Business Brains

Reports of US manufacturing's demise may be greatly exaggerated

Posting in Sustainability

Spurred by exports, manufacturing leads other sectors of the economy in growth.

There's been plenty said about the information economy that now defines our economic future; and one can be forgiven for assuming that everything tangible is now manufactured in places such as China and Vietnam.

In fact, one national news network recently made hay of the fact that it was almost impossible to furnish an typical American house with anything "Made in America," and made the case if everyone was willing to accept a slight rise in prices, American manufacturing could be competitive again.

Some would argue, however, that the United States still is the dominant manufacturing economy, and a new article in The Economist points out that the manufacturing sector -- in the Rust Belt no less -- is leading our economy back into global competitiveness.  A structural shift may be underway that is making the US a manufacturing powerhouse, the report says:

"Makers of floorings, furniture and glass, all of which go into houses, were especially hard hit and have yet to start hiring again. But those that make things for businesses or customers overseas—computers, machinery, electronic equipment, heavy-duty trucks—are thriving. Cisco Systems and Intel Corporation notched up record sales last year. Caterpillar and John Deere, which makes diggers, bulldozers and farm equipment, saw sales leap."

The growth of US manufacturing exports is leading the economic recovery, the article says. Growing overseas economies are hungry for the technically advanced products that can be manufactured within US shores, and US manufacturers, battered by years of downsizing and competition, are employing technology to operating more efficiently than ever before.

And we're more willing to try new things, and approach problems in new ways. Consider the rise of sustainable processes and products that my colleague Heather Clancy discusses here at this site. Consider the potential for new innovative modes of production, such as 3D printing, that would enable widespread, small-scale manufacturing at dramatically low costs.

As a result, "American manufacturing is doing better than the rest of the economy" -- manufacturing output is now just five percent below its peak level prior to the 2007-2009 recession, and factory employment has risen by 1.6% over the past year -- "the biggest gain since the late 1990s."

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure