The resurgence of manufacturing following the crash of 2008 is unprecedented, notes AMT – The Association For Manufacturing Technology. The most current U.S. manufacturing technology orders put the year-to-date total for 2011 at $4,529.11 million, which is up 80.5 percent compared with 2010 and is the second highest dollar amount in the last 15 years. As of October, manufacturing technology orders had already surpassed the total value accumulated in 2007, says AMT.
“It’s 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,” said Douglas K.
Woods, president of 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
United States have seen the greatest surge in manufacturing technology orders,
says the organization. The Midwest’s manufacturing technology orders in 2011
are 105 percent more than the comparable figure for 2010. This large increase
is the result of the region’s large traditional customer base.
It is also where the oldest equipment
resides and the industries impacted most by the weak dollar and reshoring trend
are located. The Central region pick-up - 85 percent higher compared to 2010 -
was powered by the growth in the energy business and secondly by the automotive
Beyond manufacturing technology, overall
U.S. manufacturing is robust, notes the organization in its report. Despite the
past several years 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 strong with a share of 19.4 percent.
“The factors that are 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.
“American manufacturers rushed to beat
the end-of-year bonus depreciation deadline. Inventories were low - something
we’ve never experienced going into a recession - and that accounts for the
quick rebound,” he says. Exports are rising as American manufacturers meet
overseas demand. Manufacturing technology from the U.S. is less expensive than
foreign equipment, and U.S.-made goods are more price competitive than many
imports due to the weak dollar.
The average age of machinery currently
in use at U.S. manufacturing facilities crept up from nine years in 2007 to
13.5 years, and as demand started to increase the need for investment to
replace the aging equipment became apparent. Those investments are being made
in completely new technology. Multi-operation machines are profoundly impacting
productivity. Water jet cutting and hydroforming are experiencing massive
growth because they offer all the benefits of traditional processes but
eliminate distortion and deformation. Additive manufacturing is growing, nano-machining
has become commercially affordable, and the availability of new materials, such
as compact powdered metals, is having a tremendous impact. Plus, the emergence
of cloud manufacturing, which promotes collaborative efforts across
organizations, is opening new doors to manufacturers.
Another factor boosting U.S.
manufacturing is the reshoring phenomenon. More work is coming back to the United
States from foreign shores and there is greater foreign direct investment in
U.S. facilities. The quality of work in the United States is proving to be more
valuable than originally thought in the off-shoring investment calculation. Companies
face increasing costs in logistics issues with the delivery of components and
the exporting of completed products to North America. Add to that the rapidly
increasing labor costs in traditionally “low-cost” labor markets, and the
continued decline of labor in the overall share of total production cost, and
the reshoring picture becomes clear. “When the total cost of manufacturing is
calculated, the U.S. is a very favorable environment,” Woods notes.
The outlook for 2012 remains positive. The
weak dollar is making exports strong. Reshoring is in full bloom. The
manufacturing base is reinvesting in the latest tools. Energy will continue to
be a large investor in manufacturing technology. The automotive industry is
making major changes to address green issues, which will lead to significant
investments in production technology, as well as spending to support the shift
of the industry’s center from Detroit to the South/Southwest. Aerospace green
field investments will continue in the Southeast and West.
AMT 2012 Forecast Calls for Continued but Slower Growth
December 28, 2011