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Manufacturing Technology Orders Hitting Near-Record Highs

AMT Orders

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The crash of 2008 had a considerable impact on domestic manufacturing, though its resurgence since then has been equally dramatic, according to the Association for Manufacturing Technology. The most recent U.S. manufacturing technology orders put the 2011 year-to-date total at $4.5 billion, up 80 percent from 2010 and the second-highest dollar amount in the last 15 years.

Through October, manufacturing technology orders had already surpassed the total value accumulated during the pre-crash year of 2007.

"It has long been recognized that analysis of manufacturing technology orders provides a reliable leading economic indicator, as it is an indicator that manufacturing firms are investing in capital equipment to increase their capacity and improve productivity. Manufacturing technology provides a foundation for all other manufacturing," says Douglas K. Woods, president of the AMT. "These machines and devices are the equipment that turn raw materials such as steel, iron, plastic, ceramics, composites, and alloys from their original state as stock materials into what will become durable goods such as airplanes, cars, and appliances, as well as consumer and other goods that are used every day."

The Midwest and Central regions of the U.S. have seen the greatest surge in manufacturing technology orders. The Midwest's manufacturing technology orders through 10 months in 2011 were 105 percent greater than the comparable figure from the previous year. This large increase is the result of increased activity from the region's large traditional customer base, which is also where the oldest equipment resides.

The Central region pickup-85 percent higher compared to 2010-was powered by the growth in the energy business and the automotive industry.

Beyond manufacturing technology, overall U.S. manufacturing is robust. Despite the trend of offshoring, the value of U.S. manufacturing output increased by one-third to $1.65 trillion between 1972 and the 2008 recession. Even though China accounted for 19.8 percent of global manufacturing value in 2010, the U.S. was just behind with a share of 19.4 percent.

"The factors fueling this tremendous surge are the traditional reasons that drive growth in investment, but what is unusual about the current rebound is that all factors have come together at one time. This is something that's never been seen before and, as a result, we are seeing a true renaissance for manufacturing in the U.S.," Woods says.

The average age of machinery currently in use at U.S. manufacturing facilities has crept up from nine years in 2007 to 13.5 years. As demand started to increase, the need for investment to replace the aging equipment became apparent, AMT officials say.