McLEAN, VA-The resurgence of manufacturing following the crash of 2008 is unprecedented, says the Association for Manufacturing Technology (AMT). The most current U.S. manufacturing technology orders put the year-to-date total at $4,529.11 million, which is up 80.5% compared with 2010 and are the second highest dollar amount in the last 15 years. As of October, manufacturing technology orders had already surpassed the total value accumulated in 2007.
“It’s long been recognized that analysis of manufacturing technology orders provides a reliable leading economic indicator, as it is an indicator that manufacturing firms are investing in capital equipment to increase their capacity and improve productivity,” says AMT President Douglas K. Woods. “Manufacturing technology provides a foundation for all other manufacturing. These machines and devices are the equipment that turn raw materials such as steel, iron, plastic, ceramics, composites, and alloys from their original state as stock materials into what will become durable goods such as airplanes, cars, and appliances, as well as consumer and other goods that are used every day.”
The Midwest and Central regions of the United States have seen the greatest surge in manufacturing technology orders. The Midwest’s manufacturing technology orders in 2011 are 105% more than the comparable figure for 2010. This large increase is the result of the region’s large traditional customer base.
It is also where the oldest equipment resides and the industries impacted most by the weak dollar and reshoring trend are located. The Central region pick-up - 85% higher compared to 2010-was powered by the growth in the energy business and secondly by the automotive industry.
Beyond manufacturing technology, overall U.S. manufacturing is robust. Despite the past several years trend of offshoring, the value of U.S. manufacturing output increased by one-third to $1.65 trillion between 1972 and the 2008 recession. Even though China accounted for 19.8% of global manufacturing value in 2010, the U.S. was strong with a share of 19.4%.
“The factors that are fueling this tremendous surge are the traditional reasons that drive growth in investment, but what is unusual about the current rebound is that all factors have come together at one time,” Woods says. “This is something that’s never been seen before and as a result we are seeing a true renaissance for manufacturing in the United States.”
“American manufacturers rushed to beat the end-of-year bonus depreciation deadline,” he continues. “Inventories were low, something we’ve never experienced going into a recession, and that accounts for the quick rebound. Exports are rising as American manufacturers meet overseas demand. Manufacturing technology from the U.S. is less expensive than foreign equipment, and U.S.-made goods are more price competitive than many imports due to the weak dollar.”
The average age of machinery currently in use at U.S. manufacturing facilities crept up from nine years in 2007 to 13.5 years, and as demand started to increase the need for investment to replace the aging equipment became apparent. Those investments are being made in completely new technology. Multi-operation machines are profoundly impacting productivity. Water jet cutting and hydroforming are experiencing massive growth because they offer all the benefits of traditional processes but eliminate distortion and deformation. Additive manufacturing is growing, nano machining has become commercially affordable, and the availability of new materials, such as compact powdered metals, is having a tremendous impact. Plus, the emergence of cloud manufacturing, which promotes collaborative efforts across organizations, is opening new doors to manufacturers.
Expanding markets worldwide are playing an important role as manufacturing grows. China seems insatiable and accounts for almost one half of the world’s total consumption of manufacturing technology. India’s economy is growing at double the Western economy’s rate, with expectations for more China-like development soon. As it prepares for major world events including the Olympics and the FIFA World Cup competition, South America faces the challenge of building infrastructure that can support the events. Russia, South Africa, the Middle East and South Asia are on the fringe, but nevertheless contribute to growth in the global manufacturing economy.
Another factor boosting U.S. manufacturing is the reshoring phenomenon. More work is coming back to the United States from foreign shores and there is greater foreign direct investment in U.S. facilities. The quality of work in the United States is proving to be more valuable than originally thought in the off-shoring investment calculation. Companies face increasing costs in logistics issues with the delivery of components and the exporting of completed products to North America. Add to that the rapidly increasing labor costs in traditionally “low-cost” labor markets, and the continued decline of labor in the overall share of total production cost, and the reshoring picture becomes clear. “When the the total cost of manufacturing is calculated, the United States is a very favorable environment,” Woods notes.
“In fact, new research from the Boston Consulting Group shows that transportation goods such as vehicles and auto parts, construction equipment, appliances, electrical equipment and furniture are among the sectors that could create up to three million jobs as a result of manufacturing returning to the United States,” Woods says.
The outlook for 2012 remains positive, AMT says. It says that the weak dollar is making exports strong; reshoring is in full bloom and the manufacturing base is reinvesting in the latest tools. Energy will continue to be a large investor in manufacturing technology and the automotive industry is making major changes to address green issues, which will lead to significant investments in production technology, as well as spending to support the shift of the industry’s center from Detroit to the South/Southwest, it notes. In addition, AMT advises that aerospace green field investments will continue in the Southeast and West.
Report Abusive Comment