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July 2012
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Survey Shows American Manufacturing is Alive and Well

Buoyed by growth and confident in their futures, American manufacturers are laying out an agenda for restoring their industry to its earlier glory, according to the results of ThomasNet.com’s newest Industry Market Barometer. Overwhelmingly, they are pushing to revitalize the American manufacturing sector by creating jobs at home, doing business with U.S. suppliers and expressing pride in the quality of products that are “Made in America,” reports the online buyers guide formerly known as Thomas Register.

More than 3,700 buyers and suppliers of industrial products and services, including more than 1,600 professionals from manufacturing companies, participated in the latest IMB survey. The research looked at their performance during 2011, their outlook for 2012, and their growth strategies.

“Manufacturers know they do more than sell products or provide services; they play a vital role in the growth of the American economy,” says Eileen Markowitz, president of Thomas Industrial Network. “Their success is critical to the success of America. And as we can see from this report, the future is looking bright for all of us.”

According to the survey, nearly half of all respondents (46 percent) grew in 2011, and 70 percent expect their companies to grow in 2012. Twenty-five percent expect business to stay the same this year, while only 5 percent forecast declines. Most attribute expected growth to a wide variety of strategies, including a focus on customer retention and service, competing more aggressively in core markets, developing innovative new products and pursuing new business in the U.S. and overseas. Top projected growth markets in 2012 include: fabricated metals, aerospace and defense, automotive, energy/utilities, construction and medical equipment/instrumentation.

This level of growth is igniting a new wave of investments among manufacturers preparing to meet future demand. They (83 percent) are spending on capital equipment, hardware, software and facilities in order to increase production capacity, upgrading their plants, and developing new products and services.

In addition, nearly half of these manufacturers (48 percent) are hiring, with openings for line workers, skilled trade workers and engineers. But for many manufacturers, finding the best people to fill these new positions is far from assured. IMB respondents lament the skilled labor shortage and stress the importance of STEM (science, technology, engineering and math) curricula in the schools.

In addition to the labor issue, manufacturers point to pricing pressures and overseas competition as challenges to growth. China’s ability to pay lower wages and charge less for products is a thorn in the side for many. In response, some U.S. manufacturing companies are promoting the quality of their “Made in America” brands as a way to combat offshoring.

Respondents to ThomasNet.com’s IMB are also capitalizing on America’s reputation for quality by ramping up their exports. Nearly 7 out of 10 (67 percent) are selling overseas, and more than one-third (37 percent) plan to increase their international sales.

To reach new clients, overseas and at home, nearly nine out of 10 respondents (86 percent) are investing in online marketing this year, and more than half (52 percent) are increasing these investments. They report that their websites have helped them find new sources of business, improve customer service and increase revenues.
 
With successes like these, manufacturers are bullish on their own careers. More than three-fourths say they would “do it all over again” if they were just starting out. They want younger generations to appreciate manufacturing, too. As one respondent notes: “There is excitement to be found in creating something tangible, from engineering and design to the finished product.”

["Manufacturers know they do more than sell products or provide services; they play a vital role in the growth of the American economy.” Eileen Markowitz, Thomas Industrial Network.]


NAM Offers Four Goals for U.S. Manufacturing
The National Association of Manufacturers, Washington, D.C., is lobbying hard for Congress to take action to make the United States more competitive on the global stage. NAM offers the following four goals for economic growth and job creation:
  • Goal 1: The United States will be the best place in the world to manufacture and attract foreign direct investment.
  • Goal 2: The United States will expand access to global markets to enable manufacturers to reach the 95 percent of consumers who live outside our borders.
  • Goal 3: Manufacturers in the United States will have the workforce that the 21st-century economy requires.
  • Goal 4: Manufacturers in the United States will be the world’s leading innovators.
With 21 percent of global manufactured goods produced here, the United States is the world’s largest manufacturing economy. Yet government policies threaten that leadership position, assert NAM officials. Because of U.S. policies on taxes, energy, tort and trade, it is 20 percent more expensive to do business in the United States than in America’s nine largest trading partners—excluding the cost of labor.
 
Federal regulation costs $1.7 trillion annually, according to the Small Business Administration. Direct tort costs total almost 2 percent of U.S. GDP. Health care costs have increased an average of 12 percent over the last 10 years.

Ninety-five percent of consumers live outside the United States, making it critical for manufacturers to have access to global markets through free trade agreements. Currently, dozens of free trade agreements are being negotiated around the world, but the U.S. is a party to just one. Through inaction on free trade agreements, we are ceding market share to our competitors, NAM contends.

Manufacturing supports an estimated 18.6 million jobs in the United States—about one in six private sector jobs. Nearly 12 million Americans (or 9 percent of the workforce) are employed directly in manufacturing. In 2010, the average U.S. manufacturing worker earned $77,186 annually, including pay and benefits, compared to just $56,436 for the average worker in all industries.

Manufacturing is critical to America’s growth, yet all of these factors and more are hurting U.S. competitiveness. And it’s not all about the unfair trade practices of foreign competitors. “The 20 percent cost differential is caused by policies created in Washington, not in some far away capital,” NAM says.
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