How advanced is advanced manufacturing, really?
Perhaps the real question is, will advanced manufacturing advance the economy overall, and contribute enough to make US industries sustainable in our global environment?
Alright, enough advancement. Let’s take a look at a recent NPR article’s take on Chicago – the fair city we publish from – and its manufacturing pedigree, and how the city’s metro area essentially serves as a proxy for US industry at large.
Takeaway #1: Scorecarding the Manufacturing Sectors
The author of the article provides a scorecard from a report released today by the Chicago Metropolitan Agency for Planning on innovation, workforce and infrastructure:
Metals industries, including primary, fabrication and machinery, are generally in the middle. Clearly more investment in high tech and pharmaceuticals drives the local sector.
Takeaway #2: There’s Still an Employer/Employee Disconnect
The report shows that the divide between Chicago manufacturing job openings and the skills of unemployed workers are not matching up, as is the trend countrywide. Until they do – with the help of trade school programs, etc. – those “high-paying jobs” promised by President Obama will continue to elude many.
Takeaway #3: End-User Demand Is Still King
At the end of the day, we have to take a look at whether order books are being filled and orders delivered. For that to happen, the domestic economy has to come back to a point that spurs demand for manufacturing end-use products and services.
January’s headline number for industrial production was lower than expected — down 0.1% after having risen 0.4% in December. Last month’s decline was traced to durable goods with decreases recorded in the output of motor vehicles and parts, which dropped 3.2%, and in the output of primary metals, which fell 2.6%.
The Congressional Budget Office expects US real GDP to grow by just 1.4% this year, due to “a combination of ongoing improvement in underlying economic factors and fiscal tightening that has already begun, or is scheduled to occur,” according to Bob Garino of Export Tax Advisors. We should, by extension, see pretty firm commodity prices.
However, the CBO also noted that after the economy adjusts this year to the fiscal tightening inherent in the current law, underlying economic factors will lead to more rapid growth: they project 3.4% growth in 2014 and an average of 3% a year from 2015 through 2018, according to Garino.
If positive industrial growth trends continue — and prove to be sustainable — only then will cities such as Chicago see their manufacturing networks improve investment and truly advance their sectors.