MNI INTERVIEW: Absenteeism Hurts US Factory Recovery-ISM Chief

U.S. factory managers are paying special bonuses just for showing up to work amid fears of the second Covid-19 wave, but it's not enough to keep staffing needed for sustaining the industry's expansion, Institute for Supply Management chair Tim Fiore told MNI Tuesday.

Surging Covid-19 cases across the country are pushing absenteeism to new heights as the fear of exposure to the virus grows, he said, particularly among older workers.

"It's not a lack of work, it's a lack of people," he said. "If you heard a coworker tested positive, are you really going to show up the next day?"

Transportation has been hit hard, creating a ripple across an industry that relies on deliveries. Delivery performance of suppliers to manufacturers slowed in November, constraining production growth, according to the ISM survey.

Delivery drivers tend to be aged 45 and older, Fiore said, and are generally more at risk from Covid-19. Many companies offered attendance bonuses through November, though absenteeism was still elevated even with the highest unemployment in a decade.

EXPOSED OCCUPATION

"It's an exposed occupation, it's a risky occupation," he said. "There's been a lot of pay increases to keep drivers at work."

Companies in November also offered bonuses to other manufacturing workers, particularly among lower-wage staff making between USD14-20 per hour who may be less attached to their jobs, Fiore said.

The ISM Manufacturing Index fell 1.8 points in November to 57.5 after climbing to 59.3 in October, slightly below the Bloomberg consensus of 58.0. The employment index contracted for the first time since September, falling 4.8 points from October to 48.4.

The U.S. is roughly 6 - 8 months away from a "free and open" economy where virus-related business restrictions have been lifted and life has largely returned to normal, Fiore said.

Sentiment among respondents would have improved if the ISM survey was taken at the end of the month, he said, when drug-makers reported early success in vaccine development.

Still, panel sentiment was high through November despite an unsettled presidential election at the time of data collection, with 2.5 positive comments for every cautious comment, an improvement over October's 2 positive comments for every cautious one.