Positive thinkers make me nervous, and motivational speakers make me roll my eyes. I'm a self-motivated individual who has a clear understanding of the reality around him. I believe in the ability to scale mountains, but those that believe they can move them through sheer will deserve to have Tony Robbins take their $350 in exchange for an autographed book and an afternoon of self-help babble.
So back in 2008 I laughed as manufacturers tried to convince me that the media was causing the economic downturn initiated by the collapse of the real estate market. So if everyone had ignored the facts around them, the economy magically would have improved overnight? Reality wasn't going to cooperate.
At the time all I saw were a bunch of people building miniature mansions and living well beyond the means that their jobs afforded them. I actually told me wife that perhaps wealthy senior citizens were dying off at an alarming rate and leaving a wealth of inheritances to these nouveau riche. That wasn't the case, of course; they were living off paper wealth derived from mortgages and credit lines. The media just happened to beat the drums a little too loudly as the economy entered the first months of the Great Recession.
Nowadays I'm told by some of those same manufacturers that if the media would just report on the resurgence of U.S. manufacturing, consumers would grow more confident and their spent dollars would spur more economic development. Reality suggests that positive media coverage of manufacturing will not result in economic prosperity. U.S. consumers are still digging out of debt and rebuilding their savings. They also haven't recovered the value of their homes—if they weren't foreclosed on—so they can't access lines of credit as they did in the past. And it would be a mistake not to mention that people haven't seen much wage growth in their jobs, should they be lucky enough to have one. All that adds up to lackluster consumer spending, which is so vital to the overall health to the U.S. economy.
Depressed yet? I'm not. I'm starting to sound repetitive in these blog posts, but common sense tells me that things should be a lot worse. Just look at Europe. Ouch!
Instead, the U.S. economy continues to inch along to recovery, and manufacturing remains strong. Here are some more reasons for my optimism:
- ThomasNet.com's Industry Market Barometer®, an annual survey of industrial market professionals, revealed that 75 percent of the 3,766 surveyed believed that their business will grow in 2012, which is a healthy boost over the 53 percent that said they grew in 2011. Additionally, 93 percent of overall respondents reported that cutting costs has contributed little or not at all.
- Even if nearshoring isn't resulting in a huge wave of jobs coming back to the U.S., it's a trend, and people believe that the return of once outsourced jobs is having an impact.
- The housing industry finally may have hit bottom. Economist Chris Kuehl reported in one of his recent Armada Executive Intelligence reports that the price of homes has increased in a way not seen since at least seven years ago. This is the sector of the economy that has been the biggest drag on GDP and has the potential to employ thousands currently looking for work.
I'm not going so far as to say that the U.S. economy is poised to take off, but I'm certain that U.S. manufacturers have every reason to be confident about their business prospects. I believe what I see, so when I look around and see metal fabricating shops adding shifts and working overtime, I see a good fourth quarter of economic activity ahead. It's definitely more than wishful thinking.
About the Author: Dan Davis
Hi Dan,
during the last two years of my career at the Lincoln Electric Company I covered the Akron/Canon, Ohio sales territory. during my four years there, as a wrap up to my career, I saw manufacturing hit the floor and then rebound. There were losses. I did find that many middle management positions were lost; i was told that they were not coming back. So, while manufacturing increased, lean management methods took over. Seems that going lean took out about 20 % percent of the jobs in that region.
Further, there were many robotic automation inquires made and followed up on during my last two years. Automation became a proposed source for competing with offshore manufacturing. And people did buy robots and they purchased them with the thought of reducing the cost of labor. No, the robots were not purchased for welding alone; machining, packaging, and material handling became targets for robotic automation. Robots are good for cutting costs but while they increase the required skill level to operate, they also reduce the number of required workers.
I am not certain how much of the economic downturn will recover. Here in Ohio I read that the unemployment rate is down to 7.2%. I am certain though that lean methods and robotic automation, while making us more competitive, will also reduce the ranks of manufacturing manpower.