Manufacturers on the Upbeat

The Institute of Supply Management is signaling a more optimistic outlook in its latest report.
Manufacturers on the Upbeat
A worker builds cars on the assembly line at Ford's Chicago Assembly plant August 4, 2009 in Chicago, Illinois. (Scott Olson/Getty Images)
8/26/2009
Updated:
10/1/2015

<a><img src="https://www.theepochtimes.com/assets/uploads/2015/09/car-89606448.jpg" alt="A worker builds cars on the assembly line at Ford's Chicago Assembly plant August 4, 2009 in Chicago, Illinois. (Scott Olson/Getty Images)" title="A worker builds cars on the assembly line at Ford's Chicago Assembly plant August 4, 2009 in Chicago, Illinois. (Scott Olson/Getty Images)" width="320" class="size-medium wp-image-1826588"/></a>
A worker builds cars on the assembly line at Ford's Chicago Assembly plant August 4, 2009 in Chicago, Illinois. (Scott Olson/Getty Images)
WASHINGTON—Despite the global economic recession, America’s manufacturing sector reported increased activity. The Institute of Supply Management (ISM), based in Tempe, Arizona, is signaling a more optimistic outlook in its latest report.

“New Orders and Production Indexes rose significantly above 50 percent, thus setting an expectation for future growth in the sector,” ISM Chairman Norbert J. Ore said in a statement. 

Ore continued to state that although manufacturers are still pessimistic and don’t believe “that we are on the brink of recovery,” the numbers show that growth should continue into the third quarter of 2009. 

Manufacturing executives indicated that in anticipation of decreased economic activity, factories cut inventories to such an extent that raw material orders will be on the upswing.

In July, the ISM New Order Index signaled a 6.1 percent increase from 49.2 percent in June, and it is consistent with the numbers published by the Census Bureau’s series of manufacturing orders. 

During the first half of 2009, U.S. manufacturers increased production by 4 percent, an increase of $1.4 billion to a total of $349 billion over the same period in 2008, as orders are trickling in more frequently, announced the U.S. Census Bureau last week.  

Paper products, nonmetallic mineral products, printing and related support activities, electrical equipment, transportation equipment, and chemical products are among the 18 manufacturing sectors that released positive growth figures.  Eight industry sectors disclosed order activities on the rise, among them: textile mills, miscellaneous manufacturing, paper products, and electrical equipment firms. 

Manufacturers in New York have reported new orders coming in.

“In August, after more than a year of negative readings, the general business conditions index rose into positive territory and reached its highest level since November 2007—a clear indication that, on balance, business conditions had improved for New York State manufacturers,” the Federal Reserve Bank of New York announced in its August 17 press release of its “Empire State Manufacturing Survey.” 

Gloom and Doom on the Decline Optimism regarding improved revenue growth was reported by almost half of the manufacturers surveyed for the “Manufacturing Barometer” report, a quarterly business outlook published by PricewaterhouseCoopers LLP (PwC).  

“The decline in pessimism is promising since it shows increased economic confidence at both a U.S. and global level,” Barry Misthal, partner at PwC, explained in an August report.  

Misthal qualified his remark by saying, “Many manufacturing executives still appear to be cautious in terms of identifying a turnaround for the economy, but many more are feeling optimistic than were last quarter. It’s still evident we have quite a ways to go, but we are certainly on the right trajectory.”  

Market demand is still on the decline, but at a lesser rate, with 27 percent—up 3 percent from the first quarter of 2009—eyeing capital investments, including replacement of outdated equipment.  

Mergers and acquisitions activity is on the rise. More executives plan to grow through mergers instead of looking for new markets, a different customer base, or growth through research and development. 

But not all is on the upswing, as executives continue cost-cutting tactics, including sweeping layoffs.

However, with the fear of losing experienced and talented employees, some executives are more selective when retrenching the work force.  

“More often, companies relied on job freezes (88 percent), salary or bonus freezes (88 percent), and a reduction in contractors (70 percent) to keep costs in check,” PwC reported. 

Miracle Lies in Innovation and Manufacturing Experts say that America’s economic recovery won’t be driven by Wall Street or on Pennsylvania Avenue, but through the ingenuity and hard work of Americans. 

“The miracle lies in U.S. innovation and manufacturing. After a decade of bankers gone wild, America needs to create real wealth by making things rather than selling complex derivatives in the markets,” Mark C. Tomlinson, Manager of the Society of Manufacturing Engineers (SME), said in an article published on the IndustryWeek.com Web site, a Web site for manufacturing companies. 

Tomlinson states that although there are many workers looking for jobs, the problem is finding experienced workers for the aerospace, defense, medical, and other manufacturing companies. Companies are looking for experienced engineers, machine operators, welders, and other technical jobs. One example of innovation is that many products are re-engineered to fit the needs of different industries.

The Cleveland Vibrator Co. produces industrial vibrators and is moving into other industries, such as pharmaceutical, petrochemical, ceramics, textiles, and construction. 

“Our equipment line is not relegated to just the stock standards. Our greatest strength is our ability to modify our standard line to meet the most demanding applications,” Cleveland Vibrator announced on its Web site. 

Tomlinson points to American manufacturing companies that have remained on U.S. soil, employing domestic workers who are highly flexible and have no problems adapting to a new environment. 

Companies who have lost contracts due to the auto industry buying products from foreign manufacturers have moved on to other ventures. One such company, called Visioneering, “which at one time built Corvette body molds for GM,” Tomlinson said, gained a foothold in the aerospace industry. 

“These manufacturers, along with thousands of others, are succeeding through innovation, diversification, and technological advances. That’s the real story of American manufacturing. It may be evolving, but by getting back to making things, manufacturing can be the miracle that will boost the economy,” Tomlinson concluded in his article.