Written by Thomas Stone
The 2008 economic downturn sent shockwaves through the US economy, leading to a drop in manufacturing demand and forcing many businesses into loss or bankruptcy. Massive unemployment crippled the industry as large and small manufacturers struggled to survive. Poor access to credit put an additional stranglehold on small businesses, making it harder than ever for employers to meet payroll obligations or invest in new equipment or bigger inventories.
Recently, however, rising market confidence levels and an increase in manufacturing output have resulted in growing profits for the manufacturing sector, which in turn allows employers to bring laid off employees back to work. This upward spiral is reducing the costs of investment and starting to allow manufacturers to branch out. As new job creation and industry expansion begin to gain steam, the manufacturing sector is finally beginning to see better days.
Part of this revival can be attributed to weakening overseas markets. Increases in Chinese wages have undercut the savings that outsourced production once provided, while a weak dollar supports international investment in US manufacturers. Supply chains are also becoming re-established after disruptions caused by crises such as the 2011 tsunami in Japan
But it's not only external causes that have been helping US manufacturing to stage its recent recovery. In the wake of the recession many manufacturers have become leaner and meaner, with a slimmed-down workforce and heightened efficiency. America's access to advanced technology and cutting-edge manufacturing techniques give it an additional edge over overseas manufacturers such as China, where factories can frequently mask inefficient systems with the sheer quantity of cheap human labor available.
As beneficial market shifts and increased internal efficiencies converge, the US manufacturing sector is looking likely to swing back into full gear in the coming months. Analysts are optimistic, citing recent reports that find steadily rising numbers in new orders, job growth and production levels. As America continues to recover its position as a world leader in manufacturing, the nation is likely to see the growth spread to related sectors as well.
Though the industry’s not entirely out of the woods yet, there’s more than enough reason to be optimistic about the future. As manufacturing continues to climb its way back to its pre-downturn levels, we’ll see other industries picking up steam and jobs returning to the country, providing much-needed relief to the many unemployed in the US.