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U.S. manufacturing's demise is greatly exaggeratedU.S. manufacturing's demise is greatly exaggerated

Packaging Digest

March 11, 2015

3 Min Read
U.S. manufacturing's demise is greatly exaggerated

Many see the long-term decline in U.S. manufacturing jobs as a sign of the demise of American manufacturing, a decline that has been expedited by offshoring. However, to paraphrase Mark Twain, the reports of U.S. manufacturing's demise are greatly exaggerated, according to the Material Handling Industry of America. It's true that some manufacturing jobs have moved overseas, especially to China, to take advantage of lower labor costs. But the number of Chinese manufacturing jobs hasn't risen over the last fifteen years, MHIA says. In fact, both the U.S. and China have fewer manufacturing employees today than they did in 1990. The number employed in China's manufacturing sector has declined steadily, after peaking in the mid-1990s. And the percentage of workers employed in manufacturing is actually higher in the U.S. than it is in China.

This doesn't mean that the U.S. manufacturing industry is in good shape. We are in a recession, domestic and foreign demand are weak and the big three auto manufacturers are in trouble. But to focus on declining manufacturing employment doesn't tell the whole story, both in the U.S. and around the world. Improvements in productivity, in part, due to material handling and automation solutions, have allowed manufacturers to produce goods more efficiently and with fewer workers. This increased productivity is also part of the U.S. manufacturing story. In fact, multinational investment in the U.S., continues in many industries including pharmaceuticals, electronics, and even autos (especially in the Southeast).

Twelve out of the 62 industrial markets tracked by according to Torto Wheaton Research (TWR), an independent research firm owned by CB Richard Ellis, experienced declines in manufacturing space availability and this group of markets is expected to have positive rent growth in the next two years, as national rents fall. While most industrial real estate is in the warehousing/distribution sector, warehousing and distribution facilities house not only consumer goods, but also the inputs and outputs of manufacturing production.

Where are manufacturing companies headed now?
A study by Archstone Consulting indicates that manufacturers may be contemplating a migration back to the U.S. as new job and cost reduction opportunities emerge. In addition, the latest location under the spotlight of multinational manufacturing firms is Northern Africa, according to TWR.

"Northern Africa is attractive not just for lower labor costs, but also for growing populations and the fact that they do not have piles of foreign debt, these nations are attracting companies like Renault and Airbus," according to Luciana Suran of TWR. Led by Morocco and Tunisia, the region is attracting serious investment ($30 billion plus over the past five years) to build everything from auto and aerospace factories to call centers for multinational corporations.

Renault is building an assembly plant in Tangier that will be one of its biggest anywhere. The factory expects to employ 6,000 workers, and Moroccan officials say it could attract suppliers that would provide 35,000 more jobs. Airbus plans to open a $76 million factory in Tunisia in 2010 that will employ 1,500 workers. The industry's suppliers employ more than 10,000 in the Maghreb, making fuselage panels, high-pressure pipes, etc.

Source: Material Handling Industry of America

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