Category: Trade and Mfg News

February 4, 2020

US Manufacturing Activity Rebounds In January

U.S. factory activity unexpectedly rebounded in January after contracting for five straight months amid a surge in new orders, offering hope that a prolonged slump in business investment has probably bottomed out.

The Institute for Supply Management (ISM) said on Monday its index of national factory activity increased to a reading of 50.9 last month, the highest level since July, from an upwardly revised 47.8 in December.

A reading above 50 indicates expansion in the manufacturing sector, which accounts for 11% of the U.S. economy. The ISM index had held below the 50 threshold for five straight months. Economists polled by Reuters had forecast the index rising to 48.5 in January from the previously reported 47.2 in December.

The improvement in the ISM data likely reflects ebbing trade tensions between the United States and China. Washington and Beijing signed a Phase 1 trade deal last month. The deal, however, left in place U.S. tariffs on $360 billion of Chinese imports, about two-thirds of the total, which economists say will remain a constraint on manufacturing.

The ISM’s forward-looking new orders sub-index jumped to a reading of 52.0 last month, the highest since May, from a revised 47.6 in December. Manufacturers also reported paying more for raw materials and other inputs. The survey’s measure of prices paid hit its highest level in 10 months, suggesting some building up of inflation pressures at the factory level.

The ISM’s factory employment index rose to 46.6 last month from a revised reading of 45.2 in December, suggesting manufacturing payrolls could remain weak. Factory employment increased by 46,000 jobs in 2019 after rising 264,000 in 2018.

The improvement in ISMs closely watched national survey follows a series of mixed readings on the manufacturing sector at the regional level.

A purchasing manager survey tracking the Chicago region slumped to a four-year low in January, and manufacturing indexes from the Federal Reserve banks of Richmond and Dallas continued to show contraction in those districts. But factory activity in areas tracked by the Philadelphia and Richmond Feds both showed significant improvement in January, tracking more closely with ISMs findings.

October 2, 2019

Global trade to see weakest growth since Great Recession

Global trade is forecast to weaken this year to its slowest pace since the depths of the Great Recession due to the U.S.-China trade war, the World Trade Organization said Tuesday.

WTO said it expects volumes of traded goods to rise 1.2% in 2019, well below the 2.6% estimate it issued in April and the weakest growth rate for world trade since 2009.

The organization said estimates for 2020 show growth dropping to 2.7% from 3.0%, but it warned that still depends on resolving trade disputes.

The United States and China are in a wide-ranging dispute that has led to new tariffs on hundreds of billions of dollars’ worth of traded goods. There is little expectation of an imminent resolution to the disagreement, which continues to sap economic growth.

“The darkening outlook for trade is discouraging but not unexpected,” said WTO chief Roberto Azevêdo.

The WTO sees continued risks from the trade wars, saying that “further rounds of tariffs and retaliation could produce a destructive cycle of recrimination.”

The organization noted that some economies are slowing anyway while other outstanding trade issues, such as Britain’s exit from the European Union, are adding to the uncertainty for businesses trading goods.

German Chancellor Angela Merkel, whose country is heading toward recession, said the friction around Brexit showed why Europe had no reason to be haughty about the U.S-China trade dispute.

“We’ve been negotiating for three years over Britain’s orderly exit, and this is causing us great uncertainty, too,” Merkel she said after a meeting Tuesday in Berlin with WTO’s Azevêdo and the heads of four other international economic organizations.

“This exit is meant to happen on Oct. 31, and many businesspeople still don’t know today what their supply chain is going to look like in the future,” said Merkel.

September 18, 2019

Positive fundamentals prolong record-setting expansion, for now

October 18, 2018

US Manufacturing Building Boom Roars Along

While big numbers of retirees or soon-to-be retirees are helping drive the call for a new influx of manufacturing workers, they aren’t the only reason for the urgency. U.S. manufacturers continue to announce expansions or new builds across the country and that growth means more workforce needs. Here is a look at where some of that manufacturing building growth is occurring.

The widely trumpeted growth surge in U.S. manufacturing is showing up in both new and expanded manufacturing facilities across the nation. Some factories have opened, others have been announced and even more are still raising the roof or extending their walls.

