Manufacturing Renaissance Underway?

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Manufacturing Renaissance Underway?

Posted By : | Date : March 30, 2021

The definition of renaissance is “rebirth” and there are many who have been asserting that manufacturing in the US has been undergoing such a rebirth in the last few years. This is a position that seems to be justified when one looks at the investment community as well as the performance of the sector. The data from sources such as the Purchasing Managers’ Index, Credit Managers’ Index, Federal Reserve reports and dozens of specific industry reports all support the assertion that manufacturing in the US has rarely been in better shape than it is now. There are several reasons for this resurgence:

Shifts in Consumer Spending

The first is that consumers shifted their buying from services to goods during the pandemic. Even as people start to return to their old patterns it is expected they will continue to buy things. If these items had been coming from other nations that would not have made much difference to the US manufacturer but the travails in the global supply chain have pushed more companies to produce in the US and to source in the US.

US Manufacturing Growth

The money that has been poured into the economy has not been aimed directly at manufacturing but much of it has worked its way in anyway. There have been efforts to solidify the connections between the US, Mexico, and Canada (the USMCA and the merger between Kansas City Southern and Canadian Pacific) and that further amplifies the reshoring patterns. Technological advances have allowed US manufacturers to compete against foreign operations despite their advantages in terms of production and labor costs.

There are still many challenges to US manufacturing – everything from labor shortages to the resumption of regulation and higher taxation but for the time being the US manufacturer is riding a wave of growth that will mark this year and next. To sustain this recovery will require addressing these issues and working to ensure the advantages that have evolved are maintained. That includes paying attention to trade opportunities as well as guarding the US market from predatory trade. It means paying attention to the real impact of tariffs and quotas as these often do far more damage than good. It also means including the manufacturing community in the decisions that are being made regarding infrastructure, energy policy, “green” initiatives, and even foreign policy.

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