Despite all the much-heralded talk of the rebirth of manufacturing, a new report suggests that the trend may be vastly overstated
Have we been letting a good story get in the way of the facts?
The “manufacturing renaissance” has been the central point in the return of America’s industrial power. It even has its own national council.
Yet here are the facts: the United States may have added only about one new manufacturing job in the last few years for every five that were lost during the financial crisis and the recession that followed.
That’s according to a new report from the Information Technology & Innovation Foundation, a non-partisan and non-profit think tank based in Washington, DC. The report was released early this morning.
“We have stretched six cool examples [of the rebirth of manufacturing] into a whole news trend,” says Adams Nager, economic research industry at the foundation and, together with its president, Robert Atkinson, the co-author of the report.
“A lot of people are desperate for positive economic news, so articles suggesting that there’s a revival of manufacturing get a lot of traction.”
Dow Chemical does plan to invest $4bn to expand its chemicals production on the Gulf Coast; Flextronics is, indeed, investing $32m to build a product innovation center in Silicon Valley. Airbus is setting up a massive facility in Alabama, its first in North America, for a price of $600m, to build airliners. In the last two years, the aluminum industry has announced $2.3bn of new manufacturing investments in the U.S. Corporate profits at many manufacturing companies have climbed, too.
At least some of these are on the list of the seven industries that the Boston Consulting Group identified as being most likely to participate in some kind of big manufacturing revival: transportation goods (check), computers and electronics (yup), fabricated metal products (yes), machinery, plastics and rubber, appliances and furniture.
The whole manufacturing renaissance saga even hit the bestseller lists in recent months, with Factory Man (which, as the subtitle promises, tells the story of How One Furniture Maker Battled Offshoring, Stayed Local – and Help Save an American Town) winning a coveted spot on the New York Times’ list of the year’s most notable books and reviewer Janet Maslin’s personal top 10 list.
The problem? It’s all “Pollyannaish optimism” and “consultant-driven marketing hype”. But even manufacturing executives are succumbing to it. One study by L.E.K. Associates found that 57% of respondents are convinced that the country is in the midst of a manufacturing renaissance and a whopping 68% of them believe that their industry will experience accelerated growth in the coming years as a result.
But the ITIF survey – which is based on raw numbers rather than on the feelings of manufacturing executives or anecdotes – reveals another story. And it’s one that you may want to ponder if you were planning on putting a large chunk of your investment savings to work in this as an investment theme, or betting that there will be a great, stable new source of jobs emerging sometime soon.
“It’s true that we’ve had four straight years of growth, and that we’ve added 520,000 jobs in manufacturing in the last three years,” says Nager. But that compares to 2.5 million jobs lost between 2007 and 2009. Moreover, he adds, the dramatic turnaround of the auto industry has distorted those figures.
Full article: The US ‘manufacturing renaissance’ doesn’t exist, says new report (The Guardian)
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