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Record Growth for U.S. Manufacturers?

March 16, 2008

Filed under: manufacturing — Terry Wohlers @ 08:53

The Washington-based Cato Institute, a non-profit public policy research foundation, claims that U.S. manufacturing is doing very well. In fact, it maintains that the manufacturing sector is experiencing record growth, record profits, record output, record exports, and record return on investment. A summary of the organization’s findings was published in the December 2007 issue of Manufacturing Engineering.

If you were to randomly ask a dozen manufacturers in the U.S. how they are doing, I would be surprised if their comments support the report from the Cato Institute. My sense is that some manufacturers are doing fine—and a few are doing very well—but many are struggling. However, I do not have any quantitative data to support this belief.

The Cato Institute goes on to say that Michigan’s economic growth from 2005 to 2006 was dead last among the 50 states, although manufacturing outside of Michigan has been strong. What’s more, the U.S. produces 2.5 times more goods than China, despite the loss of 3 million jobs since 2000, according to the report.

What do you think? Is manufacturing in the U.S. not only strong, but at an all-time high?

1 Comment

  1. Terry

    Like you, I have no quantitative data. However, I would not be surprised to learn that the manufacturing sector is doing far better than we read about. Most media pundits are still in a time warp and think that manufacturing is only in big companies and mostly in Michigan.

    A fundamental fact of the U.S. economy that these pundits seemed to have missed is that the U.S. economy has been steadily strengthening by transitioning the work force from big companies to mid-size and small companies, with an emphasis on small ones.

    If you could draw a circle around the Fortune 500 companies and call it MegaCompany, then look at it’s metrics, you would find that MegaCompany has grown in (inflated) dollars, but has been steadily dropping in head-count. Relentlessly.

    The fact of job losses in big companies is not news. It is an economic necessity for survival. The survivors have learned that it is most efficient to define what they do best and staff for that, then outsource the rest. When they outsource, new jobs are created elsewhere. The work gets done more effectively, national productivity goes up, and everyone in the economy benefits.

    Meanwhile, entirely new technologies get created and new job opportunities appear. And most of that happens in small and medium companies.

    When a pundit states that “12,000 jobs were lost this month,” without stating how many new ones have appeared, it is dishonest reporting, intended to deceive. On more than one occasion, I have read panic reports on monthly job losses in months in which the unemployment rate declined. But the unemployment rate was not reported.

    I spent a long tenure in one of those “large” companies. It is still doing very well, but is only about 60% of the head-count compared to the year I left. And, although I really value my time there, and my learning, if starting over today, I would look in the direction of smaller companies. That is where the action is in job creation.

    I will now get off my soap box.


    Comment by ErvinM — March 26, 2008 @ 08:49