What is in this article?:
Can U.S. manufacturing maintain its momentum and continue to lead the recovery?
As a result of increased activity in the manufacturing sector, capacity utilization is improving. “It’s not real high yet, but it’s getting to the normal levels,” says Warner, further explaining that once capacity reaches 80% to 85%, companies begin considering expansion. “It’s not quite there yet, but it’s better than it has been,” he concludes.
In April, manufacturing capacity reached 79.2%, according to the Federal Reserve Bank of Chicago. Although
it hasn’t yet reached the numbers indicated by Warner, there have been both retrofit and new construction projects since the end of the recession.
For Faith Technologies, Inc., Menasha, Wis., the recession brought about a sharp decrease in its contracts in the manufacturing sector. “As with the rest of the construction industry, we did see a downturn in the manufacturing sector,” says Tom Clark, chief revenue officer. “For a period of time, there was a significant drop off in not only construction, but even the ongoing maintenance done for many of our clients.”
However, by late 2010, the firm was starting to see gradual increases in its backlog. “There does appear to be a resurgence in manufacturing in the United States,” says Clark. “Some of the projects we have looked at are manufacturing products to export — which wasn’t the case a few years ago.” Clark estimates his firm’s current backlog in manufacturing/industrial projects to be up more than 100% compared to this time last year, making up about 25% of the total backlog. “It has been a mix of retrofits and new construction, although many of the opportunities we have been looking at in 2012 have been new construction,” concludes Clark.
In the last nine months, Stephen J. Frantz, executive VP for the industrial, utilities, and service divisions of Detroit-based Motor City Electric Co., has seen a definite increase in the number of manufacturing projects up for bid. “The business activity that we’ve had with industrial companies — automotive, steel, and utility as well — has seen a minimum 50% increase. That’s in the amount of available work for us to go after and bid. We’re finally starting to see a significant change.”
According to Frantz, the uptick in activity is economy driven. “For the automotive industry, it’s all about sales and market share, and they’re doing really well right now. As long as something doesn’t happen in the economy — or we have some financial meltdown of some sort — I would say we’ll probably continue to see that growth. It all hinges on could there be another terrorist attack, could there be an issue with the financial situation in our country? If those things don’t change, I would say it’s going to continue.”