Future of American Manufacturing Looks Bright
Here are a few excerpts from my new article "Manufacturing in Our Favor: A Global Reallocation of Manufacturing" in the Spring issue of Business Horizons Quarterly, published by the National Chamber Foundation (U.S. Chamber of Commerce):
There were three related and important manufacturing trends that emerged in 2011:
a) American manufacturing remained at the forefront of the United States’ economic expansion for the second year in a row and re-established itself as one of the economy’s strongest sectors;
b) An erosion of China’s manufacturing cost advantages, especially for wages, started to bring manufacturing production back to the United States from China and other low-wage countries, reversing a decade-long trend of outsourcing production overseas; and,
c) An abundance of domestic shale-based natural gas brought gas prices to record low levels and sparked a new boom in the United States for energy-intensive manufacturing.
As a result of these trends, American manufacturing in 2011 had its best year in at least a generation by all relevant measures of economic performance: profits, output growth, and employment gains. In fact, it’s possible that we will look back on 2011 as a watershed year that marked the beginning of a great manufacturing renaissance in America.
Putting it all together, the U.S. manufacturing sector had one of its best years ever in 2011, reflecting a new manufacturing rebound that is now underway and is expected to accelerate in the years ahead. Flush with record-level profits, the manufacturing sector has never been financially healthier than it is today, and the future of American manufacturing has never looked brighter. After years of negative reports about the decline of American manufacturing, it’s now time to recognize and celebrate a great turning point, as America’s industrial sector moves in a new direction that many are now calling a “manufacturing renaissance.”
5 Comments:
When did the future of American manufacturing ever look dim?
Washington state is the home of Microsoft, Nordstroms, Amazaon, Costco and Starbucks
but..."Manufacturing propels state's job growth".
marmico,
2010 manufacturing value added was more robust on a percentage basis
A percentage basis, not absolute. Manufacturing has increased absolutely pretty much every year for centuries.
If you and I earned $45K each in 2010, then $50K each in 2011, then this year you earn $55.5K and I earn $60K, would you really say that your income and standard of living has declined or that your "growth momentum... has tapered off" because as a percentage of income you went from 50% to 48%?
ken-
gdp increases pretty much every year too, but recessions are different.
manufacturing took a much harder hit than overall gdp and has recovered less well.
INDPRO is still 3% under pre recession peaks. that's the best index to use as it mostly tries to count actual units.
"real" figures from the bea etc are heavily affected by the way they are deflated which has been highly suspect of late. gdp-d has been vastly lower than cpi lately, particularly in q3-4 of last year.
We need to step back and look at the bigger picture. The economic contraction hit manufacturing quite hard. Many of the things that were not purchased are now past their useful lives and have to be replaced. That makes manufacturing very strong over the short term unless there is another collapse coming. There is no evidence that the gains in manufacturing are sustainable. In fact, with the Euro on the verge of collapse some Eastern European countries are beginning to look good to people wanting to build factories in low cost jurisdictions.
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