Where in the world is manufacturing growing?

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Categories: Manufacturing
January 19, 2017
Recent Fed reports indicate mixed growth and moderate expectations for the manufacturing sector.

Recent Fed reports indicate mixed growth and moderate expectations for the manufacturing sector.

Which way is manufacturing headed? It’s hard to tell. On the one hand, you see reports of declines in the sector while on the other, the media touts a booming manufacturing base driving growth.

The truth very likely lies somewhere in the middle. So, where in the world is manufacturing growing and going?

More gas, more growth?

The rise of shale gas has been controversial. The fracking techniques used to extract trapped natural gas have allegedly caused significant issues with the environment. Yet the abundant supply has pushed the cost of natural gas domestically to less than half of that in Asia, Europe, India and South America.

A July 2016 article by Mark Perry of the University of Michigan and the American Enterprise Institute points out that lower prices and energy security are driving manufacturing growth, particularly in energy-related industries such as iron and steel, food and paper products, plastics, bulk chemicals, and petrochemicals.

Coupled with lower electricity prices, the reduced energy costs helped propel the US to an all-time high of $2.17 trillion in 2015, second only to China and more than the combined outputs of France, Germany, India, Italy and South Korea.

Strong growth is reported in certain sectors, including machinery manufacturing.

Strong growth is reported in certain sectors, including machinery manufacturing.

Fed reports mixed results

On the flip side, the Federal Reserve, in its most recent “beige book” look at the US economy, reported “mixed” demand for manufacturing products from early October to mid-November. The Fed reported that growth was expected in many key US manufacturing markets, including New York, Atlanta, and Dallas. However, the strong US dollar is a concern for exporters in Boston and San Francisco.

So where are the gains? According to the Fed, there’s optimism in chemical, automobiles, machinery, aerospace and electronics manufacturing, though not in all regions of the country. From a national perspective, there are clear manufacturing trends emerging.

What’s driving uncertainty?
There are several factors experts point to that are driving the mixed messages. Strong US currency and weakened international currencies are one crucial factor. The Fed is cautiously optimistic but not predicting any economic surge.

Another critical factor is the Donald Trump presidency. Trump consistently pledged an isolationist stance and a desire to incentivize companies to keep jobs on American soil. His pressuring of Carrier Corp. to make a deal to keep about 1,000 jobs from moving abroad was met with mixed reviews and is unlikely to be a sustainable, long-term strategy.

Being certain with uncertainty

How can manufacturing companies withstand the variability of the current marketplace? At NexTec Group, we work with clients in a wide range of manufacturing sectors to develop integrated systems that help to reduce complexity and boost efficiency.

With NexTec Group, your company will work closely with one of our experienced consultants to find the right ERP software solution both for today and tomorrow. We have relationships with a large number of ERP providers and a deep understanding of the strengths of each.

By gaining a deep understanding of your business needs, we can recommend an ERP solution that best fits. Contact us today to learn more about how NexTec can help your manufacturing company find the right solution.