Archive: Jan 2015
Manufacturing is the life-blood of a country. Without the continuous growth of this sector, the growth of an economy is far from possible. The United States has always been the home of the brave and the land of the free. As one of the super powers of the world, manufacturing has been an imperative of its government.
The last real boom in the manufacturing sector came in the 1950s when suburban USA woke up to its potential. However in the recent decades despite a whopping 340% increase in exports, manufacturing has sadly been pushed to the back burner. In fact in 1990 the service industry left it behind as a dominant contributor to the national income and the very next year finance, insurance and real estate followed suit.
WHAT WENT WRONG?
The gradual depreciation of the economic value of manufacturing was exacerbated by the trend of off-shoring. Because of the juxtaposition of low minimum wages and a number of lucrative tax benefits, China and other Asian countries beckoned investors and factories. The IT boom also added its two bits and turned the attention towards silicon chips and the ‘rise and rise’ of technology was born.
There has been a lot of ‘passing the buck’ where the apparent decline of US manufacturing is concerned. The fact though remains that without active factories and busy work floors, true economic progress is difficult to achieve.
THE 2007 RECESSION:
After the recent 2007 recession, a second awakening of American manufacturing and the blue collar work force has been in the offing. With the sudden inflow of ready cash from investors looking to develop everything from construction to real estate, manufacturing too has received a major boost. In a golden cycle of shared profits (this is called the Industry Multiplier Effect), manufacturing in return acts as the benign patron for these sectors bumping economic prosperity.
In 2013, manufacturing contributed $2.08 trillion to the economy at the rate of #1.32 for every buck invested.
Presently there are about 17.4 million manufacturing vacancies in the US beckoning both skilled and unskilled workers to make a living.
And topping all achievements, if the collective revenue of manufacturing companies is considered, it is equivalent to the 8th largest economy in the world.
The future looks extremely promising! Because of several issues (the least of which isn’t a steep increase in hourly wages across China), transportation expenses are no longer being offset by tremendous profits. It is making more sense for industries with a large client base in the US to set up production units within the country.
The productivity of US workers is also phenomenal and surpasses that of any other country.
Manufacturing is truly a slumbering giant. If leveraged and encouraged with passion, the positive signs could well result in an era of abundance and a return to former glory.
Posted in: Manufacturing