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Stronger domestic, global economies help manufacturers grow

September 26, 2014


At one point, the United States was one of the dominant forces in the manufacturing industry. Following a sharp decline that saw many Asian nations and countries in the Eurozone take control, the U.S. has been steadily climbing its way back toward the top. In fact, the past several years have been relatively strong in this sector, giving hope to manufacturing business owners and other professionals involved in the industry.

Here at Clark Schaefer Hackett, we understand the demands you face on a daily basis. While the nuances of manufacturing, distribution, due diligence and other critical aspects are time consuming, we know that you also care about the trends and current events in your industry. As the U.S. works toward the top spot on the list of global manufacturing powers, it can pay to know what else is happening, both here in this country and abroad.

To help you with that task, we’ve dedicated a portion of our time to tracking the news coming out of the manufacturing sector. Below, we’ve compiled several recent reports that may be of interest to you:

U.S. works to compete with global manufacturing
Optimism in the U.S. manufacturing sector has been relatively strong as of late. However, even with the emergence of several notable trends – such as interest in shale – and a stronger overall economy, the nation is still lagging behind global competitors.

According to The Wall Street Journal, U.S. manufacturing may be strong in certain areas, but it is having a more difficult time in others. Segments include steel, trucks, car parts and furniture, just to name a few. At the moment, the U.S. trade goods deficit is at $371.59 billion, with imports and exports both up slightly on a yearly basis.

In all likelihood, it is going to be behind stronger exports that the manufacturing sector maintains its upward momentum, The WSJ noted. According to some economists, this will happen in the near future.

Economist Michael Montgomery told the media outlet that due to low energy costs, a smaller wage gap and many other factors, international trade will improve, but better conditions are taking a while to materialize.

Fluctuating costs lead to different strategies
Success in the manufacturing industry is often dependent on a global focus. Without imports, exports or factories abroad, many companies would have a hard time maintaining the profits they’ve worked so hard to achieve.

A recent report from The Boston Consulting Group explained that fluctuating manufacturing costs have forced many organizations to alter how they approach global production. In the report, BCG noted that cost competitiveness has allowed many companies to grow their production into new areas. For example many auto manufacturers are looking at the United Kingdom due to its affordability.

“Many companies are beginning to see the world in a new light,” said Harold Sirkin, BCG senior partner and a co-author of the report. “They are finding that many old perceptions of low-cost and high-cost countries are out of date, and they are starting to realign their global sourcing and production networks accordingly.”

Manufacturing’s economic trends improve
While global conditions have shifted how many manufacturers approach their businesses, changes here in the U.S. are also taking hold. According to the Institute for Supply Management’s Report on Business, this sector’s economic activity improved this past July, marking a continued trend of 14 straight months.

ISM uses its Purchasing Managers Index (PMI) to gauge economic improvement, where any figure over 43.2 percent is a sign of expansion.

“The July PMI registered 57.1 percent, an increase of 1.8 percentage points from June’s reading of 55.3 percent, indicating expansion in manufacturing for the 14th consecutive month,” ISM wrote in the report.

Overall, many different segments of the manufacturing industry are experiencing improved conditions this year. These changes are a potential sign that more gains are likely to come. Even so, you still need to take advantage of new trends and opportunities and find professional success. Our experts at Clark Schaefer Hackett are well-versed in this specific industry, and we can help you avoid problems, capitalize on every available chance and grow as a manufacturer. Contact us today to learn more.

© 2014

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.


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