Manufacturing in Alabama

"As manufacturing picks up across the United States, Alabama has become an unexpected beneficiary. The state -- best known for agriculture and textiles production -- is enjoying the best pickup in industrial manufacturing in five years as U.S. and foreign companies flock there. The credit goes to the state's low taxes, top-grade trade schools, a statute that curbs union power, and other incentives spurring many manufacturers to move to or expand in the state, experts said.

In 2011, 70 domestic manufacturers announced plans to set up a factory in Alabama. They're expected to create 4,879 jobs and $1.6 billion in capital investment over the next two to three years. In the same year, an additional 313 manufacturers, already in the state, announced expansion plans that would create another 12,369 new jobs and pour $2.5 billion in capital investment."

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US Manufacturing

The true economic measure of the success of any company or industry is not the number of workers, the amount of output, or the level of sales revenue, it's the level of profitability. Based on that measure, American manufacturing is alive and well, and doing better than ever before.

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iPhone Economy

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Manufacturing Growth

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Manufacturing v Service Employment and Job Growth

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Manufacturing v. Farming

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Real Manufacturing Output

The chart above shows the incredible increases in U.S. manufacturing productivity, which has made American manufacturing increasingly more efficient and more competitive, leading to lower prices for manufactured goods. Because the productivity gains for manufacturing have exceeded productivity gains for services-producing industries, the prices for manufactured goods have fallen relative to prices for services, which had led to decreases (increases) in manufacturing's (service's) share of GDP and employment.

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Manufacturing Profits and Profit Margin

Profits for U.S. manufacturing firms reached $135.3 billion in QIV last year, the highest amount of profits ever recorded in a single quarter for America's manufacturers, and surpassing the previous record of $127 billion in QII 2007 before the recession started (see top chart above). The after-tax profit margin for U.S. manufacturers also reached an all-time time of 9.1%, at least for the data the Census Bureau has available going back to 1999 (see bottom chart above).

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US Manufacturing

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US Manufacturing

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US Manufacturing

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US Manufacturing

If the U.S. manufacturing sector were a separate country, it would be tied with Germany as the world's third largest economy. It would also be larger than the entire economies of India and Russia combined. As much as we hear about the "demise of U.S. manufacturing," and how we are a country that "doesn't produce anything anymore," and how we have "outsourced our production to China," the U.S. manufacturing sector is alive and well, and the U.S. is still the largest manufacturer in the world.

Workers today produce twice as much manufacturing output as their counterparts did in the early 1990s, and three times as much as in the early 1980s, thanks to innovation and advances in technology that have made today’s workers the most productive in history.

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ISM Manufacturing Index

The Institute for Supply Management reported that, for the first time in 19 months, the U.S. manufacturing sector expanded last month, the ISM manufacturing index rising above the 50-level separating contraction and expansion, from 48.9 in July to 52.9 in August.

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Manufacturing: Jobs, Output, and Productivity

More and more manufacturing output with fewer and fewer workers should be considered a positive trend for the U.S. economy, not a negative development. We should think of it the same way as the trend in farming over the last 150 years - we're much better off as a country, with a much higher standard of living, with 3% of Americans working on farms compared to 150 years ago when about 65% of Americans toiled on farms. If we can continue to produce more manufacturing output with fewer workers, we'll be better off as a country, not worse off.

from Carpe Diem

Manufacturing Productivity

great chart from Carpe Diem

Over 4 times increase in output, due to productivity gains.

New Research: Thriving in a Global Economy: The Truth about U.S. Manufacturing and Trade

Executive Summary

Reports of the death of U.S. manufacturing have been greatly exaggerated. Since the depth of the manufacturing recession in 2002, the sector as a whole has experienced robust and sustained output, revenue, and profit growth. The year 2006 was a record year for output, revenues, profits, profit rates, and return on investment in the manufacturing sector. And despite all the stories about the erosion of U.S. manufacturing primacy, the United States remains the world’s most prolific manufacturer—producing two and a half times more output than those vaunted Chinese factories in 2006.

Yet, the rhetoric on Capitol Hill and on the presidential campaign trail about a declining manufacturing sector is reaching a fevered pitch. Policymakers point repeatedly to the loss of 3 million manufacturing jobs as evidence of impending doom, even though those acute losses occurred between 2000 and 2003, and job decline in manufacturing has leveled off to historic averages.

In the first six months of the 110th Congress, more than a dozen antagonistic or protectionist trade-related bills have been introduced, which rely on the presumed precariousness of U.S. manufacturing as justification for the legislation. Justification for those bills is predicated on the belief that manufacturing is in decline and that the failure of U.S. trade policy to address unfair competition is to blame. But those premises are wrong. The totality of evidence points to a robust manufacturing sector that has thrived on account of greater international trade.

from the conclusion:

U.S. manufacturing is generally in superb health, and increasing international trade has a lot to do with that condition. Accordingly, lawmakers should back away from their hostile rhetoric about trade before they adopt policies that will damage the sector. Despite all of the bluster about “saving” U.S. manufacturing, the truth is that the sector is in robust health. Record output, record sales, record profits, record returns on equity, and record compensation define the most recent year’s performance. Rather than being aberrational, one-time blips, those records are all the latest data points of a gradually ascending trend line that has been evident since the beginning of the sector’s recovery.

…The evidence points to a U.S. manufacturing sector that is thriving in a global economy.

read the entire paper here