June 5, 2018

FDI & Reshoring Lead to U.S. Manufacturing Growth

An improving business climate, including tax cuts and elimination of onerous regulations, bodes well for manufacturing in the United States.

During the first quarter of 2018, U.S. manufacturing is riding a wave of 19 consecutive months of growth. This manufacturing growth is largely attributed to improving global economies and robust business investment.

According to the Reshoring Initiative, reshoring and foreign direct investment (FDI) together grew by more than 10 percent in 2016, adding 77,000 jobs and surpassing the rate of offshoring jobs by 27,000. In 2017, reshoring and FDI job announcements soared adding over 171,000 jobs. The jobs equal 90 percent of the total U.S. manufacturing jobs added in 2017. Already, the preliminary data for 2018 is at least as strong as 2017.

An Inviting Destination for Business
The American industrial sector is flourishing, with the United States continuing to be the largest receiver of FDI in the world. A number of factors are contributing to U.S. manufacturing’s rapid growth:

Manufacturers want to expand in the U.S. because of its abundance of natural resources. In particular, rebounding oil prices have spurred more drilling and investment.
The U.S. has high labor standards, encouraging a high-quality, safe working environment. Manufacturers are responding to increasing scrutiny of production practices. In addition, manufacturers are pushing training programs and partnering with colleges and universities to create a more competitive workforce. At the same time, states and communities are integrating job training programs as part of their incentive packages to attract manufacturers’ investment.
The Tax Cuts and Jobs Act, which reduced the corporate tax rate from 35 percent to 21 percent, has created investment opportunities for businesses, and the manufacturing industry has already experienced positive results.
The American consumer continues to be a draw for manufacturers. Consumer spending is a significant driver of a strong economy. As SelectUSA points out, the U.S. offers the largest consumer market on earth with a GDP of $18 trillion and 325 million people.Manufacturers prefer to be near these consumers.
The trusted business climate in the U.S. allows businesses to operate in a secure and stable environment.

Companies are finding a wealth of opportunity in the U.S. marketplace. Champion Petfoods, based in Canada, invested in the U.S. economy with a new world-class facility featuring custom-designed kitchens to reach its fastest-growing market — American consumers — as well as select export markets. The DogStar® Kitchens operation is the company’s first manufacturing facility to be located outside Canada.

“Kentucky stood out for its rich agricultural heritage, enabling Champion Petfoods to further our mandate of sourcing fresh regional ingredients through local supply chain partners,” said Frank Burdzy, president and CEO of Champion Petfoods.

Italian-based Sofidel Group, one of the world’s leading manufacturers in paper production for sanitary and household use, broke ground in Circleville, Ohio, in 2016 to build its first integrated plant on U.S. soil, representing the largest private sector investment in Circleville in decades.

“The U.S. market is a key market for our group, because it is the first in the world in terms of per capita consumption in the tissue sector,” explained Luigi Lazzareschi, CEO of Sofidel Group.

Sofidel also recently announced a project in Oklahoma that will include two tissue technology machines producing a total output of 120,000 metric tons a year. This will create some 300 jobs. Both the Ohio and Oklahoma Sofidel facilities are expected to boost the economy for years to come.

Progress in Regulatory Environment
Regulation has significantly influenced manufacturing investment in the United States, but the landscape has improved in the last year. While manufacturers recognize the need for effective legislation, the environment shouldn’t be burdensome.

In January 2017, President Trump told business leaders he planned to cut federal regulations by 75 percent or more. Federal department and agency heads were told there would be a hold on all rules, with the exception of emergencies, to allow a thorough review and approval process. This was quickly followed by the signing of an Executive Order declaring that for every new regulation issued, two would need to be removed. The order was contested in arbitration, but the complaint was recently dismissed, pushing the regulatory reform movement forward.

The administration has touted the withdrawal or delay of some 1,579 regulatory actions from the fall of 2016 to the fall of 2017, according to the Office of Information and Regulatory Affairs. Furthermore, agencies hope to finalize three deregulatory actions for every new governing rule in fiscal 2018.

