Manufacturing Back on the Rise, According to Commerce Department

Between December 2007 and February 2010, the manufacturing sector loss 2.3 million jobs, according to the Department of Commerce. This drastic decline accounted for about one-quarter of the negative shock experienced during those 26 months and the loss in manufacturing represented one-half the decline in U.S. GDP. In the aftermath of this decline, both public and private sector leaders began to search desperately for ways to stop the bleeding. A new Commerce report, Manufacturing Since the Great Recession, indicates that we may have found some success in halting the hemorrhage.

The authors report that from February 2010 to May 2014, the manufacturing sector added a total of 646,000 jobs with the annual weekly hours for production workers climbing from 39.3 to 42.1 hours. Since the Great Recession officially ended in the second quarter of 2009, output in the sector has grown 38 percent and this has meant a regain of 18 percent of its real value added. Additionally, the number of manufacturing establishments have grown on a year-over-year basis in the second and third quarter of 2013. All these statistics indicate that manufacturing is heading in the right direction.

Though these signs are encouraging, they do not translate into an arrival at the destination. The number of jobs regained does not come close to recovering what was lost and a year-on-year growth means a little less when there are less establishments at the start. Another looming reality is that the even though in 2013 $1.2 trillion of manufactured goods was exported, the trade deficit continues to increase, recording a high of $47.2 billion in April 2014. The growth of imports continues to rise above the growth of exports so that over the past four years there has been a 50 percent increase in the trade deficit.

Another source of caution is the fact that much of the growth in manufacturing has come from a few industries in a few locations. More than half the jobs added have been in Indiana, Michigan, Ohio, Texas, and Wisconsin and 87 percent of the jobs gained have been in the transportation equipment, fabricated metal products, and machinery industries. The authors comment that, ideally, the manufacturing resurgence should be more widespread both in terms of locations and industries involved.

The report highlights two ongoing initiatives that are geared toward continuing the growth of the sector. The first is the National Network for Manufacturing Innovation (NNMI) and the second is the Investing in Manufacturing Community Partnership (IMCP). The former is meant to create “innovation ecosystems” through establishing university and industry partnerships. The latter aims to encourage communities to create long-term economic development strategies that surround the development of the manufacturing sector. The overall strategy seems to be the facilitation of the creation of clusters where manufactures are able to play key roles. 

Download the report…