With all the gloom and doom we have been hearing about the U.S. economy and the manufacturing sector specifically, it is nice when someone - The Manufacturers Alliance (MAPI) - releases a study based on real numbers - not suspicions, suppositions or rumor. MAPI published a report, “Ten Talking Points of U.S. Manufacturing,” in July 2009. Not all the news is bad, but not all is good either. And it is important for us to keep in mind the data in this study is for all U.S. manufacturing, not specifically the pipe, valves and fittings sector. Still, the findings are illuminating and give us a means by which to assess our own performance.
quantity of manufactured goods produced in the U.S. has kept pace with overall
economic growth for the past 90 years. Employment in manufacturing has steadily
declined - though one in six private sector jobs are related to manufacturing.
This is no surprise. Factories of all types have gotten more efficient.
2) In terms of
value-added production, manufacturing is 12% of GDP compared to 27% in the
1950s. Between 1987 and 2008, manufacturing productivity grew more than 100%. Thanks
to international competition, prices have risen only 2%/year since 1960. This
is more telling: Even with all the efficiencies gained over the years, some at
great cost, manufacturing has not been able to cash in on these improvements.
3) Due to
increased productivity, unit labor costs have declined 40% when compared to the
14 principal international competitors since 1986. Basically, this is telling
us that the quality American worker is not being overpaid - not when compared
to our principal competitors.
4) The U.S.
continues to be the source for innovation. Four manufacturing segments account
for 56% of all private sector R&D: computers/electronics, chemicals,
aerospace and automotive. I would guess these sectors are robust and growing.
Something to think about.
consumes more than 1/5 of all the energy in the U.S. This isn’t a big surprise
either, though it is a pretty big number. It would be interesting to know which
industries have made the greatest strides to use less. Furthermore, I would
like to know what it cost them to do it and what the benefit was (in dollars). Where
are PVF manufacturers and the warehouses on smart energy use?
Manufacturing production fluctuates more than GDP. The current recession has
affected manufacturing worse than the overall economy. MAPI forecasts a decline
of 12% in manufacturing for 2009, but only a 3% decline for GDP. This does not
bode well for us. Fluctuations this severe can take companies down so low that
they can never recover. This can damage whole industries.
manufacturers have a higher tax burden than any other competitor country except
Japan. This came as a surprise to me. I was certain (and wrong) that most
European companies had higher tax rates. This isn’t going to get better anytime
soon with the bail-out and universal health care to pay for.
manufacturing pays premium wages and benefits. They add up to about $32/hour.
Please note: Even though we pay a premium wage, we get value and productivity
for those wages. If we are not competitive, it is NOT because of the workers.
goods account for 57% of all U.S. exports, but U.S. manufacturers are losing
market share in Asia to the EU and China. I would like to know the numbers for
10) More than
75% of U.S. Foreign Direct Investment is in high wage regions/countries such as
Europe, Japan, Australia, New Zealand and Singapore. U.S. firms sell nearly
$4.7 trillion abroad, much more than the $3 trillion in sales by foreign
companies in the United States. I am happy to see this big fat number. How much
PVF do we manufacture abroad and sell abroad?
Has FDI been part of the PVF growth strategy?
The study raised more questions
than answers for me. I will be looking into specific numbers for PVF in an
article coming soon.
The State Of U.S. Manufacturing - MAPI Publishes A Report
December 1, 2009