There seems to be a general feeling that there has been a rebound for manufacturing in the US. I even heard in a speech (Feb. 6th, 2015 speech) by the president of the National Association of Manufacturers that the manufacturing sector in this country is stronger than ever. So, wondering really what is happening with manufacturing in the US, I turned to the data to get some answers – at least as much as can be gleaned from statistics. All data in this post is from the World Bank, the Bureau of Labor Statistics and the Bureau of Economic Analysis and is free to anyone who wishes to find it.
Manufacturing is a broadly defined sector of the economy that includes “establishments engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products.” This includes everything from auto manufacturing, to steel production, to light bulb production, clothing manufacturing, cabinet making, and on and on. As a forklift sales and service company we work with all of these types of businesses and then some.
So what does the data tell us about this sector that represents 12% of US GDP?
Employment Up Over Short Term, Largely Down Over Long Term
In 1980 the manufacturing sector supported about 19 million jobs. In the last 35 years, that was the highest employment in manufacturing and from the late 90’s on employment in manufacturing fell very quickly. In 1999 manufacturing employed about 17,500,000 people and today we have somewhere around 12,200,000 working in manufacturing.
Manufacturing Industry Employment in the US – 1980-2014
Since the 2009 recession, manufacturing employment has seen a handsome rise but is not back to pre-recession levels, nor is it anywhere near the peak (of the last 35 years) of 1980 or the relatively steady years of the mid to late ’90s. Certainly there is something to be said for the recovery and possible “renaissance” of manufacturing in the US, but it’s hard to compare what we have today in employment numbers to what the US used to have in manufacturing. And my intent isn’t to lament the change or judge it as good or bad, but to simply present the data.
Manufacturing Industry Employment in the US – 2004-2014
Wages – They Look A Lot Better Than the Employment Chart
As of December 2014, average hourly wages for employees in the manufacturing industry were $24.91 per hour, which is middle of the road compared to all of the industries tracked by the Bureau of Labor Statistics. The highest average hourly wages are in the Utilities industry and come in at $35.86 per hour. The lowest hourly wages are found in the leisure and hospitality industry which earns on average $14.08 per hour as of December 2014.
The wonderful thing about average hourly wages in the manufacturing industry is how steadily they have been rising over the last 10 years. In 2004, production and non-supervisory employees were making about $16 per hour on average. And that figure has gone up every year since 2004, including the difficult years of 2008, 2009, and 2010.
The highest earners in the industry are purchasing agents who made an average of $29.55 per hour in 2013. The lowest wage earners in manufacturing were “Helpers-Production Workers” who earned on average $12.66 per hour in 2013.
Number of US Manufacturing Establishments – Yikes Stripes
I suppose this chart shouldn’t come as a surprise if you have already looked at the employment figures. I could only get data as far back as 2001, but you get the idea of what’s happened since the turn of the century. The number of private manufacturing establishments has dropped by about 60,000. There are probably several reasons for this drop including consolidation, obsolescence, demographic changes, and of course the economy. Please add your thoughts in the comments section.
Output Per Hour – Something To Be Proud Of
If there is any chart that shows how impressive American ingenuity is, it’s this one. The increase in output per hour from the manufacturing industry is really incredible. I’m no expert so I can only offer general thoughts as to why this is so, but a lot of the productivity improvements must come from computer science, automation, and management science (lean, six sigma, etc.). Please add your thoughts in the comments section.
Worldwide Manufacturing – Where Does the US Stand?
This graph is courtesy of the World Bank and shows total manufacturing output per country in US dollars. China’s output has seen a steady rise in the last 10 years, while the European Union and the US are up less aggressively. I included the remaining three BRIC countries of Russia, Brazil, and India for dramatic effect. The gap between the world’s largest manufacturers, the US and China, between these countries that get press for their growing economies is obviously massive and should be duly noted when considering the impact such places have on our competitiveness.
Since the 2009 recession, the US manufacturing sector has seen a rebound according to output , employment, wages, and productivity per hour. But the number of private manufacturing establishments are down overall, and the long term trend for manufacturing in the US is down a long way from the former highs. China is the ever-accelerating machine and the European Union continues to hold its own, but there are few other countries/economic regions that can reach output levels and productivity per hour that the US can. For example, even with a population of over 1 billion people, India has an Everest sized amount of ground to make up before it has output reaching US levels.
Main image courtesy of Gualberto107 at Freedigitalphotos.net