U.S. Factories Manufacturing a Comeback?

Once a pillar of the American economy, the manufacturing industry suffered some major setbacks over the last couple of decades. Whether due to free trade agreements, international outsourcing, the general economic recession, or a combination of all three, fewer and fewer products are manufactured in the US. There are signs, however, that things may be changing for the better. 


Factories that have sat dormant for years are being purchased and reopened. Some are being opened by foreign companies, but those factories will be staffed by American workers. And the resurgence of U.S. manufacturing is not entirely dependant on foreign investment. Many American companies are also increasing their local manufacturing base – again, putting Americans to work. 

This resurgence is particularly important as manufacturing – even at its least productive – is responsible for a significant portion of the US economy. For example, in 2012 manufacturing contributed 12.5 percent of GDP. Right now, it is estimated that every $1.00 spent on manufacturing adds $1.32 to the economy, which is the highest multiplier effect of any economic sector. It is not an exaggeration to suggest that as manufacturing goes, so goes the U.S. economy. 


Manufacturing Production has increased during 9 of the last 12 months

 

The truth is that manufacturing output is increasing worldwide, due in large part to technological advances and the proliferation of factory automation. As SCADA technology advances, moving us ever closer to the next Industrial revolution – or Industry 4.0 – not only are manufacturing processes becoming more efficient, but manufacturing employees are becoming more skilled and higher paid than in previous generations, meaning there is more disposable income for purchasing manufactured goods. Greater demand encourages greater supply, and the cycle continues.

Automation is also likely to level the international playing field somewhat, as technology is eliminating the need for cheap, unskilled labor. Manufacturing employees in the new industrial environment will be technically savvy and skilled.  As we move toward a more automated future, there will be little advantage to an American company opening factories in other nations or outsourcing manufacturing projects. Americans are still among the world’s most veracious consumers, and the ability to eliminate the cost and complication of international shipping will provide incentive for local companies to keep their manufacturing base right here in the U.S.

U.S. factories continue to re-open, and new ones are being built. And the most important product issuing from these new assembly lines? Prosperity.

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