Oregon’s manufacturing sector continues its rapid decline with employment down more than 5% in the past year. Newly released state data shows factory employment has fallen below the depths it hit in the dark days of the pandemic recession.

The state had about 177,000 manufacturing jobs in September, the Oregon Employment Department reported last week. That’s the fewest number since December 2013.

Manufacturing is a big deal in Oregon. The state has a higher concentration of blue-collar jobs than most other states, a function of its roots in forest products, food processing and electronics manufacturing.

The state’s tax code also favors heavy industry. Oregon has no sales tax and offers lucrative property tax exemptions to large manufacturers. It exempts companies from income and revenue taxes on products they make here and sell in other states or countries, though the state’s new corporate activity tax is adding to the cost of some equipment and materials that manufacturers use.

Oregon factories began shedding jobs three years ago but as recently as last spring state economists were hopeful the worst was over. It wasn’t. The decline accelerated as the year went on and Oregon has now lost nearly 10,000 factory jobs in the past 12 months.

Much of the trouble corresponds to severe issues in Oregon’s semiconductor industry, the state’s largest economic sector in dollar terms.

Intel remains the state’s largest corporate employer but it has laid off more than 6,000 workers since the summer of 2024. The chipmaker’s Oregon workforce is at its lowest point in more than a dozen years, at a little more than 16,000 local employees.

Intel is struggling to overcome years of setbacks in its production technology, playing catchup to industry leader Taiwan Semiconductor Manufacturing Co. CEO Lip-Bu Tan says a smaller workforce will make Intel more agile.

It’s not just Intel cutting jobs. Microchip Technology, Onsemi and others have laid off an unspecified number of Oregon workers in response to setbacks in their own businesses. Altogether, Oregon chipmakers have shed about a fifth of their jobs in the past 18 months.

President Donald Trump’s trade war may also be playing a role in Oregon’s manufacturing woes. The president says his tariffs are designed to bring factory jobs back to the U.S. but they have also triggered retaliatory tariffs from other countries.

That stings in Oregon, which is among the most trade-dependent states in the nation. The state’s exports were down 19% through the first nine months of the year, according to the latest federal data collected by WiserTrade. It’s not clear how much of that decline was triggered by the trade war, though, and to what degree fewer exports translated into fewer jobs.

In their quarterly revenue forecast last month, state economists told a legislative committee that Oregon factory workers are also spending less time on the job in recent months — a worrisome sign that suggests manufacturers are continuing to scale back.

“The current direction of manufacturing hours worked per week in Oregon, coupled with ongoing job losses, raises concerns for the sector,” the economists wrote.

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