The Wall Street Journal reports that US
manufacturing added 1.2% or 136,000 jobs in 2010, the first time more workers
were hired than fired in over a decade. Projections for 2011 are gains of about
2.5%, or 330,000 manufacturing jobs, total about 12 million. One economist is
even calling manufacturing "the shining star of this recovery". And
manufacturing jobs are expected to grow about 2% a year, through 2015.
Job growth is occurring as companies replace aging equipment, take advantage of
government incentives, seek energy savings and discover that it makes sense to
produce some products domestically, rather than operating over long distances.
A new tax break, approved by Congress in December, is expected to further
stimulate investment by letting companies deduct 100% of certain types of
investments from taxable income in 2011.
The turnaround comes from companies that weathered the recession, and are now
building and upgrading their factories, spurred by government tax incentives. At
least in the near term, prospects are good, and some expect that Manufacturing
will be a good source of job growth over the next decade. Mind you, this
turnaround doesn't quite make up for the 6,000,000 manufacturing jobs lost in
the US over the past 10-15 years.
US manufacturers that survived the brutal 2008-09 recession are now very
competitive, and can afford to expand with much lower labor costs and debt
burdens. While they will keep building factories overseas to satisfy demand in
foreign markets, they’ll also be investing in US plants.
After the worst recession since the 1930's, manufacturing revenue has grown for
almost a year and a half, which is good news after shedding jobs offshore.
Despite the upbeat forecasts, many companies are being very cautious in their
hiring, partly to avoid the risk of having to lay off later. They are finding
ways to increase production without adding workers - through automation and
better efficiency.
Between 2000 and 2007, manufacturing employment had already reduced by about
30%, or 3 million, as companies faced intense pressure from cheaper overseas
production. Also, during the recession and subsequent recovery, automation
technology accelerated, and productivity jumped 8.6 % in 2010, the biggest gain
in 20 years. Automation investments increased by 15% this year to $590 billion,
the biggest increase in over a decade, as automation delivered ways to do more
with less.
But Manufacturing is not out of the woods. To continue this growth, US
manufacturers must adopt new business growth strategies. They must prepare for
"re-shoring" - bringing production back to North America by finding new and
innovative ways to reduce costs and train workers in new methods and machinery.
To emphasize the turnaround, President Obama declared that his primary job is
"putting our economy into overdrive". He announced a restructured presidential
advisory board to stress increased employment and greater export opportunities.
He put GE CEO Jeffrey Immelt in charge - good man, and a good choice. Hey, have
you seen the new GE TV ad.? It features GE employees line-dancing, to show that
innovation is fun. That's the positive American attitude!
