BUSINESS NEWS
ANALYSIS
EMPLOYMENT DATA: WHAT'S GOING ON? Despite huge layoffs, chemical industry is propped up by growth in pharmaceuticals
O
NE OF THE BIGGEST PIECES OF
news in the past year has been the response of chemical companies to the moribund economy—streamlining of operations, closing of plants, and cost-cutting programs, all of which have a negative effect on employment. In recent months, DuPont said it would shed 6,800 employees; Dow Chemical, 4,500; PPG Industries, 1,500; and Rohm and Haas, 1,200, to name a few. Planned reductions at these four companies alone total 14,000 employees. In addition, there have been numerous plant closings and other company announcements affecting fewer than 1,000 employees. But when one looks at the employment datafromthe Bureau ofLabor Statistics for the "chemicals and allied products" industry these large reductions in force are not readily apparent. In fact, the government data show that, in August, total chemical industry employment on a nonseasonally adjusted basis was down a mere 2,500 employees from a year ago to 1,039,400. And in July, the latest month for which data are complete for all sectors of the industry, the government reports chemical employment was actually 1,800 ahead of where it was in July of last year.
One has to wonder, then, what happened to the thousands of employees who were supposed to be fired? Why aren't the numbers lower? In many cases, perhaps, not all of the announced firings have taken place. Rather than cut workers immediately, companies often stretch the reductions out as they identify the best places to make them. In some past reductions, chemical companies often did not meet their stated layoff goals. But the most important reason that the employment numbers seem to be holding up is that the chemicals and allied products category contains the pharmaceuticals segment— the largest employer in the category—and drugs have been booming. In the past year, the pharmaceutical industry has added some 14,800 employees, according to the government data. In fact, in July, there were more people employed by the U.S. pharmaceutical industry— 333,100—than ever before. EXCLUDE PHARMACEUTICALS from the
total chemical industry, and the remaining seven segments saw employment during the 12 months decline by 13,000, or 1.8%, to 706,300. As an example ofjust how important the pharmaceutical industry has been to chemical employment, between
Working Chemical employment rose in July, but with help from drug industry TOTAL EMPLOYEES PERCENT CHANGE 3
THOUSANDS
Chemicals & allied products Pharmaceuticals Chemicals, excluding pharmaceuticals Industrial inorganics Plastics & synthetics Soaps & toilet goods Paints Industrial organics Agricultural chemicals Other chemicals
1,039.4 333.1
0.2% 4.6
N0NPR0DUCTI0N EMPLOYEES PERCENT CHANGE 3
PERCENT CHANGE 3
563.8 143.4
-1.7% 1.9
475.6 189.7
2.5% 6.8
706.3
-1.8
420.4
-2.9
285.9
-0.1
96.6 149.0 155.4 49.2 119.4 48.8 87.9
0.4 -3.6 2.8 -6.3 -0.8 -4.1 -6.2
52.2 99.5 95.6 25.6 66.4 28.0 55.1
-1.9 -4.1 3.2 -8.9 -2.5 -6.7 -5.0
44.4 49.5 59.8 23.6 53.0 20.8 32.8
3.3 2.6 2.2 -3.3 1.3 -0.5 -8.1
a From July 2000. SOURCE: Bureau of Labor Statistics
HTTP://PUBS.ACS.ORG/CEN
PRODUCTION WORKERS
July 1996 andJuly 2001, the entire chemical industry added just 1,400 employees. Take away pharmaceuticals, the largest employer among the chemical segments, and the remainder of the industry actually lost 70,200 jobs. Only two chemical segments besides pharmaceuticals had more employees in July of this year than they had 12 months earlier. Soaps and toilet goods employed 155,400 in July, up 4,300 or 2.8%, while industrial inorganic chemicals gained 400, or 0.4%, to 96,600 employees. Of the other chemical segments, employment in plastics and synthetics dropped by 5,500; paints, by 3,300; industrial organics, by 1,000; agricultural chemicals, by 2,100; and all the other chemicals segments, by 5,800. AS IS NATURAL during periods of declining demand and output, the cuts are falling heavily on production workers. While the total chemical industry added 1,800 total employees fromJuly 2000 toJuly 2001, it cut 10,000 production workers and added 11,800 nonproduction, or white-collar, workers. Again, this was mainly due to the large percentage of white-collar workers in the pharmaceutical industry; about 57% of pharmaceutical employees are classified as nonproduction workers, whereas for the rest of the chemical industry, just 40% get this designation. Even when the pharmaceutical industry is excluded, the difference between cuts in production workers and the rest is still daunting. Of the 13,000 total employees cut during the 12-month period, 12,700 were production workers and just 300 were nonproduction employees. One-third of these production job losses—4,200—were in the beleaguered plastics and synthetics sector, which includes the long-suffering fibers industry. The preliminary numbers that have come out for August indicate a loss of 3,000 more employees from the chemical industry than in the previous month, with all of these losses coming from the ranks of production workers. When segment data are available, it will be interesting to see, both for August and for the immediate future, if production workers will continue to be the primary target on thefiringline. The one sure thing, however, is that the chemical economy, like the economy as a whole, is tottering on the brink of a recession, and chemical employment is going to get worse.-WILLI AM ST0RCK C & E N / OCTOBER 8. 2 0 0 1
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