from his first term. We need to defend it because it prioritized manufacturing in the United States, it secured supply chains, and it strengthened our industry.

It pivoted production away from China to the North American continent … to the U.S. and our closest allies … and away from one of our fiercest competitors.

But we need more:

We need a trade policy that respects the manufacturing investments that we’ve made under the rules we were given.

Since the new world order involves tariffs, they need to start low, giving manufacturers in the United States time to adjust their investment and expansion strategies accordingly.

We are encouraging the administration to think about tariffs in the context of that comprehensive manufacturing strategy that I outlined…. A longer runway that incentivizes, … rather than penalizes … manufacturers… To prioritize leveling the playing field against market distortions like dumping, subsidization and the theft of intellectual property.

And, of course, any tariff policy should also have clear and reliable exclusions. And why is that?

Because of critical minerals and other industrial inputs, like chemicals and energy products, that simply cannot be sourced in the U.S. They need to be tariff-free—so supply chains are not disrupted and manufacturers are not penalized for inputs that simply do not exist domestically.

The administration has to recognize there could be scarcity and shortages until we get to the point where we produce more here.

For example, two-thirds of the primary aluminum we need today comes from Canada. So we’ll need a policy that ensures manufacturers who need that aluminum aren’t sidelined, a policy that prioritizes the needs of American manufacturing and your access to the inputs you need.

And here’s another imperative: we need more trade agreements that expand market access and that ensure fair competition—so that manufacturers in the U.S. can compete on a level playing field.

So again, maybe I’m sounding a little repetitious. But here’s the bottom line: A commonsense, comprehensive manufacturing strategy to align our trade policy with tax, regulatory, energy and workforce initiatives—so that manufacturers can plan, grow and succeed. Anything else creates a piecemeal approach that generates uncertainty … and uncertainty kills investment.

***

NAM Leadership

Now if you’re like a lot of our members, you probably have whiplash, going from one agenda in the White House to another … back to the other … over the past eight-plus years.

But the one thing that you can count on is this: the National Association of Manufacturers will always respond in the appropriate manner.

All of our work, as you well know, is based on policy, not on politics, not on personality and not on process. That imperative has not changed. And it will not change.

Our greatest asset is that virtually every politician, left or right, wants to see manufacturing succeed.

That’s because manufacturing’s success is about more than balance sheets and profits. These elected officials know it’s about individual families in their communities.

It’s about when that member of Congress walks down the street and sees that a new school has been built because of the economic might that a manufacturing facility has pumped into a town.

It’s what Kathy and I saw in Ohio as we kicked off this year’s Competing to Win Tour at Armstrong World Industries with the State of Manufacturing Address.

We visited Ohio, Texas, Alabama and Florida last week, and everywhere we went we were energized by what manufacturers are doing—from Freeport LNG … to Toyota … to Milo’s Tea … to Port Miami.

By the way, thank you, Tricia Wallwork, for the warm welcome outside Birmingham. Your passion and the company culture are so evident. And your tea, well, as I told you, it tastes just like my grandmother used to make.

And Chris Nielsen, you have a stellar team just outside Huntsville. Thank you, Toyota, for the incredible tour.

Thank you also to everyone who has already brought your story to Washington, DC, this year though powerful testimony before Congress…

Karl Hutter and Courtney Silver …. Barbara Humpton from Siemens … and Noah Hanners from Nucor.

And to all the board members whose companies were represented during our tax event with House leadership that Kathy recognized already … thank you again!

As members of the board, as leaders of the manufacturing ecosystem, you all have the power to use your voice to ensure that leaders on both sides of the aisle, in Congress, the White House and the agencies, make the right decisions.

…

That’s our job at the NAM … You invest in us to help you succeed, to help the industry succeed, to help our country succeed. Because when manufacturing wins, America wins.

And your investment matters even more. Because we live in a new reality, a new world order.

