Manufacturing Report Card Shows Sector is Thriving

American manufacturers are thriving according to a recent reports.

The 2017 Manufacturing & Logistics Report Card for the United States by Conexus Indiana and the Center for Business and Economic Research at Ball State University found that manufacturing production has grown by 11% since the dot.com burst around 2003.

CBER director Michael Hicks said that “folklore” has driven the belief that the past generation has been a bad one for the industry. Contrarily, he noted that 2015 was a record year and 2017 is on track to top new records of growth. The perception that manufacturing is in demise is often attributed to the fact that the United States has lost approximately 7.5 million manufacturing jobs since 1979. Yet much of this is not attributed to a drop in production but to better training, mechanization, increased productivity, and [automation]/more efficient processes.

“Most of the confusion about manufacturing and logistics is due to declining employment over the past generation,” Hicks said. “The fact is, manufacturing firms have become very lean, and productivity growth means more goods produced with fewer workers.”

“manufacturing firms have become very lean; productivity growth means more goods produced with fewer workerS.”

Many of those lost manufacturing jobs have been regained in other areas of the supply chain, and Hicks said since 1979, the U.S. also has gained more than 9 million jobs in trade, transportation and utilities, not to mention technology.

To measure and gauge manufacturing health, Conexus graded states by share of total income earned by manufacturing employees, the wage premium paid to manufacturing workers, and the share of manufacturing employment per capita. The top performing states with a grade of “A” for manufacturing industry health were Michigan, Iowa, Indiana, Kentucky, and South Carolina.

Indiana received top grades in both logistics and in manufacturing production where it significantly outpaced national growth over the past generation. Manufacturing and logistics accounted for 45% of Indiana’s GDP growth since 1997 and 52.5% since the end of the Great Recession.

South Carolina also moved from a “B” to an “A” in manufacturing production in recent years. The state’s manufacturing sector has been driven by continuous investments by BMW, which currently employs 9,000 workers and produces 400,000 vehicles annually at its plant in Greer. Other companies there include Boeing, Volvo Cars and Mercedes-Benz Vans. Samsung is in late-stage negotiations to invest $300 million in a production facility in Newberry.

Kentucky, which is now the third largest automotive manufacturing state in the country, also has moved up from a “B” to an “A” in 2016 and 2017. Ford Motor Co. recently announced plans to expand its presence in the state with another $900 million investment in its plant in Louisville.

As the sector continues to grow, one of the biggest challenges manufacturers will face is the shortage of talent. A survey by the National Association of Manufacturers found that 40% of manufacturers said the skills gap was standing in the way of opportunities. Will Eadie, vice president of sales and strategy with WorkJam, said that the shortage isn’t just about skills, but about motivating and putting factory workers on a career path. “It’s not just about line-based skills, or using a new machine or procedure. It’s about how to increase their skills so they can become line leaders, and move into management,” Eadie said.

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Craig Guillot
Craig Guillot is a business writer based in New Orleans, La. His work has appeared in Wall Street Journal, Entrepreneur, CNNMoney.com and CNBC.com. You can read more about his work at www.craigdguillot.com.

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