I have the pleasure of meeting frequently with business owners from across the country. They talk about where their challenges are in growing and sustaining their businesses, and they also talk about how locating production abroad hasn’t always turned out as well as they had hoped. Not surprisingly, during our current economic recovery and expansion, news reports and private consultants have repeatedly echoed that thinking. Increasingly we hear that U.S. companies that previously took their operations or supply chains overseas are now reshoring or insourcing─bringing operations and supply chains back home to America.
To help continue that momentum, the Department of Commerce today published a new tool to help inform manufacturing firms’ location decisions. The Assess Costs Everywhere (ACE) tool outlines the wide range of costs and risks associated with offshore production, and provides links to important public and private resources, so that firms can more accurately assess the total cost of operating overseas. ACE also shares case studies of firms that reversed their decisions to locate offshore once the full range of costs became clear.
The role of the manufacturing sector in the U.S. economy is more prominent than is suggested solely by its output or number of workers. It is a cornerstone of innovation in our economy: manufacturing firms fund most domestic corporate research and development (R&D), and the resulting innovations and productivity growth improve our standard of living. Manufacturing also drives U.S. exports and is crucial for a strong national defense.
The current economic recovery has witnessed a welcome return in manufacturing job growth. Since its January 2010 low to April 2012, manufacturing employment has expanded by 489,000 jobs or 4 percent1— the strongest cyclical rebound since the dual recessions in the early 1980s. From mid-2009 through the end of February 2012, the number of job openings surged by over 200 percent, to 253,000 openings. 2 Coupled with attrition in the coming years from Baby Boomer retirements, this bodes well for continued hiring opportunities in the manufacturing sector.3
Manufacturing is a dynamic and changing industry. Explore and analyze the current state of manufacturing and its potential future direction. To this end, several manufacturing indicators are listed below to paint a picture. These indicators were chosen to represent a current snapshot of different dimensions of the industry and its performance. The indicators are updated as new data becomes available. Links to the sources of these indicators are provided when available.
American manufacturers are saying that business is booming, but many of them also say that banks aren’t keen to provide the loans necessary to hire more workers, buy new equipment, and ramp up production. According to Biz2credit, a New York firm that matches borrowers with lenders, a recent analysis found that loan approvals at large banks (those with $10 billion plus in assets) fell in April for the second straight month.
Banks are saying that they’re willing to lend but also admit that they are proceeding with caution, especially with loans to smaller, or contract manufacturers. Recent articles note that “the slow pace of the economic recovery is causing both borrowers and lenders to proceed with caution” and “ the slowdown in small-business lending is due to the March expiration of a temporary 90% guarantee on SBA loans and the reinstatement SBA loan fees that had been temporarily waived to stimulate lending.”
However, I would like to suggest that the continued tightness in business lending may be a reflection of banking strategies employed by different sized banks. Big national banks are much more likely to have been affected by the mortgage backed security mess and the subsequent increase in bank oversight and regulation has encouraged them to reduce risk and tighten lending. Smaller banks, meanwhile, which have traditionally made their living off of smaller loans that they carry on their own balance sheets, seem to have increased their small business lending.