Overall, the economy is looking up—manufacturing, not so much

Manufacturing is showing signs of coming back, but while productivity is up, hiring isn’t. Manufacturers have learned to do more with fewer people and better technology. Yet in the technology arena, consumption still is sorely lagging.

News headlines would make it seem as if the economy is showing signs of recovery. Looking at the numbers for the manufacturing sector, it’s not as hopeful. The latest U.S. Manufacturing Technology Consumption survey, a joint statistical program of the Assn. for Manufacturing Technology (AMT) and the American Machine Tool Distributors’ Assn. (AMTDA), shows U.S. manufacturing technology consumption continuing its slump.

In August, U.S. manufacturing technology consumption totaled $129.16 million, according to the AMT/AMTDA survey. This was down 14.8% from July and down 63.3% from the total of $351.66 million reported for August 2008. With a year-to-date total of $1.04 billion, 2009 is down 67.7% compared with 2008.

“We are cautiously optimistic that manufacturing has hit bottom and will begin to move forward,” said Douglas K. Woods, AMT president. “But it’s going to take time before technology providers feel the impact in their backlogs.”


The stark reality
Alan Tonelson of the U.S. Business & Industry Council and Lloyd Wood of the American Manufacturing Trade Action Coalition spoke at the annual Fall Conference of the American Mold Builders Assn., and presented some disturbing statistics for U.S. manufacturing that directly impact moldmakers, and, in turn, molders.



Tonelson stated that “the health of the U.S. mold industry is an indicator of the health of U.S. manufacturing overall. You are all at ground zero of the efforts to strengthen U.S. manufacturing.”



Tonelson noted in his report that the recession has hit manufacturing especially hard. “Whereas the entire economy grew by 0.74% in real terms in 2008, the non-bubble-ized manufacturing shrank by 2.74%,” Tonelson said. “Manufacturing’s output losses so far in this recession (down 16.70%) already exceed even those of the 1973-1975 recession (15.32%)—formerly the worst U.S. downturn since the Great Depression.”



The Alliance for American Manufacturing (AAM), a nonpartisan, nonprofit partnership formed to strengthen manufacturing in the U.S., released a statement on Oct. 1, warning that industries employing 4.1 million workers are at risk under the proposed climate change legislation now pending in the Senate unless lawmakers adopt and strengthen key provisions contained in the House version of the bill.



“Legislation should include a steady and sufficient supply of emission allowances for energy-intensive, trade-sensitive industries to rebate the cost of compliance, as well as a border adjustment fee on the carbon content of goods from countries that fail to regulate greenhouse gases emitted in the production of goods,” the AAM commented in response to a new study, “Climate Change Policy,” released by the Economic Policy Institute (EPI).



However, the EPI report “strongly cautions that any economic recovery could be slowed and significant segments of U.S. manufacturing could suffer increased outsourcing if the climate legislation does not include a comprehensive program to avoid carbon and job leakage.”

As an energy-intensive and trade-sensitive industry, plastics processing could be hard hit unless these considerations are taken seriously by those in Congress who are drafting these bills.



Tonelson had some hopeful comments, however. “Cap & Trade, which is essentially a tax on businesses in the House Climate bill, doesn’t seem to have much support with Obama or the Senate,” he noted. 

“After years of being ‘out,’ talk of U.S. manufacturing in now ‘in.’ Revitalizing U.S. manufacturing has gotten the attention of Congress, and they are at least talking the talk. Now we have to hold their feet to the fire and make them live up to what they’re saying,” Tonelson said. “However, there are still constant challenges that confront us in spite of the fact that manufacturing is once again cool. The national governing class doesn’t get it yet, and U.S. manufacturing is not unified enough to have an impact.”

Lloyd Wood, director of membership and media outreach for the American Manufacturing Trade Action Coalition (AMTAC), said he agreed with everything Tonelson said. “Some things out there are truly shocking,” he stated. “U.S. manufacturing never came out of the 2000 recession and was only made worse a year ago. We produce less today that we did 10 years ago, but demand has increased. That is absolutely stunning.”



Wood also pointed to job losses in manufacturing. “U.S. manufacturing has lost 5.35 million jobs in the last decade, including 1.57 million in the last year. Manufacturing employment is at its lowest level since May 1941, yet the population has doubled and demand is up 10 times. Productivity gains don’t answer the problem.” —Clare Goldsberry

See also: Industrial production moves slowly in the right direction

The September 2009 report from the Manufacturers Alliance/MAPI showed that the composite index rose to 38 from a near-historic low of 24 in the June 2009 report.