Once-ailing manufacturers are enjoying a robust rebound as cost-saving moves from job cuts to a greater reliance on technology help drive stronger-than-forecast growth. The shift has helped set the stage for a potential “manufacturing renaissance,” says James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management. He predicts the industry will set the pace for U.S. expansion and the American stock market during this decade, as technology did in the 1990s.
“Manufacturing is leading the whole economy,” said Paulsen, whose firm oversees about $340 billion. U.S. manufacturers “had to find religion. They’ve really cleaned up their balance sheets. What is left is the cream of the crop.”
Companies mentioned include Timken, the Canton, Ohio-based maker of roller bearings and steels; Materials Processing, Inc., the Logansport, Indiana-based metals-processing company; Siemens Corp., a subsidiary of the Munich-based Siemens AG; Boeing; Deere & Co.; Cooper Industries Plc, Deere & Co. and Kennametal Inc.
The story builds on recent data and reinforces what many National Association of Manufacturers member companies — other than the ones mentioned above — have been reporting. Economists are seeing the same thing; last Friday, The Wall Street Journal’s Real Time Economics blog rounded up the reaction of top economists, including Sung Won Sohn of the Smith School of Business and Economics. He said:
Economic momentum has not been lost. There are enough tailwinds to move the economy and the job market forward. Service and manufacturing continue to be the workhorse of the employment picture. On the other hand, there are reasons to believe that the jobless rate won’t fall much in coming months.
And here’s an interesting perspective, via The Dayton Business Journal’s article, “Manufacturing must revive before recovery.”
A new report suggests that making U.S. manufacturers more competitive is a more pressing priority than addressing the federal government’s fiscal crisis.
Reducing federal spending to a sustainable level is important, the Information Technology & Innovation Foundation concedes, but “only by restoring U.S. economic competitiveness can historic trade imbalances and high unemployment levels be expeditiously reduced and economic growth expanded to generate sufficient tax revenues to help ultimately balance the budget deficit.”
ITIF’s report is “The Case for a National Manufacturing Strategy.”
The National Association of Manufacturers released its “Manufacturing Strategy for Jobs and a Competitive America” last June.