Promising Factors for Manufacturing

posted on: Monday June 24, 2013

DSC_6717The strength of our manufacturing industry signifies strength in the economy. Many sectors depend on a solid manufacturing base. News reports on the industry vary greatly – some show concerns that manufacturing is producing well below capacity. Manufacturers are also focused on the 2014 budget and the Regulatory Accountability Act. Other news reports focus on the increase in manufacturing, including productivity gains and jobs.  Despite conflicting depictions of the state of this important sector, there are some interesting reasons to remain optimistic.

While some Americans worry that everything is being manufactured elsewhere and imported here, in reality, the US is one of the top exporters in the world. According to Louis Navellier, writer for investorplace.com, several companies are bringing their manufacturing facilities back to the US or investing in opening more here. These include Apple, Ford, Whirlpool, and General Electric. Navellier attributes this to the oil fracking technologies behind the boom in US oil and energy production in his article, “How the New Energy Boom Helps Manufacturing.”

The result of the energy boom is good news. Experts anticipate millions of new jobs and trillions in tax revenues over the next seven years, bringing the US closer to economic and energy independence. Today, the price of natural gas is the lowest it’s been in a decade, which means more discretionary income for consumers. Americans having more money to spend and also the US becoming a cheaper place to manufacture goods create a ripple effect for retailers, manufacturers, builders, and job seekers.

Another aspect that, contrary to popular opinion, is expected to help manufacturing is automation. A widely-held belief is that automation will eliminate jobs. This is a narrow view of the big picture that we need to get over. Reed Langston, writing for Modern Materials Handling, addresses this in “Other Voices: let’s think of automation as a key to growth.” He states, “Before the 20th century, most people in the Unites States were farmers. If they were told that at the start of the 21st century, the necessary farm production could be accomplished by roughly 2% of the population and automation, the concern would be that those 2% would have all the wealth and the rest of the population would be unemployed and destitute. We know that’s not what happened. In fact, the improved technology in agriculture freed up the resources that gave birth to the industrial revolution and the technology and new industries that grew from there.”

Langston’s point is that automation will create many jobs that don’t exist yet, and the effectiveness of these changes will make those jobs higher-paying. Furthermore, the jobs that will be replaced by automation will create a safer work environment. These jobs are some of the most likely to result in musculoskeletal disorders that cost employers millions and bring an early end to many careers.

Langston projects three effects of automation: lower prices, higher wages, and higher profits. All of these result from the higher production at a lower cost that automation will bring. Manufacturers will be more competitive and consumers will be able to afford more products. There are jobs that will go away because of automation, but the overall effect on the economy will be significant and beneficial to everyone.

As we look into the future of manufacturing, we need to factor in all the changes that are benefiting and will benefit the industry in coming years. Being open to change and moving with trends will be key factors in future success.

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