An executive directive was also issued calling for executive departments to accelerate reviews and approvals of proposals to build and expand manufacturing facilities in hopes of advancing U.S. industry. This action led to a report from the Commerce Department identifying some 20 regulations in need of reform, based on information from manufacturers and industry influencers.

“The current onerous and lengthy processes and inadequately designed rules add to an already overwhelming amount of government waste,”Commerce Secretary Wilbur Ross said in a release. “This report is an important step in correcting the status quo and promoting, instead of shackling, American manufacturing.”

The report found three major themes, including:

Overlap, duplication, and lack of coordination between states and the Environmental Protection Agency (EPA)
Uncertainty related to the permitting process.
Inconsistency in application and enforcement.

In an effort to address these concerns, each federal agency’s Regulatory Reform Taskforce must deliver an action plan to the president responding to the permitting and regulatory problems found in the Commerce Department’s report.

Additionally, an annual forum will be held both for regulators and manufacturers to assess the regulatory landscape. The Commerce Department plans to work with Congress to use the already streamlined permitting procedures established in the Fixing America’s Surface Transportation Act (FAST Act) on other legislation pertaining to manufacturing projects. This should increase projects’ speed to market.

Historically, the EPA has been the source of many of the regulations affecting industrial production. The Clean Power Plan was intended to drastically reduce greenhouse gas emissions from the power sector by 2030. Many companies spoke out against its threats to jobs and manufacturers’ access to affordable energy. The Trump administration has proposed a plan to repeal the act in order to alleviate its negative impact on the industrial sector. However, the EPA intends to develop a replacement plan that will take the sector’s concerns into consideration, while also accommodating concerns about negative environmental effects.

The current onerous and lengthy processes and inadequately designed rules add to an already overwhelming amount of government waste.Wilbur Ross, Commerce SecretaryMore recently, the EPA issued a guidance memorandum to improve the air permitting process for manufacturers working to increase efficiency by building or modifying facilities such as power plants and refineries. In April, the agency determined through its Midterm Evaluation process that the current greenhouse gas emissions standards for 2022 to 2025 model year cars and light trucks are not appropriate and need to be revised. The goal of this development is to set a national standard for greenhouse gas emissions that allows automakers to manufacture vehicles that consumers want and can afford, without compromising environmental impact or safety.

Promise Ahead
Manufacturers, both foreign and domestic, have maintained that regulatory burdens hinder new investment and expansion. Facing nearly 300,000 restrictions on manufacturing operations from federal regulations, according to the National Association of Manufacturers, businesses welcome the recent changes. While much progress has been made, further action is needed to continue to improve investment into the U.S.

Multiple bills have been introduced, with some being partially passed, that seek to increase transparency, expand effective oversight and, most importantly, mitigate overregulation and encourage manufacturing investment. This activity, coupled with growing awareness of manufacturers’ needs, sets the United States apart as an even more enticing destination for business.

“An increase in ‘Made in America’ strengthens the U.S. manufacturing sector,” said Harry Moser, founder of the Reshoring Initiative. “For every manufacturing job added through ‘Made in America,’ somewhere else another one to five jobs are created. As more products are made here, it becomes possible to fill ecosystem niches that had hollowed out from offshoring. As those niches are filled, upstream and downstream sectors expand.”

May 11, 2018

NFIB Small Business Economic Trends

NFIB Small Business Economic Trends – March

Embargoed Tuesday, May 8 at 6 a.m.

(Based on 1554 respondents to the April survey of a random sample of

NFIB’s member firms, surveyed through 4/29/18)

Overview

The Index of Small Business Optimism increased slightly in April to 104.8, a gain of 0.1 points. The Index has been higher only 20 times out of the last 433 surveys.

Labor quality remained the #1 problem for the fourth straight month.
Reports of improved earnings trends were the highest in survey history.
Reports of compensation increases held at the highest level since 2000.
Reported job creation posted another solid gain.

Hiring plans remained strong, as did reports of actual net increases in employment over the past few months. Reports of labor quality as a top business problem remained at record levels. Reports of capital outlays rebounded to strong levels after a minor decline in March. There appears to be more interest in credit to support spending, but not strong. Cash flows from solid profit trends and tax cuts are supporting higher spending and hiring without debt, boosting this recovery to the second longest expansion in history.

