SC Manufacturing Dealing With Contraction
Jun 05, 2020 11:18AM
By David Dykes
By Sara Hazzard
The Palmetto State’s manufacturing sector has long been the backbone of our economy. From our manufacturing heritage rooted in textiles to the addition of other sectors including automotive, tire, aerospace, chemical and more, South Carolina’s manufacturing industry has developed a global reputation as a manufacturing powerhouse and has experienced record growth in recent years.
It goes without saying that the impact of Covid-19 on the economy has been unprecedented. Never before have our state and nation seen such an extreme economic contraction in such a short period of time.
According to the South Carolina Department of Employment and Workforce (SCDEW), the South Carolina unemployment rate increased from 2.5 percent to 12.1 percent from March 2020 – April 2020. Approximately 211,000 South Carolinians became unemployed during that two-month timeframe.
In April, the industries hardest hit were:
Leisure and hospitality, down 125,300 jobs
Professional services, down 40,700 jobs
Education and health services, down 28,900 jobs
Trade, transportation, and utilities, down 27,900 jobs
Manufacturing, down 12,900 jobs
(Source: SC Department of Employment and Workforce)
According to an analysis by Dr. Joey Von Nessen, research economist with the University of South Carolina’s Darla Moore School of Business, this contraction is particularly unusual because the actions that led to it were intentional, as countries and states implemented various shelter-in-place and stay-at-home-orders, and in some cases mandatory closures.
South Carolina was incredibly fortunate that from the beginning of the Covid-19 outbreak manufacturing was considered an essential business sector and remained open for business. However, closures in other states and nations caused, and in some isolated cases continue to cause, supply chain disruptions.
Von Nessen also points to manufacturing, as compared to other sectors of South Carolina’s economy, as having a much greater impact in terms of its combined contribution to both GDP and employment. Thus, our state’s economic recovery depends on the success of the manufacturing industry.
While the overall unemployment numbers for our state, our country’s GDP growth, and many other indicators clearly show a retraction for manufacturing, it is important to note that our state and federal leaders have recognized that reopening our economy in a safe and prudent manner is a top priority. In order to jump start this effort, in April, Gov. Henry McMaster established the AccelerateSC task force, which was charged with leading the state’s economic revitalization.
The task force issued its final report and recommendations last week to McMaster include asking the General Assembly to support Covid-19 liability protection legislation and a plan for allocating the state's Covid-19 federal funding.
The federal funding recommendations include: $500 million toward the state's Unemployment Insurance Trust Fund, funding to establish a 28-day PPE state stockpile, $80 million for broadband expansion, as well as funding for other critical needs.
Critical funding and policy decisions by the General Assembly will be essential in South Carolina’s economic recovery. Particularly, the adoption of limited Covid-19 liability protections will allow employers to operate with confidence and have certainty that if they act in good faith and implement recommended guidance to protect their employees and customers, then they will not be subject to unnecessary and burdensome lawsuits.
The South Carolina Manufacturers Alliance along with a coalition of other organizations are working closely on this issue.
It is no small task, but South Carolina has a history of rising to the occasion to meet difficult challenges head-on. Some recent positive signs of our initial recovery are that according to SCDEW, 78 percent of all unemployment insurance claims list a return-to-work date and continued unemployment claims numbers have begun to decline suggesting that South Carolinians are returning to work.
In the coming months there are many unknowns that will impact South Carolina’s continued economic recovery. Will there be new spikes of Covid-19, and how severe will they be? How will the response be handled? What will the reopening of schools and childcare facilities look like, and how will this impact parents and employers? How swiftly will the consumer economy recover, and how will that impact the demand for consumer products? While the future is uncertain, TeamSC and our state’s manufacturers are focused on a safe and full recovery, and the South Carolina Manufacturers Alliance will be with them every step of the way.
Sara Hazzard is president & CEO of the Columbia-based South Carolina Manufacturers Alliance, the only statewide organization dedicated exclusively to the interests of manufacturers. Its mission is to elevate the quality of life for all South Carolinians by advancing the state’s manufacturing industry. The SCMA membership is comprised of more than 200 manufacturing companies that represent more than 80,000 associates in South Carolina.
For additional information about the SCMA, go to www.myscma.com.