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CPBJ Blog Extras

Manufacturing outlook: some sun, some rain

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I was browsing Facebook last week when a friend, someone I consider very educated and thoughtful, posted a few disturbing statistics about U.S. manufacturing.

Namely, that we lost 5.5 million manufacturing jobs from 1997 to 2012. While I believe this is an accurate statistic, it is one that reflects more the serious economic downturn than the state of manufacturing in the U.S.

I responded with a note that the state of manufacturing isn’t that bleak at all. In fact, quite the contrary. Sometimes statistics can be misleading if used as a means to an end.

I referred my friend to a blog post I made several months ago. In it, I pointed out that since the manufacturing low point of the recession in February 2010, 554,000 manufacturing jobs were added through November 2013, according to a report from the Joint Economic Committee of the U.S. Congress. That figure represents a 4.8 percent increase and 24 percent of the manufacturing jobs lost during the recession.

In addition, manufacturing exports over the previous year (ending in November) totaled $1.2 trillion, or 38 percent more than 2009, the report said. Also, many U.S. manufacturers, as well as several foreign companies, have plans to build factories here. Caterpillar, General Electric and Ford all have plans to bring foreign production back to the U.S.

Likewise, Lenovo, a computer manufacturer based in Beijing, opened a manufacturing plant in North Carolina in June 2012 and BASF, a German-based chemical company, has similar plans.

Still, I wasn’t completely sure I had the whole picture. Was I just cherry picking stats myself to make a blog post? To feed my need to see the glass half full? I needed validation.

I found it Sunday when the Wall Street Journal devoted a good bit of newsprint (and Web pages) to why many believe U.S. manufacturing is poised for big things.

The article cites many of the same examples and statistics I did four months ago but adds a few new points. Specifically, that wages are soaring at double-digit rates in China and some other emerging countries, while they have stayed roughly level in the U.S. in recent years. The WSJ reports that the Boston Consulting Group estimates that China’s overall manufacturing-cost advantage has shrunk to just 4 percent.

Not everyone believes these sunny predictions. Critics say the U.S. still suffers from a skilled-labor shortage and a trade imbalance. Foreign competitors, like China, pay far less in corporate taxes and will adjust to recent weaknesses, they say.

Time will tell if these positive trends continue, but I see U.S. manufacturers making their own adjustments. I see favorable trade agreements continuing to open new markets for U.S. companies.

As Hal Sirkin, a senior partner with the Boston Consulting Group told the WSJ, the U.S. manufacturing recovery he sees is “just in the beginning stages” and should start improving the trade performance in 2015 and beyond.

I think he’s right.

John Hilton

John Hilton

John Hilton covers Cumberland County, manufacturing, distribution, transportation and logistics. Have a tip or question for him? Email him at johnh@cpbj.com. Follow him on Twitter, @JHilton32. Circle John Hilton on .

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