Small Business Optimism and Ten Components

[Column 1 is the current reading, column 2 the change from the prior month, column 3 the percent of the total change in the Index accounted for by each component; “*” means the percent <0.5% or not a meaningful calculation. Index is based to the average value in 1986, components are not. The term “net” means that the percent of owners giving an unfavorable answer has been subtracted from the percent of owners giving a positive or favorable response. For some questions, there is no “unfavorable” response category]

LABOR MARKETS

Reports of employment gains remain strong among small businesses, inconsistent with the BLS report for March employment gains. The increase in new business establishments is running well ahead of eliminations, a real boost to new employment. Owners reported adding a net 0.28 workers per firm on average, the third highest reading since 2006 (down from 0.36 workers reported last month, the highest since 2006).

Sixteen percent (up 2 points) reported increasing employment an average of 2.7 workers per firm and 9 percent (unchanged) reported reducing employment an average of 2.5 workers per firm (seasonally adjusted).

Fifty-seven percent reported hiring or trying to hire (up 4 points), but 50 percent (88 percent of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill. Twenty-two percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem (up 1 point), exceeding the percentage citing taxes or regulations. Shortages of qualified workers are clearly holding back economic growth.

Thirty-five percent of all owners reported job openings they could not fill in the current period, unchanged and tied with March 2018, July and October 2017 for the highest reading since November 2000. Twelve percent reported using temporary workers, up 2 points. Reports of job openings were most frequent in construction (48 percent) and manufacturing (48 percent). The inability of construction firms to organize teams is slowing the construction of new homes at all levels.

A seasonally-adjusted net 16 percent plan to create new jobs, down 4 points from March but historically strong. Not seasonally adjusted, 27 percent plan to increase total employment at their firm (down 3 points), and 3 percent plan reductions (up 1 point). In some industries, nearly half the firms have unfilled openings, especially severe in construction and manufacturing.

Labor markets are very tight, for both skilled and unskilled workers. The strong demand indicated by the NFIB data anticipates an unemployment rate below 4 percent. Expected real sales volumes and reports of positive sales trends were very good and growth has been solid, leaving labor demand historically very strong.

CAPITAL SPENDING

Sixty-one percent reported capital outlays, up 3 points. Of those making expenditures, 43 percent reported spending on new equipment (up 4 points), 27 percent acquired vehicles (up 3 points), and 16 percent improved or expanded facilities (unchanged). Five percent acquired new buildings or land for expansion (down 3 points) and 15 percent spent money for new fixtures and furniture (up 3 points). Non-residential fixed investment has grown at a better than 6 percent rate for the past 5 quarters (compared to under 1 percent in 2015 and 2016) and small business has made a major contribution.

Twenty-nine percent plan capital outlays in the next few months, up 3 points. Plans were most frequent in manufacturing (38 percent) where additional capacity and productivity-enhancing investments are needed and construction (32 percent) where labor-saving investments are needed to increase the number of housing starts and completions. Hiring difficulties will lead firms to engage in more training and adopt more labor saving technology to support growth and serve growing numbers of customers.

SALES

A net 8 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months compared to the prior three months, unchanged and the fifth consecutive strong month. After a blow-out holiday season, consumer spending slowed in the first quarter according to the Bureau of Economic Analysis, contributing to a weaker first quarter GDP number. On Main Street, there was no slowdown in reports of improving sales trends. Customers (consumers and other businesses) turned out in numbers that rivaled performances turned in all year and March data indicated that the consumer is back, which will boost the second estimate of first quarter growth.

The net percent of owners expecting higher real sales volumes rose 1 point to a net 21 percent of owners. Fifty-nine percent of construction firms and 56 percent of manufacturing firms expect higher real sales volumes in the coming months. Wages and salaries grew by about $3,000 per family last year (about 40 percent better than 2016) and will be boosted by the tax cuts this year. Consumer sentiment has remained solid, anticipating continued good spending in the coming months.

INVENTORIES:

The net percent of owners reporting inventory increases rose 1 percentage point to a net 4 percent (seasonally adjusted), positive and extending a four month run of substantial inventory building (a boost to GDP growth).

