Quality Blog


Keeping an Eye on Economic Trends

June 26, 2012
It's up to us to keep up with all the promise the manufacturing sector holds for the future.



American manufacturing is weathering many of the economic storms that have taken place in the past year, even with all the economic instability taking hold in Europe. The relative strength of the U.S. and Chinese markets is forecast to drive healthy market growth of 9.5% in the global industrial automation market –which manufacturing relies on heavily--to reach $159.8 billion in 2012, according to IMS Research. And while we do have to worry about the deepening recession in the Eurozone, large declines in manufacturing markets are unlikely, as most investment in industrial automation comes from the private sector.

America’s manufacturing base is getting help in the form of federal funding, too. The Obama Administration announced a $26 million federal funding opportunity for the multiagency Advanced Manufacturing Jobs and Innovation Accelerator Challenge. This will provide funding for regional partnerships dedicated to developing industry clusters for advanced manufacturing.

While this is certainly a helpful incentive, many U.S.-based manufacturing companies still see the need for corporate tax reform to give them fair standing with their global counterparts. According to a recent PwC study, companies based in the United States had higher effective tax rates than companies in Canada and Germany, although this number has evened out more in recent months based on the impact of foreign operations and tax incentives.

We’ve heard a lot about the reshoring trend taking place here in the United States, and it continues to pick up speed. According to a recent MGF.com Watch survey, 22% of manufacturers surveyed are bringing their operations back home. With rising fuel prices, shipping costs and intellectual property protection of increasing concern to these companies, it makes sense for many of them to, produce materials at home. But there are still some trends holding the domestic manufacturing industry back. Among them is a sustained increase in concern over access to capital, as well as a continued low hiring rate, which may indicate a workforce skills gap and struggle to find qualified labor.

According to MFG.com CEO and trade analyst Mitch Free, the key is to find people with the right skill set and attitude. Manufacturing has really gone digital over the last 20 years or so, where everything is done by highly precision CNC machines , and the 3-D models are all generated by CAD systems today. So, people that are going into manufacturing need to have a mechanical aptitude, and they also need to be good with computers and have a curiosity, and even basic programming skills.
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