Is Manufacturing Finally Stabilizing?

In the mid-1990s, manufacturing made up a significant portion of the U.S. economy, and manufacturing jobs were plentiful. Following a peak in 1998, there was a steady decline in the U.S. manufacturing sector that continued for over a decade. Statistics point to increased stability in manufacturing since 2012.

Daniel Meckstroth, the chief economist for the Manufacturer's Alliance for Productivity and Innovation, keeps track of the number of factories in the United States using data from the Bureau of Labor Statistics. He noticed that the number of factories remains steady, hovering at around 304,000 since 2012. Meckstroth takes this as a good sign that the decline in manufacturing has tapered off. He is optimistic that the stability in the number of factories is a turning point that is likely to lead to an increase in the number of factories in the United States in the future.

Meckstroth adds that although this is an optimistic sign, the state of manufacturing in the United States does not appear to be moving towards the same level it was in the 1990s. Competition from foreign manufacturing is fierce. Unless the trade deficit significantly decreases, manufacturing in the United States is likely to grow at a slow pace, and manufacturing jobs are unlikely to increase to the percentage of the job market represented in the late 20th century.

Another indicator of increased stability in the U.S. manufacturing sector is an increase in companies reshoring their factories. Several factors are influencing this trend. First, problems in foreign factories, including poor productivity, a lack of quality control and rapidly increasing wages in some areas, have manufacturing companies rethinking their decision to move overseas. Second, a tighter supply chain, shorter delivery times and new government incentives to reshore are encouraging companies to consider the benefits of doing business on U.S. soil.

Unfortunately, increased stability in U.S. manufacturing has not correlated with an overall increase in manufacturing jobs, especially for unskilled workers. Automation in factories through improved robotics and additive manufacturing methods are decreasing the number of unskilled employees working on production lines. There is a shift to more manufacturing jobs in research and development to keep pace with consumer demand for innovation and in areas involving technology to keep new automated production lines running smoothly. Manufacturing jobs of the future will require more education, and government incentives are encouraging schools at all levels to incorporate new training programs focusing on the skills needed in modern factories.

The state of manufacturing in the United States appears to be stabilizing. The number of factories in the United States has remained steady since 2012, and more companies are exploring the benefits of keeping their operations in the United States. Despite increased stability, the number of unskilled manufacturing jobs is not growing. New manufacturing jobs require skills in innovation and technology.

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