Manufacturing seems to be increasingly finding its way back home, and that has started a new growth trend for construction of industrial facilities. Although no one is ready to call it a “boom,” growth ended up right around 4% for 2013 — with forecasted growth expected to reach 6% starting in 2015. This isn’t a patriotic move designed to make more jobs for Americans, as it is sometimes cast. Rather, it is a business decision based on the cost of production and time to market. The lower prices for energy, as well as the ability to build and staff highly automated facilities, are major ingredients in choosing to locate operations in the United States. Unfortunately, that doesn’t mean all those who lost manufacturing jobs will be re-employed. The next generation of employees in manufacturing will be more like technicians than laborers. Overall, the trend is good, but it won’t happen rapidly — it takes time to start up new plants. While orders for manufactured goods have been improving, few plants are operating near full capacity yet.
Industry Trends
• The Federal Reserve reports, “Manufacturing output increased 0.6% in November for its fourth consecutive monthly gain. Industrial production surpassed, for the first time, its pre-recession peak of December 2007 and was 21% above its trough of June 2009. Capacity utilization for the industrial sector increased 0.8 of a percentage point in November to 79%, a rate 1.2 percentage points below its long-run (1972-2012) average.”
• “Reshoring of manufacturing” is happening slowly, in part due to availability of lower energy costs.
• The U.S. Census Bureau reports, “New orders for manufactured durable goods in November increased $8.2 billion or 3.5% to $241.6 billion. This increase, up three of the last four months, followed a 0.7% October decrease. Excluding transportation, new orders increased 1.2%. Excluding defense, new orders increased 3.5%.”