The net percent of owners viewing current inventory stocks as “too low” (a positive number means more think stocks are too low than too high, a positive for inventory building) improved 2 points to a negative 4 percent. The build in inventory is clearly not excessive in the minds of owners expecting continued strong sales.

The net percent of owners planning to build inventories was unchanged at 1 percent, the eighteenth positive reading in the past 19 months. This has been very supportive of GDP growth over that period.

INFLATION:

The net percent of owners raising average selling prices fell 2 points to a net 14 percent seasonally adjusted, breaking a steady march to higher levels that started in November of 2016. The Federal Reserve’s target of 2 percent inflation (based on the headline Personal Consumption Deflator) has not been reached, but it is close. But, if Main Street slows the frequency of its price hikes, reaching the goal will become more difficult. Unadjusted, 9 percent of owners reported reducing their average selling prices in the past three months (up 1 point), and 26 percent reported price increases (unchanged).

Seasonally adjusted, a net 22 percent plan price hikes (down 3 points). With reports of increased compensation running high, there is more pressure to pass these costs on in higher selling prices, although tax cuts and growing operating profits alleviate some of this pressure. Still, as the gap between the percent raising compensation and raising prices closes, more of these costs will be passed on to customers. The NFIB data predict a PCE inflation rate of 2.1 percent in the months ahead.

COMPENSATION AND EARNINGS:

Reports of higher worker compensation were unchanged at a net 33 percent, the highest reading since 2000. Although government reports of wage and salary gains remain historically low, they are the best in a long time, and don’t include benefits. Historically wage gains were larger, but that was in environments with much higher inflation. Plans to raise compensation rose 2 points to a net 21 percent, but below its recent peak of 24 percent in January.

Owners complain at record rates of labor quality issues, with 88 percent of those hiring or trying to hire reporting few or no qualified applicants for their open positions. Twenty-two percent (up 1 point) selected “finding qualified labor” as their top business problem, more than cited taxes, weak sales, or the cost of regulations as their top challenge.

The frequency of reports of positive profit trends improved 3 percentage point to a net negative 1 percent reporting quarter on quarter profit improvements, the best reading in the survey’s 45 year history. Although the new tax law will impact profits this year, much of the current improvement is due to gains in operating profits and stronger sales. Sales gains from stronger growth fall to the bottom line before costs such as rising labor costs catch up. Overall, the new tax law and the strong economy are very supportive of profit improvements.

CREDIT MARKETS:

Four percent of owners reported that all their borrowing needs were not satisfied, unchanged and historically low. Thirty-two percent reported all credit needs met (up 1 point) and 50 percent said they were not interested in a loan, up 3 points but one of the lowest readings since 2010. Only 2 percent reported that financing was their top business problem compared to 18 percent citing taxes, 13 percent citing regulations and red tape, and 22 percent the availability of qualified labor. Weak sales garnered 8 percent of the vote, down 3 points and only 3 points above the 45 year record low reading. Five percent reported loans “harder to get”, historically low. In short, credit availability and cost are not issues and haven’t been for many years, even with the Federal Reserve raising interest rates.

Thirty-one percent of all owners reported borrowing on a regular basis (down 1 point). The average rate paid on short maturity loans was up 30 basis points at 6.4 percent, rates are rising gradually with Fed policy moves. In anticipation of the Federal Reserve rate hikes, borrowers have increased their demand for fixed rate loans with longer maturities.

As the Federal Reserve moves away from its focus on keeping rates low, more firms are reporting changes in the interest rates they pay. For those experiencing a rate increase, not a happy event, but not an impediment to borrowers who now see much higher rates of return on investments in a growing economy with lower tax rates. Bigger picture, it is important to be returning the job of capital allocation to markets and interest rates, and not Federal Reserve policy. We have twice experienced in recent times the cost of interest rate suppression, “too low for too long”.

