Manufacturing has always been the lifeblood of the United States economy, and when signs of doom are there, everyone typically panics. The most recent reports of economic turmoil building in America stem from the Institute of Supply Management’s manufacturing index being below 50 for the last two quarters. Yet, despite recent concerns, some economists say manufacturing is not in a recession.
Though our financial markets are slipping, and other economic concerns seem obvious, the manufacturing industry is actually stronger than it seems. In fact, the supposed “recession” in the manufacturing industry can be attributed to three things: the stronger U.S. dollar, weakening foreign demandon manufactured goods, and declining prices of commodities, such as industrial and precious metals, and energy and agricultural goods.
According to a report from Business Insider, economists Tim Quinlan and Sarah House of Wells Fargo, acknowledging these economic indicators, have come up with four key variables that indicate that the manufacturing industry is not in a recession. Examining these four areas, we can see that the manufacturing industry, including the injection molding and product design industries, are, in fact, more solid than some reports make it appear.
1. Increasing Industrial Production
Despite the bleak reports from some economists, the manufacturing sector is still producing more than it did a year ago. Though it’s only 1 percent more, it is still a hopeful sign of growth. You can see more evidence of this through various key indicators.
For example, the injection molding plastics industry is anticipated to turn into a $252 billion industry by 2018. New product design and development continues to thrive, as we can see from daily news reports detailing the number of innovative designs coming on the market.
We must also consider that there is a past precedent for weaker growth rebounding in the manufacturing industry. And as cyclical economic patterns tell us, the current growth is not only normal, but promising.
2. Better Productivity, Despite Lower Employment
One unfortunate fact is that hiring in manufacturing plants is down. However, productivity levels have remained stable. It’s easy to sound the alarm bells when hiring slows, but as reported in the article, manufacturing has seen decreasing employment for three decades. And as technology and structural changes continue to make manufacturing processes more efficient and automated, lower employment rates only make sense. However, not all manufacturing sectors are cutting down on their employee numbers. Employment in the molding industry is still on the rise, and hiring for new product designers will c .
3. Income Improvements in Manufacturing
The amount of money manufacturing plants make is also improving, despite downturns during the Great Recession. Ever since the turnaround in 2009, incomes have steadily risen and haven’t wavered.
Product design wages have a continual median salary of $64,620, and injection molding job salaries can reach over $55,000 per year, signifying the great opportunities available in these industries.With healthier profits and workers, it seems that most plants are not at risk of closing, even if they aren’t necessarily hiring more people.
4. Mid-Cycle Slowdowns
Though reports show that manufacturing sales are somewhat flat, Quinlan and House urge us not to worry. Mid-cycle slowdowns, while they may be misinterpreted as indicators of a recession, are actually quite normal. Over the last few decades, we have seen it happen numerous times in the middle of an economic cycle. So, although manufacturing shipments have fallen 4 percent over the last four months (which when adjusted for inflation and dollars sold are actually flat), if we look at the data over the last seven years, real sales will likely remain stable.
What Does the Future Hold for U.S. Manufacturing?
Trying to predict the future of any industry is never simple. Still, there are clear signs that can show us what manufacturing should do now to steer toward a stronger path.
The Wall Street Journal expounded on this last summer with some valid points. One of those is addressing the aging industrial base and the need to upgrade to better technology. By integrating new technology into many industrial plants dealing with injection molding or product design, manufacturing has the potential to flourish like never before.