***

The Choice Before Us

More than three decades ago, the fall of the Berlin Wall harkened not only the collapse of an empire but the triumph of an idea. It was the vindication of freedom over oppression, of open markets over command economies, of democracy over dictatorship.

President Reagan had long called America the “last best hope of man on Earth,” and in that moment, history affirmed his words. The Soviet Union collapsed, and President George H.W. Bush spoke then of a “new world order,” a world where American leadership would usher in stability, prosperity, and global cooperation.

But the tides of history are restless.

Over the past three decades, new forces have emerged, reshaping the global order. China, once an economic understudy, now seeks to write its own rules for trade, technology, and security.

Russia, though diminished, wields disruption as a weapon, seeking relevance through aggression—and targeting democracy, not only in Ukraine but beyond.

And across the Middle East, regional actors assert themselves, untethered from the frameworks of the past.

The world is no longer defined by a single guiding force but by a contest of ambition, where nations pursue their own paths, and power is measured in economic strength as much as in military might.

So we stand at yet another inflection point. And our ability to lead in this new era will not rest on rhetoric but on action—on our capacity to build, to innovate, and to compete. A strong and dynamic manufacturing sector must be at the heart of that effort, ensuring that America remains self-reliant, yet engaged, in the world, prepared, and ready to meet the challenges ahead.

The question before us is not whether the world will change—it already has. The question is whether we will shape the future, or be shaped by it.

I know how I want to answer that question. And I sure hope everyone here would agree with me.

So thank you. I want to thank you for your leadership. I want to thank you for your vision. And as always, I want to thank you for your commitment to the success of this storied institution, the National Association of Manufacturers.

The manufacturing skills gap in the U.S. could result in 2.1 million unfilled jobs by 2030, according to a new study by Deloitte and The Manufacturing Institute, the workforce development and education partner of the NAM. The cost of those missing jobs could potentially total $1 trillion in 2030 alone.

The study’s dramatic findings come from online surveys of more than 800 U.S.-based manufacturing leaders, as well as interviews with executives across the industry and economic analyses. All told, they paint a worrying picture of manufacturing’s labor shortage. The lack of skilled labor was the industry’s major challenge even before the pandemic, according to the NAM’s quarterly outlook surveys—and this new study shows it’s still a major concern today.

The hard data: About 1.4 million U.S. manufacturing jobs were lost during the early days of the pandemic, according to the study, setting back the manufacturing labor force by more than a decade. However, the industry has largely recovered those lost jobs and is now urgently seeking more workers.

• While the manufacturing industry recouped 63% of jobs lost during the pandemic, the remaining 570,000 had not been added back by the end of 2020, despite a near record number of job openings in the sector.

The inside scoop: Manufacturers surveyed reported that finding the right talent is now 36% harder than it was in 2018, even though the unemployment rate has nearly doubled the supply of available workers.

• Executives reported they cannot even fill higher paying entry-level production positions, let alone find and retain skilled workers for specialized roles.
• A long-term challenge: 77% of manufacturers say they will have ongoing difficulties in attracting and retaining workers in 2021 and beyond.

Deloitte says: “Given the foundational role the manufacturing sector plays in our nation’s economy, it is deeply concerning that at a time when jobs are in such high demand nationwide, the number of vacant entry-level manufacturing positions continues to grow,” said Paul Wellener, Deloitte vice chairman and U.S. industrial products and construction leader. “Attracting and retaining diverse talent presents both a challenge and solution to bridging the talent gap. To attract a new generation of workers, the industry should work together to change the perception of work in manufacturing and expand and diversify its talent pipeline.”

The Institute says: “Manufacturers are proud to lead efforts to build stronger, more diverse and inclusive workplaces because we are committed to being the solution,” said Carolyn Lee, executive director of the Institute. “As we expand our programs at The Manufacturing Institute, and work with the National Association of Manufacturers on initiatives like our Creators Wanted campaign and tour, we’re making sure that Americans of all backgrounds in all states can find a home in manufacturing and get equipped with the skills to seize these opportunities.”