The economy, jobs, consumer confidence, production, the penultimate State of the Union address – the manufacturing industry is influenced from all sides.
And today, it is stronger than it has been in recent memory. This means changes – likely positive – are on the horizon for manufacturers. We have compiled several media reports that illustrate the ongoing shift in the industry.
Here are the highlights from the past few months:
Is SOTU good news for manufacturers?
One of the biggest news stories in early 2015 was President Barack Obama’s State of the Union address. While he covered many topics, including unemployment, foreign policy and economic recovery, some of the speech touched on progress attributable to manufacturers. In fact, Obama credited nearly 800,000 new jobs to this industry.
Following the State of the Union, the National Association of Manufacturers released a statement praising Obama’s desire for Trade Promotion Authority, calling it a positive for manufacturing. However, the President isn’t without criticism from NAM.
“Manufacturers powered the American resurgence the President hailed tonight,” noted NAM president and CEO Jay Timmons following the State of the Union. “Manufacturing in the United States is back. But instead of firmly pressing the accelerator to strengthen the dreamers, makers and builders of America, the President offered the country mixed messages. While some are positive, others threaten to put the brakes on our economic revival.”
So while the address offered some optimism for manufacturers, it will take more time to learn if any changes will truly help the industry grow.
Will manufacturing growth continue?
The State of Union address is, at its core, just a speech – however, economic reports have supported the President’s assertions regarding the industry.
According to the Institute for Supply Management’s Report on Business, economic activity in the manufacturing industry grew in December. This comes alongside overall economic expansion as well. In addition, 11 out of the 18 manufacturing segments noted improvements at the end of 2014.
Manufacturing growth is there on a broad scale, albeit a bit slower than in the past, even as many companies were experiencing ups and downs as the new year rolled around.
“Comments from the panel are mixed, with some indicating that falling oil prices have an upside while others indicate a downside,” explained ISM chair Bradley Holcomb. “Other comments mention the negative impact on imported materials shipment due to the West Coast dock slowdown.”
Naturally, manufacturing’s expansion is related to the U.S. economy, and future growth will be closely tied to any national trends.
Is the slow growth rate important?
According to the ISM, many elements of the industry are growing, but the rate of change was slower in December than it has been in the past.
This has caused some to ask if the slow growth rate is a cause for concern. In an article for Forbes, contributor Tim Worstall argued that it wasn’t very important at all. He pointed out that manufacturing now has many partners in the U.S. economy – once, it was the main segment responsible for positive gains.
This has relieved some of the burden on the industry. In the past, any small change to manufacturing could have serious implications, not only in the U.S, but the world. Other industries have stepped up today, and this has led to a more balanced economy.
What does this all mean?
Overall, it seems that the manufacturing industry is headed in the right direction. Growth is ongoing – slower, but at a stable pace – and the segment itself isn’t relied upon to solely drive the U.S. economy.
For individual businesses, the gains could soon lead to increased sales, happier customers and other positive trends. In all likelihood, 2015 will be a good year.