When IndustryWeek released its annual ranking of revenue growth for the 500 largest publicly held U.S. manufacturing companies, it was exciting to see the progress made in 2011. Rather than another year of decline, these U.S. manufacturers saw 12.75% growth. That’s almost high enough to match Japan’s total 2011 GDP.
Annual sales for petroleum and coal were higher than the combined 2011 GDP of Mexico and South Korea. And annual sales for computers and electronic products surpassed the total annual 2011 GDP of Switzerland.
And to top it all off, the president declared in the 2012 State of the Union address that “the American auto industry is back.” General Motors is back to being the world’s #1 automaker, Ford has invested billions in U.S. plants and factories, and the auto industry has added over 160,000 jobs.
Can American manufacturers finally breathe a sigh of relief?
Unfortunately, it may be soon to tell what this all means. In a recent NPR interview, David Wessel, economics editor of The Wall Street Journal, declared that U.S. factory output is still 10 percent lower than pre-recession figures. And although factories have added more than 300,000 jobs in the last two years, we would need two million more jobs to get manufacturing back to 2007 levels—which may be a challenge, as factories can produce more without hiring thanks to new technologies and increased efficiency.
The European Union’s recent economic turmoil could further complicate the manufacturing industry’s path to recovery. (Currently, U.S manufacturers generate about 22% of their total sales from European nations.) If the festering debt problems, high borrowing costs and debt deflation continue in Europe, American manufacturing industries may be impacted.
An argument for optimism
Despite reasons for concern, U.S. manufacturing’s strong finish in 2011 is giving some experts reason to be optimistic. Dr. Mark Perry, professor of economics and finance at the University of Michigan, goes as far as to say that U.S. manufacturing is “thriving, expanding and prospering”—an assertion he backed up with the figure below.
These numbers look strong, and hopefully reflect a brighter future for American manufacturing.
And with the rise onshoring, we may see even more good things to come. In the 2012 State of the Union address, the president shared that the CEO of Master Lock finally believes it makes business sense for him to bring jobs back home. And for the first time in 15 years, Master Lock’s unionized plant in Milwaukee is running at full capacity.
So what do you think? Have you noticed any signs of recovery in the industry? Are we right to be optimistic?