U.S. Manufacturers Fight Back from ‘China Shock’ Amid Reduced Spotlight

By Howard Schneider

HICKORY, North Carolina – As furniture manufacturers began relocating from Hickory to China at the turn of the century, the local community college discontinued its furniture production courses, effectively leaving behind an industry that had been the backbone of this North Carolina community for generations.

Now, just over a decade later, many jobs are returning. The industry, having adapted to focus on custom fabrics and designs, is currently facing a challenge in filling hundreds of open positions, prompting the college to revive its training programs to address this demand.

The U.S. economy saw a significant decline in manufacturing jobs from 2000 to 2010, with the promises made by political figures to take a tougher stance on China and renegotiate trade deals resonating with many blue-collar voters. Even the Democratic candidate has shifted their stance on trade.

Analyzing federal data, it becomes evident that regions most impacted by the “China shock,” including Hickory, are starting to recover job losses in sectors significantly affected by international competition.

The Hickory metropolitan area, comprising four counties and home to about 350,000 residents, has seen the addition of over 2,800 manufacturing jobs since 2010. Nationally, furniture manufacturers have added 30,000 jobs over the past five years. Since 2010, manufacturing as a whole has generated 800,000 new jobs, a number that is strikingly similar to estimates of the jobs lost to Chinese imports leading up to the 2007 financial crisis. Research by economists has suggested that the number of jobs lost during this period ranges between 800,000 to 1 million.

Local officials in Hickory indicate that concerns over trade are being overshadowed by pressing issues such as securing financing for new projects, providing worker training, and addressing the migration of young residents to larger cities.

“In 1997, we were the fastest-growing manufacturing metro area in the country, and just four years later it collapsed,” remarked Donald Duncan, city manager of Conover, part of the Hickory metro area. “Today, we have 3,000 job openings.”

The rise of China as a low-cost manufacturing powerhouse following its entry into the World Trade Organization in 2001 severely impacted traditional industrial regions like Hickory.

Economists David Autor, David Dorn, and Gordon Hanson have been researching the impact of trade and found that, between 1990 and 2007, Hickory lost around 16 percent of its manufacturing jobs due solely to the influx of Chinese imports.

The area faced additional challenges from factors such as the North American Free Trade Agreement and changes in textile quotas, resulting in a total loss of 40,000 manufacturing jobs, half of its workforce, between 2000 and 2009. Nationwide, over 5 million manufacturing jobs vanished since 2000, coinciding with the worst economic downturn since the Great Depression.

These drastic shifts left lasting scars, illustrating the appeal of promises to restore manufacturing’s former glory.

In Hickory, disability cases surged by more than 50 percent from 2000 to 2014, primarily among older workers struggling to return to the job market. Simultaneously, the population of 25 to 34-year-olds declined by nearly 20 percent between 2000 and 2010.

Consequently, despite a drop in the unemployment rate from over 15 percent in 2010 to 4.6 percent today—now lower than the national average—the labor force participation rate also fell from more than 68 percent in 2000 to under 59 percent in 2014, with poverty levels doubling.

However, the recovery in manufacturing sectors, especially in areas hardest hit during the downturn, is notable. Rust Belt states, including Michigan, Indiana, and Ohio, have been adding manufacturing jobs at a faster pace than the overall economy.

For instance, Michigan, which lost nearly half of its manufacturing jobs between 2000 and 2009, has experienced a 25 percent increase since then, significantly outpacing the national gain of 4 percent.

Despite this positive trend, manufacturing employment in these regions remains considerably below levels seen in the 1990s. Economists are divided on the feasibility of returning to those high levels, especially given technological advancements that have reduced manufacturing’s workforce share from over 30 percent in the 1950s to around 8 percent today.

Nevertheless, many believe the worst impacts of competition from China may be behind us.

“The worst of the China shock, as we measured it, is over,” Autor noted in a recent presentation. “The next 20 years will be vastly different from the last 20… This lesson is largely absent from current political discussions.”

As Hickory transforms, former hosiery mills are now home to upscale restaurants and office spaces. Many workers who lost their jobs have transitioned to different careers, while several manufacturers have not only survived but are thriving by shifting focus from mass-market production to higher-value products.

“We’ve shifted from the worst of times to the best of times in a short span,” said John Bray, chairman and CEO of Vanguard Furniture, which has increasingly focused on custom orders. After scaling back during the recession, the company has roughly doubled its workforce since then.

Catawba Valley Community College has reintroduced its furniture training classes, collaborating with an industry consortium to establish a 30,000 square foot simulated factory.

While the notion of jobs returning evokes nostalgia, some, like Chanda Sherrill, who spent many years in a textile factory, have no regrets about the industry moving overseas.

Having earned a meager wage folding socks, Sherrill opted to pursue an associate’s degree in healthcare management after being laid off. She now works as a medical billing coder and expresses no desire to return to her former job.

“If those mill doors were still open, I’d still be down there,” Sherrill stated, as she considers pursuing a bachelor’s degree.

For younger individuals, manufacturing may be regaining its allure. Elizabeth Fowler, 19, who recently landed a trainee position as an upholsterer, sees it as a better opportunity than her previous restaurant job.

“This pays more,” she said while working on the assembly line at Vanguard, noting potential earnings starting at around $25,000 a year, with opportunities for future growth.

At the Manufacturing Solutions Center, which connects local suppliers with companies fostering custom clothing lines, director Dan St. Louis commented on the changing landscape of manufacturing. While some lower-skilled jobs have inevitably shifted overseas, local businesses that have invested in automation and high-tech fabric development now find themselves in need of qualified workers.

“We’ve been telling kids for two decades that manufacturing is going away, that it will all be in China,” he reflected. “Call a recruiter and ask for a textile mechanic, and they will laugh at you.”