THE LARGER PERSPECTIVE:

GDP growth for the first quarter came in at 2.3 percent, considerably shy of the 2.9 percent “guess” by the New York Federal Reserve but well above the Atlanta Fed’s 2 percent “guess.” Most observers feel the economy was much stronger in the first quarter of 2018, although consumers did slow spending considerably in January and February after their holiday binge. March has come in better, and that will show up in the second “guess”. After the cold weather pause, it appears consumer spending is back on track. Business invesment grew just above a 6 percent rate, 1.5 points faster than the average in this recovery. Small business capital spending has picked up the pace. GDP growth for the first quarter will likely be revised up at the next “guess,” as consumers were back spending in March and exports grew substantially while imports (a negative for GDP arithmetic) slowed.

Federal Reserve policy now revolves around two issues. First, will inflation finally hit the Federal Reserve’s 2 percent target? Second, will they raise rates even faster if economic growth runs at 3 percent or better (as even the CBO forecasts) and inflation starts to pick up? Removing the “punch bowl” just when the party is really hopping is a habit (and responsibility) of the Fed. Currently the Fed plans two more rate hikes this year, but if inflation finally starts to run, more are possible – unless the Fed decides to let the economy “run hot” with more inflation. Inflation pressures on Main Street remain “moderate” and indeed fell back a bit in April.

Overall, the outlook remains very positive. Forecasters have the growth pace near 3 percent, even with the weak start in the first quarter (which will likely be revised up). The main impediment to growth will be the short supply of labor, which plagues all industries but especially manufacturing and housing. House prices are rising sharply but are not directly included in the inflation measures. Housing starts are still running below the estimated 1.5 million needed based on demographics. This pressure will show up in rents and ultimately in the PCE inflation measure. That said, 2018 will be a “happy new year”.

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NFIB began surveys of its membership in October 1973. Surveys were conducted in the first month of each quarter through 1985 when monthly surveys were instituted. The first month in each quarter is based on between 1,200 and 2,000 respondents, while the following two monthly surveys contain between 400 and 900 respondents. The term “net percent” means that the percent of owners giving an unfavorable response has been subtracted fromthe percent giving a favorable response. If, for example, 20 percent reported that they were going to increase the number of workers at the firm and 5 percent reported an intention to reduce the number of workers, the “net percent” would be 20 percent – 5 percent or a net 15 percent planning to expand

employment. These figures are seasonally adjusted unless noted. The graphs show quarterly data (first survey month in each quarter), updated when available by subsequent monthly surveys.

Small Business Optimism and Ten Components

LABOR MARKETS

June 20, 2017

Manufacturing Infographic: Report Calls for Greater Flexibility to Improve Revenues, Production, and Labor Efficiency

Accenture Manufacturing Infographic Calls Explains State of Manufacturing In Survey With 250 Top Manufacturers

Each year Accenture takes a look at the state of manufacturing and this year is no different…..except they took it a big step forward in the way you consume that information. Accenture has not only create a comprehensive easy to understand infographic, but also created a quite immersive interactive website to explain the findings in the report. On their website, the main conclusions they tout are around operational flexbility, stating:

Accenture’s global manufacturing research study reveals that companies must have greater operational flexibility to substantially increase revenues and margins, boost production levels and improve labor efficiency.

In particular, with this study Accenture wanted to understand how manufacturers are performing and what initiatives they are embarking on to align their operations with market challenges and opportunities. We had 250 senior manufacturing executives from around the world participate this year, and they represented companies with annual revenues that range from $500 million to more than $50 billion.

How are Manufacturers Performing These Days, Still a Pretty Tough Market?

You’re right, it’s definitely a challenging time to be a manufacturer. But Accenture actually found that those participating in our study are doing pretty well. Production levels, revenues, and profitability have all increased during the time for the vast majority of them. And most manufacturing executives are optimistic about continued growth in the future. In fact, executives believe their most important markets will offer plenty of growth opportunities.

However, there are still things that could stand in the way of growth. Most of these would be classified under the broader category of volatility—such as global currency instability, unpredictable commodities costs, uncertainty about customer demand and where that demand is going to come from, political and social unrest, and then obviously government regulations that might be imposed upon them. So although manufacturers are growing and confident about their prospects in the future, there are always risks that they need to watch out for.

