Upturn insight

General media outlets have been buzzing with news that manufacturing is back as a major economic driver in the U.S. Recent reports on this "trend" could be found in the Wall Street Journal citing U.S. Census Bureau data about increases in domestic manufacturing capacity, backed by numbers from the Institute of Supply Management stating that June marked the 25th straight month of expansion in th...

08/01/2005


General media outlets have been buzzing with news that manufacturing is back as a major economic driver in the U.S. Recent reports on this "trend" could be found in the Wall Street Journal citing U.S. Census Bureau data about increases in domestic manufacturing capacity, backed by numbers from the Institute of Supply Management stating that June marked the 25thstraight month of expansion in the industry. Also, the Chicago Tribune reported in early July that manufacturers are leading the way in profit gains among Midwest companies.

Amid this chatter about manufacturing's return as a U.S. economic powerhouse, some say manufacturing never really went away. One of those voices is John Fontanella, senior vice president of the Aberdeen Group, a Boston-based research and analyst firm. "I never viewed the U.S. economy as just an information and services provider and that manufacturing was going to go somewhere else," Fontanella told Control Engineering .

Fontanella also believes that the furor over the outsourcing trend is "way over exaggerated." The drop in U.S. manufacturing jobs cannot be largely attributed to outsourcing, he says. "What we're seeing is the result of greater productivity—and it started when we when to battle against 'Japan Inc.' in the late 1980s."

Coupled with this push for greater process productivity was a corresponding rise in technology that gave manufacturers "the ability to communicate a lot more efficiently and a lot more precisely, which contributed to more efficient operations and resulted in less manpower required to operate effectively," Fontanella says. "Think of the huge layer of middle management that doesn't exist anymore because of the transparency of information."

When asked how long he expects this current upturn to last, Fontanella says he is torn between two sets of facts. "On one hand, I know that upturns generally last about three years, then you start looking for thin ice. And we're moving into the third year of the current manufacturing expansion. But it seems that manufacturers took a wait-and-see attitude toward this recovery. They didn't add capacity or people, and weren't buying capital equipment until late in the game. When you couple these facts with the current high level of consumer confidence, all the indicators tell me that this thing is going to keep going."

The upheaval and subsequent upturn we've seen over the past five years are forming the future of manufacturing. And it's clear that the path ahead will be a blend of engineering, technology, and management disciplines. Living amid the tumult that makes history may not be comforting, but it sure is interesting and provides great opportunity to make an impact. Are you making yours?

David Greenfield, Editorial Director

dgreenfield@reedbusiness.com





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