Reports Convey Continued Manufacturing Optimism

March 21, 2011
Two recently released reports point to increased 2011 capital spending and a more positive outlook by manufacturing senior management.

U.S. manufacturers are reinvesting vigorously to improve productivity, while executives at manufacturing companies are becoming more optimistic about the economy. Those were among conclusions drawn from two new reports on the manufacturing economy that were released last week.

January U.S. consumption of machine tools and related equipment totaled $371.4 million, according to a report released on March 14 by the American Machine Tool Distributors’ Association (AMTDA, www.amtda.org) and The Association For Manufacturing Technology (AMT, www.amtonline.org). This total, as reported by companies participating in the United States Manufacturing Technology Consumption (USMTC) program, was down by 16.3 percent from December but up 188.3 percent when compared with the total of $128.8 million reported for January 2010.

Reinvestments

“Despite the slight decline in orders from December, the January USMTC report confirms that U.S. manufacturers are reinvesting vigorously to improve productivity,” said Peter Borden, AMTDA President. “As equipment deliveries grow longer and commodity prices increase, factories may continue to make these investments before inflation and other factors raise prices further.” All data included in the report are based on the totals of actual data reported by companies participating in the USMTC program, the two trade associations said.

A separate report released on March 16 based on a February survey by  Grant Thornton LLP (www.GrantThornton.com), the U.S. member firm of Grant Thornton International Ltd., shows that senior management at U.S. manufacturing companies are significantly more optimistic about their own companies’ growth than they were just three months ago in November. Nine in 10 (91 percent) report that they are optimistic about their companies’ growth in the next six months, up from 81 percent in November, Grant Thornton said.

As for the economy, 60 percent believe that the U.S. economy will improve in the next six months, up from 49 percent in November. However, the number planning to increase hiring in the next six months dropped to 44 percent in February, from 49 percent in November.

Uncertainty

“We believe that the decrease in expected hiring despite an overall high level of optimism is because manufacturing executives feel some uncertainty about the future of manufacturing in the U.S.,” said Wally Gruenes, Grant Thornton’s national managing partner for Consumer and Industrial Products and a member of the Board of Directors of the National Association of Manufacturers (NAM).

“These executives believe that the United States government has no battle plan to make American manufacturing more competitive in order to create more good-paying jobs. In fact, to the contrary, they believe Washington has created a climate that has made American manufacturers less competitive over the years,” Gruenes opined.  “Rather than spending scarce resources on employees, manufacturing executives are spending on capital equipment purchases and technology to improve productivity and lower costs in an effort to be more competitive globally.” American Machine Tool Distributors’ Association www.amtda.orgAssociation For Manufacturing Technology www.amtonline.orgGrant Thornton LLPwww.GrantThornton.com

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