IU Prof Says More People Needed In Manufacturing, No Signs Of Recession

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(INDIANAPOLIS) – Indiana manufacturers say they’re doing well, but they’d be doing better if they could fill their open jobs.

I-U Kelley School of Business Professor Mark Frohlich says a rough rule of thumb is that every job you have to leave unfilled slices a quarter-million to a half-million dollars off your bottom line — you can’t sell what you don’t have enough people to produce. Companies have papered over the shortages with stopgaps like automation, overtime, or asking longtime workers to delay their retirement plans. Now, though, Frohlich says an increasing number of companies have automated where they can, overtime isn’t enough to meet demand, and retirees don’t want to wait any longer.

I-U’s annual manufacturing survey still finds employers expecting an eight-percent jump in profits next year, down only slightly from this year’s nine-percent. Four out of five manufacturers increased profits this year.

Frohlich says there’ll be a recession sooner or later, but I-U doesn’t see any sign of one around the corner.

Economists sounded an alarm this summer when the purchasing management index, a measure of what companies are buying for their own use, declined to the lowest level in 10 years. But Kelley School Professor Steve Jones says the P-M-I measures only month-to-month changes, making a 10-year comparison useless. And he says the sharp drop reflects companies frontloading purchases earlier this year to complete them before tariffs kick in and drive up prices.