View the Accenture Manufacturing Infographic Below

November 15, 2016

Promoting Revitalization of the US Manufacturing Industry

The US manufacturing sector is on the rise, which was not the case previously. The growth in the automotive industry supports the success that continues to make these industries thrive within the US. Another factor is that improvement of domestic plants cost competitiveness, in comparison to the rise of manufacturing expenses as a result of high wages in other countries, draws attention of majority back to the US manufacturing industry. Here are some of the attributes that will help revitalize this industry.

Colleges as career factories

As the need to replace retiring employees within the US manufacturing field continues to rise, there is the threat of recruiting new hires from community colleges that offer generalized training. A new measure in place to provide job-training programs will help deal with the issue. Collaboration with community colleges to offer programs that the industry needs will be the other way to deal with this challenge.

Creation of regional centers of expertise

Manufacturing innovation and realization of new business opportunities lead to production of hi-tech and high-margin products. They can achieve this through creation of regional centers of competence that specialize in a particular area and leverage on that as well will make this achievable.

Value-addition on exports

The idea to make import more expensive than exports will also help revitalize the US manufacturing industry. To achieve this, there is a plan for those who ship products from the US, to acquire certificates equal to the value of their exports, while importers acquire certificates from exporters. That means exports become cheaper and this will make US goods more competitive.

October 28, 2016

Effect of Digitalization on Personnel on the Manufacturing Shop Floor

Manufacturers all around the business world are bracing for change. The ever-changing face of digital technology has led to reinvention of manufacturing. There is no place the impact of digitization hits more than the shop floor, which is the heart of any organization. To understand the impact, consider the following factors.

Operational excellence

Reliability and efficiency are the driving force for any manufacturing enterprise that yearns for success and make an impact in the market. Changes in the way you can configure, make, assemble, and pack items is what determines efficiency.

For this services to pan out perfectly for better productivity, better and improved systems are imperative. Personnel at this level understand meeting customer’s current expectations is next to impossible at most. In most manufacturing enterprises, profits or losses occur at the shop level, so it is important to have up to date systems. Digitization does not only determine increase or decrease of reliability of systems, but it also improves the efficiency of services at this stage. Strategy teams in a manufacturing enterprise should prioritize improving the shop floor first.

Examinations of core systems

Evaluation of revenue generation opportunism is critical. Managers and directors understand which areas have loopholes, where the enterprise is falling short of expectations, where there is poor communication, or where there is unavailability of data that slows down the decision-making process. Often the stumbling block for systems is inefficient ERP solutions. If any manufacturing enterprise is to make progress in the competitive market, then their ERP solutions should meet the challenge of digitization.

October 21, 2016

Manufacturing and Trade News: A Gloomy Outlook for Growth

In late September the World Trade Organization (WTO) revised its previous forecast for global trade for both 2016 and 2017, reducing its growth estimates to 1.7% and 1.8%, respectively. This presents a stark contrast its projection from a year ago, which estimated that trade would expand by 3.9% this year.

And with global GDP expected to grow 2.2%, the WTO notes that 2016 will mark the “slowest pace of trade and output growth since the financial crisis of 2009.” Several issues were presented as possible causes of the diminished outlook, including Brexit’s long shadow, financial volatility in developed countries and the possibility that anti-trade rhetoric will impact trade policy.

The International Monetary Fund’s (IMF) recent World Economic Outlook report was similarly stark, stating that the volume of world trade has “grown by just over 3% a year since 2012, less than half the average rate of expansion during the previous three decades.” The Fund, which in July had forecast 2.2% economic growth for the United States in 2016, revealed concerns regarding U.S. trade and manufacturing, weakening its predicted U.S. growth to just 1.6%.

In the midst of this global trade slump, and looking out onto a horizon of disappointingly slow growth, the leader of the IMF, Christine Lagarde, stated that trade restrictions would leave U.S. workers and families “worse off.” She also warned that “to turn our back on trade now” would “[choke] off a key driver of growth.”

However, all is not lost. As detailed by U.S. News, the strong dollar and weak outlook on global growth may mean that we can expect U.S. manufacturing to “flatline.” However, they estimate that service industries and construction may step as leaders to propel the economy forward.