Manufacturers Expect Continued Revenue Growth in Q4

No matter what manufacturing facility you visit in the United States, you will pretty much find the same thing everywhere. The future of manufacturing has already arrived in the U.S. You will find robotic arms, CNC machines, and logic controllers in almost every facility across the country.

These automated machines are being used daily, changing how manufacturing is completed for various products, including wire. Just one decade ago, most manufacturing companies had employees bending wire using their hands for steel baskets. Now, with these machines, companies can produce hundreds products for clients in the aerospace, pharmaceutical, and automotive industries.

According to the Robotic Industries Association, there are close to 230,000 robots being used in factories across the United States. This number puts the U.S. second on the list behind Japan. Automation allows manufacturers to improve their safety, productivity, speed, effectiveness and ability to reduce their operating costs. The North American robotics industry set a record in 2012 and orders placed for the first six months of 2013 could set another new record.

Sources within the industry claim that just 10 percent of companies in the United States that could gain from these robots have actually installed them and put them to use. The more than 300,000 companies in the small and medium ranges in the country are representative of the growth that could occur should they install these robots.

Can Automated Production Create Growth?
In 2012, the manufacturing industry contributed $1.87 trillion to the United States economy, which means that advanced processes can provide the boost needed to regain some of the footing the industry lost over the past couple of years. The industry is still noticing a decline in the contribution it makes to the GDP. The industry saw a high of 26 percent in 1947 and its current level is 11 percent. (Source: Area Development Magazine Online)

When the recession hit, the industry dropped 2.3 million jobs, and is still working to recover most of them. As of this writing, some 500,000 jobs have been recovered in manufacturing across the country. Data provided by the Manufacturers Alliance for Productivity and Innovation (MAPI) shows that production in the industry has recovered by 73 percent and is still one year away from a full recovery. If you remove the sector featuring semiconductors, computers, and communications equipment, and the recovery numbers sit at 64 percent with full recovery not coming until quarter three of 2015.

According to MAPI Chief Economist Daniel J. Meckstroth, Ph.D., these companies are experiencing profits because they have high cash to low debt ratios. What causes this is the fact that interest rates are the lowest they have been in years.

It seems as though manufacturers are confident in the industry’s recovery, specifically because of a second quarter survey conducted by PwC on the manufacturing barometer. The survey says that 82 percent of manufacturers are predicting revenue growth for 2013. Data from the automotive industry supports this opinion. The data shows that vehicle production has returned to pre-recession levels. In the survey, 40 percent of those who responded said that they plan to make a major investment over the next year. The percentage is a decline from the 55 percent that was recorded in quarter two of 2012.


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