But in March, the most recent month data is available, manufacturing employment in the city climbed to 52,000, the highest since 2001, according to the federal Bureau of Labor Statistics.
By comparison, total employment in San Antonio is still down more than two percent from where it before the pandemic.
Demand has surged for manufactured goods as the economic recovers faster than economists had expected. That’s led to shortages of supplies and rising prices, said Edgar Ghossoub, chairman of the economics department at the University of Texas at San Antonio.
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Inflation “is definitely an issue presently, especially when inflation increases above expectations,” Ghossoub said. “Higher costs would imply relatively slower hiring. So that definitely could slow things down.”
Texas manufacturers surveyed by the Federal Reserve Bank of Dallas said they’ve seen an increase in new orders and feel less uncertain about the future as the pandemic recedes.
But despite their recent hiring binge, manufacturers are feeling the crunch of rising prices — for raw materials, such as steel and lumber, and wages high enough to lure new workers.
Supply shortages are a major reason for the price increases.
Supply chains are still reeling from problems that developed last year. Toyota, for example, has cut production of Tundra pickups at its South Side plant because of a global shortage of computer chips.
And some San Antonio manufacturers have been unable to get enough resin to make plastic goods, said Rey Chavez, president of the San Antonio Manufacturers Association.
“They can’t get enough plastic resin because the chemical companies rely on petroleum products, and petroleum products are not coming in, so they can’t make the byproduct,” Chavez said.
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Manufacturers likely will pass on their higher costs for goods and labor to consumers, Chavez said.
“Inflation is real; raw material prices are going goofy,” a printing manufacturer told the Dallas Fed. “It sounds like a good time to raise my prices then as well.”
“We are having raw material supply constraints and rapidly increasing costs occurring, leading to concern regarding inflation,” one metal manufacturer said.
However, the higher prices for raw materials shouldn’t last long. The current price spike for products such as lumber or copper results from a sharp increase in post-pandemic demand for factory-made products, said Harry Moser founder of the Reshoring Initiative, an advocate for boosting U.S. manufacturing employment.
“We have a short-term surge,” Moser said. “I believe that within three to six months, prices will be most of the way back down to where they were. Probably, it’ll go even lower because there will be extra supply on the market.”
But even if commodity prices fall soon, a dearth of workers could hinder the manufacturing industry.
In a recent report, analysts at corporate consulting firm Deloitte said U.S. manufacturers could see 2 million jobs go unfilled by 2030, potentially holding back the industry’s growth.
“Throughout the executive interviews conducted during this year’s study, a resounding distress signal kept repeating itself: ‘We can’t find the people to do the work,’” the analysts wrote.
On Monday, Gov. Greg Abbott said he’ll end additional weekly federal unemployment benefits in June — extra funds that were set to be paid through September. Abbott’s move could help bolster the job market, Ghossoub said.
“We all know the moral hazard problem where if you’re giving people money, they have less incentive to seriously look for jobs,” Ghossoub said. “It’s such a fast recovery — the impact (of cutting unemployment benefits) will be minimized.”
diego.mendoza-moyers@express-news.net
