Tag: Future Trends

U.S. Manufacturing Not Dead Yet

Despite dire reports that U.S. manufacturing is dying, the old boy still seems to be alive and kicking.

  • Sure the recession has U.S. manufacturers flailing, and the failure of the Big Three automakers is a definite blow to the country’s manufacturing power; but it’s far from the death knell some have predicted.
  • Sure global recession has decreased domestic and foreign demand, but faith in history tells us that’s a temporary problem. The turnaround may not materialize as quickly as we’d like, but demand will increase; it always does.
  • Sure manufacturing employment figures are declining, but statistics don’t tell the whole store. The decrease is due in part to improved manufacturing efficiency and automation, not merely the effects of decreased supply and demand in a recessionary economy.

The most important clue that there’s still plenty of life left yet in U.S. manufacturing is that increased efficiency.

U.S. manufacturers have been able to harness technology to produce goods more efficiently with fewer workers, making marked gains in productivity in the process. This increased productivity will make it more attractive for manufacturers to bring manufacturing operations and jobs back to U.S. soil (see our May 13 post). It’s a move the Obama administration is poised to encourage by closing tax loopholes that the President believes have exacerbated the outsourcing of American manufacturing jobs overseas.

The climate is right for such a show of faith by manufacturers. Americans are clamoring to have American goods produced on American soil by American workers. Legions of Americans are making a point to Buy American and eschew foreign-made products and the businesses that sell them. For the first time in decades, U.S. workers, pushed by the Detroit reality, are showing a willingness to scale back their demands and work with manufacturers to make American salaries more competitive in the global market. The economy is tightening up competition, weeding out the weak players and giving the strong a more open playing field. Real estate is cheap and opportunities to purchase near turn-key operations abound for savvy shoppers.

Taken together, the time is ripe to bring U.S. manufacturing — and jobs — back home. U.S. companies that are able to take advantage of the current climate and move jobs back to the U.S. stand to reap untoward benefits in public relations and worker and customer loyalty.

Gloomy Manufacturing Outlook to Brighten in 2009

For just about all of us, 2008 has turned out to be a tough year. According to statistics posted on Manufacturing & Technology eJournal, three straight months of no growth have plummeted the manufacturing index to 26-year lows; and it hasn’t reached bottom yet. 

“It appears that manufacturing is experiencing significant demand destruction as a result of recent events, with members indicating challenges associated with the financial crisis, interruptions from the gulf hurricane, and the lagging impact from higher oil prices,” Norbert Ore, chair of the Institute for Supply Management’s Business Survey Committee, told eJournal.

Adding insult to injury, contractions in the global economy have caused export orders to decrease after 70 consecutive months of growth. Manufacturers who were running at 78.6% capacity last April were operating at just 75.2% capacity by December.

While tough times are expected to continue into the first half of 2009, all is not doom and gloom. The sun should start to peek out within a few months. Manufacturers are already realizing a small boon from decreased commodity prices and lower fuel prices. They are guardedly optimistic that the manufacturing climate will begin to ease during the second half of 2009, particularly as credit improves. As the dollar strengthens, export orders are expected to return to normal strength. Adding another item to the plus column, Ore noted, “While 2008 has been a challenging year overall, we are apparently seeing a rapid halt to the inflationary cycle of the past several years as it relates to manufacturing inputs.”

ISM predicts a 1.1% net decrease in manufacturing revenue for 2009 which would actually be an improvement over the 2.2% decrease reported in 2008. While little to no growth is expected in most manufacturing sectors over the next year, most will stop losing ground. ISM actually expects small gains in some areas, including petroleum and coal products, electrical equipment, appliances and components, printing and related activities, food and beverage products, tobacco products, apparel and leather products and chemicals.

Manufacturers and other businesses are expected to hold their ground by decreasing capital expenditures, reducing inventories and downsizing workforces to decrease labor and benefit costs.

Next time: What it will take to succeed in 2009.

Changes Coming to U.S. Workforce

If the current economic downturn has revealed any truths, it’s that the basic premise upon which employer-employee relations has been based in America is changing and must continue to evolve. Business owners can no longer afford to assume the role of in loco parentis. The cost of comprehensive health care and lifelong pensions has simply become too great for employers to be expected to take care of their employees the way they did 50 or even 20 or 10 years ago.

Gone are the gold watch days when people could expect to find a job fresh out of high school or college and stay with the company until retirement 30 years later. Employees no longer feel that kind of loyalty toward their employers any more. And technology is changing so rapidly that business owners can’t guarantee that today’s job will be needed five years from now. Naturally, these aren’t new ideas. Like all things, the business world is always evolving; technological advances seeming to speed change with each coming year. What’s new is that long-standing employee groups like the United Auto Workers are finally realizing that the employer-employee patterns that worked for their grandparents simply aren’t viable in today’s workplace.

With unemployment at a 25-year high, jobs may be scarce now; but work will return. But when it does, jobs are likely to be different. Both employers and employees should prepare themselves to face a workplace that may be vastly different from the one we enjoyed before the economy fell apart. In its May 25, 2009 issue, Time magazine addressed these issues, predicting a workplace that is “more flexible, more freelance, more collaborative and far less secure.” According to Time, the next generation of business owners and managers will bring new values to a business world where women will control an increasingly bigger slice of the pie. With the demise of the steel industry and potentially terminal illness of the auto industry, Time also sees jobs leaving the Midwest in droves and moving to Texas and the Southwestern states or Georgia and Florida.

Job expectations, business education, career paths, benefits, retirement, work-life balance, environmental savviness, management style, office spaces and manufacturing are all in for some major upheaval. Next time we’ll explore coming changes in the business world.