Economy growing too fast? Manufacturers are having trouble keeping up with demand

[DrToast]

The manufacturing rebound has been so robust that many factories are struggling to keep up with demand because of bottlenecks in the supply chain.

That's slowing the broader economic recovery and job growth, some economists say.

Employers added 290,000 jobs last month, the Labor Department said Friday, far more than expected. After slashing 2 million jobs in the recession, manufacturers have been among the most active hirers, boosting payrolls by 44,000 in April and 101,000 since December.

But the snags likely prevented factories from adding thousands more jobs, says Sung Won Sohn, economics professor at California State University's Smith School.

Manufacturers and their suppliers closed plants, cut staff and slashed inventories in the downturn to reduce costs. Now, some say it isn't so easy to ramp back up quickly. Others hesitate to hire workers or buy equipment despite the growing demand, because they fear it won't last.

"Companies are not convinced how real (the recovery) is," says Tom Murphy of RSM McGladrey, a consulting firm.

Sohn says supply-demand mismatches are pronounced, "because the financial crisis was pretty bad, and no one expected this kind of a rebound."

http://www.usatoday.com/money/economy/2010-05-10-manufacturing10_ST_N.htm

Basically we have the opposite of recession here. Rather than trying to unload inventory, firms are struggling to get necessary equipment because demand is so high.

[havocmom]

1. Firms are struggling to spin flax into gold without hired trolls and princesses

[AllentownJake]

2. Post of the day nt.

[DrToast]

3. Plenty of trolls around here.

[AllentownJake]

4. Someone has a case of the Tuesdays nt.

[havocmom]

11. Long before there was grumbling on the internet tubes, there were trolls

Didn't anybody read fairy tales to you when you were a kid?

Hell, I am so old, Rumpelstiltskin was actually a classmate.

[ClarkUSA]

5. Team Obama deserves much credit. Sommers and Geithner once again prove all the DU naysayers wrong.

Thanks for the good news. :hi:

[AllentownJake]

7. Right....

:rofl:

[DrToast]

8. I hope I didn't ruin your day with the good news

That's how it seems to work with some people.

[ClarkUSA]

10. Not at all. Here's more good news for America: Hiring has risen to its highest level in a year.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=8314652&mesg_id=8314705

Ignore the sneers and jeers. Those folks got nuthin'. I expect they'll be doing more of the same for the next 6.5 years of Obama's presidency.

[Clio the Leo]

6. They were out of Chocolate Cheerios at the store today...

.... this is NOT acceptable.

[Jennicut]

9. Time to hire more people back? If you cut too many jobs, and

you cannot keep up with demand, that is the logical progression. You cannot get any more production out of the workers you have...there IS a limit!

[HughMoran]

13. If we get a couple of the orders we're trying for, we'll be hiring

Keeping my fingers crossed.

[HughMoran]

12. It's driving me INSANE!! We can't get parts and everybody is saying the same thing!!

Arrgh!! This happens during every economic recovery - vendors that were running at low utilization with minimal inventories are not ready for the sudden uptick in business and the supply chain runs dry.

In one sense it's good because we are getting business from competitors in some cases where we have parts on hand and they don't. In other cases, we lose. I spend 10% of my time reading datasheets of alternate parts to add to the AVL - some part numbers have up to 6 possible vendors!!! In this case the higher priced vendors are getting business that they normally wouldn't get - so it's good for them as well.

The people who deny or mock this story are not in the business and simply want to believe their preconceived notions - so be it.

[HughMoran]

14. k