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Why manufacturing?

Overview

  • U.S. manufacturers produce more today than at any other time in U.S. history.

  • The U.S. manufacturing sector is the eighth-largest economy in the world, nearly equal to China's entire world economy.

  • Manufacturing is one of the primary engines of wealth generation in America.
    -- Pumps out $1.4 trillion in annual output
    -- Employs more than 14 million workers
    -- Accounts for 12% of the GDP and two-thirds of exports of goods and services

  • For every dollar of manufactured goods produced, an additional $1.37 of economic activity is generated.

  • The U.S. manufacturing sector leads in innovation:
    -- Accounts for 57% of industrial R&D
    -- The new products and processes developed in manufacturing contribute significantly to U.S. competitiveness, economic leadership and the current high standard of living.

  • Four out of five manufacturers anticipate their revenues to increase in 2007 vs. 2006.

  • Nearly half of manufacturers anticipate their level of capital equipment spending will rise in 2007.

  • $1.5 billion of containerized shipments pass through U.S. ports each day.

  • The manufacturing sector will increase its spending on IT services to a total of $455.7 billion by 2009.

  • Manufacturing construction is projected to increase every year, reaching more than $25 billion by 2009.

  • Through October 2007, U.S. manufacturing technology consumption is up 6.3% compared with 2006.  Consumption for the first ten months of the year totaled $393.4 million.

  • U.S. ports and waterways handle more than 2 billion tons of domestic and import/export cargo annually.

  • By 2020, forecasts predict that the U.S. transportation system will handle cargo valued at more than $28 trillion, of which $4 trillion will pass through our nation's ports.

Sources:
The Manufacturing Institute, National Association of Manufacturers and RSM McGladrey Inc., The Future Success of Small and Medium Manufacturers: Challenges and Policy Issues
IW/MPI 2006 Census of Manufacturers
Gartner, Forecast: Manufacturing IT Spending, Worldwide, 2005-2009
U.S. Census Bureau of Labor Statistics
Manufacturing Construction FMI Corp.
U.S. Machine Tool Consumption: A joint statistical program of AMT and AMTDA
Council of Supply Chain Management Professionals
American Association of Port Authorities

 

Manufacturing outlook 2007
Compiled Nov. 2006

  • Spending in the U.S. on research and development should reach $336 billion in 2007, up from $329 billion in 2006.  Industry-manufacturing accounts for about 63 percent of that spending--so we can look forward to lots of innovations and new products coming out of manufacturers' labs in the coming years.

  • The latest Census Annual Survey of Manufacturers report (issued Nov. 2006) shows manufacturers in the U.S. shipped goods worth $4.73 trillion in 2005 and spent almost $130 billion on new buildings and equipment--both are records or near-records.

  • Automakers, governments, utilities and oil and gas companies are pouring billions into hydrogen research -- more than $10 billion will be spent on hydrogen research over the next ten to fifteen years worldwide. This will lead to a mass-market set of manufacturing innovations, similar to the innovations that first launched the modern auto, train, and shipping industries.

  • One trend that will continue in 2007: manufacturing jobs will continue to be shipped from large U.S. cities to smaller U.S. cities, like Wheeling, W.Va.  The reason: these cities can deliver employees with a strong work ethic, and relatively low wages.

  • With advanced manufacturing technology, businesses are able to deliver on mass customization.  This is part of a broader trend toward faster, more specialized manufacturing. The customizing concept, conceived of decades ago, is to crank out one-of-a-kind, custom-fit goods at mass-production prices.

  • Another manufacturing trend we saw in 2006: market customization.  One example, developed by Trek Bicycles, is where the company offers a commuter bike designed for the rainy Northwest, and another commuter bike, with more urban chic, for New York.  The auto and engine industries are also doing mass or market customization.

  • On November 20, 2006, The Conference Board reported that the Composite Index of Leading Economic Indicators increased 0.2% in October, following a 0.4% increase in September.

  • A couple of growth markets for U.S. manufacturers in 2007, as noted by Frost & Sullivan and other research firms: wind power generation units, selected consumer electronics, including portable digital audio and gaming devices, and food processing that involves nanotech and biotech components and processes.

  • Some auto brands in the U.S are thriving. On November 18, 2006, Toyota's San Antonio, Texas assembly plant started production.  The goal: build 200,000 Tundra trucks each year.  There's enough space at the site to build a second production line.  Every other Toyota plant in North America has been doubled, or more, in output, in the recent past.

  • Japan's Mainichi newspaper recently reported that Toyota plans a new plant in the upper Midwest to build 200,000 Yaris compact cars. That plant would start in 2009. The same article reported that Toyota also plans a North American SUV plant by 2010.

  • In March 2006, Kia Motors Corp. announced that it would build a $1.2 billion automotive assembly plant in the city of West Point, Ga., creating more than 2,800 jobs at the plant. The business deal includes a commitment from five supplier companies to locate in Georgia, creating an additional 2,600 jobs.

  • The November 2006 election upheaval could be good for manufacturing. "We are optimistic that the incoming legislators share our interest in strengthening the U.S. economy and creating more jobs," said Jay Timmons, Senior Vice-President for Policy and Government Relations of the National Association of Manufacturers.

  • The fact that there were no major storms in the U.S. this past hurricane season helped moderate energy prices for manufacturers. Also, the surging U.S. stock market shows investors have a lot of confidence in U.S. manufacturers.  San Diego State University is starting a one-year global MBA program in manufacturing-as part of the program, students will spend 12 weeks in China, attending classes and visiting manufacturing facilities and corporate offices.

  • U.S. manufacturing companies consumed more than $3.5 billion in manufacturing technology in the first 11 months of 2006, an increase of 29.4% compared with the same period in 2005.

 

U.S. Manufacturing: Dying...Or Still Going Strong?

It's easy to get the impression that U.S. manufacturing is dying -- and that China is the culprit. The numbers, however, tell a different story. Download this two-page PDF published by the US-China Business Council, which debunks some of the most common myths about U.S. and Chinese manufacturing.

For more information, contact the US-China Business Council

 

Graph: Manufacturing spends more on capital goods than any other sector of the economy

Click here to view graph.

The manufacturing sector spent $165.2 billion on capital goods in 2005, an increase of 5.5 percent from 2004. Of the total spending by this sector, $33.7 billion was for structures, and $131.5 billion was for equipment.

Investment spending by durable goods manufacturers totaled $92.4 billion, an increase of 8.6 percent from the prior year. Of this total, $14.8 billion, was for structures, while expenditures for equipment amounted to $77.6 billion.  The motor vehicle and parts industry was the largest durable goods investor, spending $23.5 billion in 2005.  The semiconductor industry was the second largest durable goods investor, at $10.3 billion.  Nondurable goods manufacturers spent $72.8 billion on capital goods in 2005. Spending for structures was $18.9 billion, and for equipment, $54.0 billion. The food manufacturing industry was the largest spender in this category in 2005 with $14.3 billion, followed by the petroleum and coal products industry with spending at $10.3 billion, and the pharmaceutical and medicine manufacturing industry at $10.1 billion.

Source: 2005 Annual Capital Expenditures Survey, U.S. Census Bureau, March 2007 report

 

More resources for manufacturing data

   

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