The NAM was one of the cosponsors of the inaugural Industry Conference of the National Association for Business Economics (NABE) titled “Making It in America: Manufacturing Matters.”
This event was held at the Federal Reserve Bank of Cleveland on May 31, with many participants touring an ArcelorMittal and NAM member Lincoln Electric plant the day before for perspective. The conference largely highlighted the outlook for manufacturing, including a discussion of its importance to growth in the current economic recovery.
Cleveland Fed President Sandra Pianalto began the day by providing her assessment for economic growth in her region and the U.S. She expects modest growth (around 2.5 percent in 2012) in real GDP, with continued cyclical headwinds.
In particular, she suggested that there continues to be slack in both labor and capital markets. She noted, as examples, that there are 3 applicants for every 1 job currently, and industrial capacity is now 6 percent lower than it was before the recession.
Her views are relevant because she is a current Federal Open Market Committee (FOMC) voting member. She has voted for accommodative monetary policies this year (e.g., keeping “exceptionally low interest rates through late 2014”).
Rick Fearon, the vice chairman and chief financial and planning officer at NAM member Eaton Corporation, gave his perspective on manufacturing as a global multinational at lunch. He feels good about the current mix of business lines and geography at Eaton, with 55 percent of its sales coming from overseas. That is expected to grow moving forward.
Along those lines, he highlighted the value to Eaton of acquiring Cooper Industries, with the combined entity having over $20 billion in global sales and more than 100,000 employees.
Many speakers referred to the revolution in shale gas, making it a “game changer” for manufacturing. Robert McCutcheon, U.S. Industrial Products Leader with PriceWaterhouseCoopers, for instance, highlighted the results of a study released by NAM in December.
It found that over 1 million additional manufacturing jobs could result by 2025 from additional shale exploration, both by increasing the feedstock for manufacturers as well as helping to lower the cost of energy for production. These sentiments were echoed by Marianne Kah, the Chief Economist with NAM member ConocoPhillips.
Overall, the conference was a success. It brought together economists, business leaders, and academics interested in learning more about manufacturing and its outlook. It was clear that manufacturing is helping to revitalize communities, including in Cleveland.
As Mark Doms, the Chief Economist at the U.S. Department of Commerce, said in his closing remarks, manufacturing provides high-paying, high-skilled jobs to Americans across the country. Moreover, the sector is helping to drive growth domestically, with exports playing a vital role.
Chad Moutray is chief economist, National Association of Manufacturers.