Oregon factories keep shedding jobs; ‘a bit alarming,’ say state economists

Oregon’s manufacturing sector still hasn’t recovered from the pandemic recession — in fact, it’s going in the wrong direction, shedding jobs for most of the past two years.

“We’ve seen significant manufacturing losses in Oregon over the last 18 months or so,” interim State Economist Josh Lehner told Oregon legislators at a hearing last week. “That’s not what’s happening elsewhere around the country.”

Oregon’s labor market remains quite healthy overall, with wage growth outpacing inflation and the jobless rate, at 4.2%, near historic lows.

But factories are a bigger party of the economy here than in most other parts of the country. So Lehner told lawmakers the persistent loss of blue-collar jobs is “a bit alarming.”

Manufacturers employ 189,000 across Oregon, according to the most recent state data. That’s down about 5% from April 2019.

Nationally, factory jobs are up about 1.1% during that same period.

Why isn’t Oregon faring as well lately?

Some of the issue relates to industries with an especially big Oregon presence. State economists note that employment in metals manufacturing and transportation equipment is down sharply from before the pandemic.

That reflects a falloff in aerospace manufacturing that accompanied the pandemic and persistent quality-control failures at Boeing, which have reduced aircraft orders and deliveries. Boeing has a large assembly plant in Gresham, and Precision Castparts is a major Boeing supplier that severely reduced its workforce in 2020 as its market collapsed.

At last week’s hearing, Rep. Werner Reschke, R-Medford, asked whether the pandemic recession prompted manufacturers to rethink their factory networks and to consolidate their operations outside of Oregon.

“It’s certainly on the list of possibilities,” Lehner said. “You can’t discount that.”

Indeed, a number of Oregon factories have recently moved jobs to other parts of the country.

For example, Portland manufacturer Gunderson shut down its local railcar factory last year and shifted production to the Southeast U.S., closer to its suppliers and customers. (Barge building continues at the Gunderson site under a new owner.)

When two toilet paper factories in Columbia County closed recently, the plants’ Canadian owner said it was moving the work to sites that performed better.

And this past week, when Campbell’s Soup Co. announced plans to close the old Pacific Foods plant in Tualatin, it said the site was too inefficient to support growing demand for its products. Campbell’s plans to move that work elsewhere and lay off 330 in Tualatin by 2026.

There are some bright spots. Employment in Oregon’s electronics manufacturing sector is up more than 4% from 2019, reflecting a post-pandemic surge in semiconductor demand. But a cyclical downturn in the industry erased some of those jobs last year.

State economists are confident Oregon’s chip sector will rebound in the years ahead, fueled by billions of dollars in federal funding and $240 million in state subsidies. Intel is preparing to spend billions of dollars to expand its main Oregon factory by one-third.

There’s far less optimism, however, that other sectors will recover their losses.

“Moving forward, we know we have the chips growth, but it’s hard to see where some of the other growth will come (from),” Lehner said.

This is Oregon Insight, The Oregonian’s weekly look at the numbers behind the state’s economy. View past installments here.

— Mike Rogoway covers Oregon technology and the state economy. Reach him at mrogoway@oregonian.com.

Our journalism needs your support. Please become a subscriber today at OregonLive.com/subscribe