Episode summary
What American Manufacturers Are Telling the Fed about the Economy
Wall Street Week
· · Guests: Tom Barkin
Summary
Tom Barkin’s trip to Gestamp in Union, South Carolina, was a ground-level check on how manufacturers are navigating a mixed economy. At the auto-parts plant, demand is still solid, the company keeps investing for the long term, and factory work is becoming more technical as automation, digitalization and AI change the skills employers need. Gestamp said robots and AI are not replacing workers so much as creating more specialized, higher-paying jobs that depend on training and maintenance talent.
Barkin said the point of leaving Richmond’s “ivory tower” is to hear what the data can miss: live information on hiring, pricing, input costs and demand. Across his Fifth District, he said the economy is not uniform, with government-heavy areas like D.C. and Maryland more challenged, while the Carolinas benefit from 2% workforce growth, housing construction and in-migration.
On tariffs and pricing, Barkin said the impact varies sharply by sector, with pharmaceutical manufacturing helped by some tariff-related deals but foreign assemblers in South Carolina squeezed on imported parts. He said businesses are broadly doing fine, but they dislike the uncertainty and want stability; the biggest question is whether companies can still pass on higher input costs and whether the economy is closer to 2016, 2023 or something else entirely.
Key takeaways
- Barkin said manufacturing conditions in his district are mixed, with the Carolinas stronger than D.C. and Maryland, where government spending matters more.
- Gestamp said demand is holding up, with U.S. vehicle sales expected around 16 million in future years.
- Barkin said tariffs are a net positive in some sectors, but South Carolina assemblers importing parts are being hurt.
- Gestamp said automation and AI are adding technical roles rather than replacing workers outright.
- Barkin said businesses are generally healthy on earnings and margins, but they want stability and dislike macro uncertainty.
Notable quotes
“I think you learn a lot about what's behind the data”
“In D.C. and Maryland, you've got an economy very tied to government spending. And I'd say that's a much more challenged environment”
“So really, I'd say weighted average manufacturing in my district is net positive, but big differences based on what impact you're seeing”
“demand, which still seems to be solid”
“-Our customers are very focused on reducing costs right now”
How the episode opens
This is a story about the good old days. Much of the American economic story has been told in its manufacturing plants, exemplified by Henry Ford's creation of the assembly line in Detroit in 1913. But as essential as manufacturing has been to the growth of the American economy through the years, it has changed profoundly over time.
The promise of seeing that change firsthand is what brought Richmond Fed President Tom Barkin to a small city in South Carolina, where Bloomberg's Michael McKee joined him. -In Union, South Carolina, a town of some 8,000 people over 500 miles from Henry Ford's Detroit, amidst the hum and clatter of the factory floor, steel and aluminum move through a seamless production line. -What we have is we have automated assembly lines which take metal stamp parts and put them together into the geometry for our customers.
This plant does primarily hoods and doors. -Gestamp has been building here in Union for years, and the scale of that investment is easy to see. Brian Brunzell helps oversee the company's U.S.
operations. -If you look at this facility, you can tell that our business is extremely capital intensive, and we're putting in assets that are here for 30 years. So we're planning long term and committing to Union County.
-Gestamp's investment comes amid a broader pickup in U.S. manufacturing, with factory activity expanding for 10 straight months. -So you're able to obviously spend capital and buy equipment, but you said employees are the hard part.
-Human resource is really the key to our business. The equipment is going to function. It's going to function as designed, but without the right people to maintain it, to make sure that we have, you know, longevity with it, to program it, to operate all the robots you said you saw out there, we're no good.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed economy
- manufacturing outlook
- rising costs
- changing technology
- policy uncertainty
Companies and tickers mentioned
- Gestamp
Watch the episode
Watch “What American Manufacturers Are Telling the Fed about the Economy” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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