The first half of 2018 is off to a positive start with continued growth in the manufacturing sector. Recent statistics from the Bureau of Labor reported an additional 18,000 jobs added within the industry. During the month of May, this equated into 12.673 million jobs, just slightly higher than the 12.655 million jobs reported in April. Many of these new jobs come from durable goods manufacturing.

Compared to a year ago when May 2017 numbers were at 12.414, this demonstrates a positive lift. Other economic areas such as the non-farm sector continue to show increases with 223,000 new jobs reported during the month of May, better than the 188,000 jobs economists predicted during this time frame. Retail trade (31,000 jobs), health care (29,000 jobs), and construction (25,000 jobs) also saw increased growth, and the unemployment rate moved to 3.8 percent, according to the June 1 economic news release from the Bureau of Labor Statistics.

Areas of New Job Creation

Machinery manufacturers – 5,800 new jobs

Fabricated metal products – 2,400 new jobs

Wood products – 1,300 new jobs

Industry Downturn

One area of the industry not experiencing the same level of growth is within the motorized vehicle and parts industry. 4,400 manufacturing jobs were lost during the month of May in this sector. Traditionally, this area, which includes trucks, cars and other vehicles, has been one of the more robust in the industry. The once-top job creator continues to experience a dip as more automotive buyers switch their preference from cars to larger-size SUVs and trucks.

Despite this slump, the sector still experienced an overall gain of 1,400 jobs, and automotive dealers point out the benefits of better-quality automobiles produced by leaner plants. Another bright side is SUVs and trucks have a larger price tag than most cars. Automotive industry insiders anticipate that larger profits from the production of SUVs and trucks will make it easier for automotive plants to make production changes, hopefully decreasing the need for large layoffs. Another positive is that automotive producers now react to changes in consumer desires quicker than they did in the past.

Slow Yet Steady

Nimbleness in manufacturing methods and changes in U.S. trade policy offer two examples of how the manufacturing industry continues to rebound from the 2008 financial crisis and recession. As economic conditions continue to improve, the industry shows steady, yet slow, growth with hiring continuing throughout much of the industry. A desire for products made in the U.S. also helps justify new jobs and an increasing workforce to meet growing demand. But the continuation of such trends remains to be seen with the possibility of an upcoming trade war, according to a news report from Manufacturing Talk Radio.

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The resurgence of the U.S. manufacturing sector continues to impact trade policy around the world. Over the last ten years, prime manufacturing areas such as Ohio have witnessed first-hand how local manufacturers can remain competitive and positively influence the impact of international trade relations on the people working and producing U.S. manufacturing products.

Understanding the Impact

The success of manufacturing at home is directly related to the failures and successes of a growing number of international trade policies and programs. These partnerships include U.S. Trade representatives, entities within the private sector, governments of foreign lands, international organizations and nongovernmental organizations. While often out of the day-to-day mindset, the policies enacted by these various groups correlate to what’s happening with the industry at home. Considering the current 14 free-trade agreements with 20 countries, the influence of the distribution, production and ultimate consumption of manufacturing goods cannot be understated.

In our home state of Ohio, there’s been undeniable growth in manufacturing output, building from the lowest point in 2009 with continuing growth ever since. In 2015, Ohio-based manufacturing accounted for 17.77 percent of the total output in the state, according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau.

Top 10 Ohio Manufacturing Sectors

Petroleum and Coal Products

Chemical Products

Motor Vehicles and Parts

Food, Beverage and Tobacco products

Machinery

Plastics and Rubber Products

Primary Metals

Aerospace and Transportation Equipment

Electrical equipment, Appliances and Components

Measuring the Impact

Shifting production and global supply chains continue to improve the efficiencies of U.S. manufacturers. Evidence of such success is visible in the growing number of investments made across the country. Such expenditures make it critical to understand how policy changes can immediately impact the work of U.S. manufacturers in the short- and long-term. In 2017, trade with free-trade partners represented more than 90 percent of U.S. imports by value and close to 70 percent of exports, according to the U.S. Department of Commerce.

Understanding the interdependence of trade policy logistics helps to understand the potential for disruptions in manufacturing at home including where and how manufacturers procure goods. Depending on the complexities, this could increase production and distribution costs. It’s critical for manufacturers to have alternative plans for sources and guardrails in place to minimize disruptions in the production cycle knowing what’s there today will not necessarily be there tomorrow or even next month.

Collective Power

As overseas manufacturing wages continue to increase, the focus on regional manufacturing throughout the U.S. becomes increasingly valid. Such an advantage becomes more pronounced when considering how U.S. manufacturers continue to make efforts toward innovation, increased research and development, bridging the skills gap and emphasizing abbreviated supply chains. With steady efforts, reinvestment in U.S. manufacturing and its regional players will continue to create jobs where they are needed, driving innovation at home and abroad.

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Manufacturing in Ohio has roots that run deep and long as one of the oldest sectors in the state which employs over 688K people and has an output of over $100 billion as of 2015.

This sector was responsible for more than $47 billion in exported goods and a 93.8% share in total goods exported. In 2015, Ohio traded $29.35 billion in exports with Free Trade Agreement Partners with trade exports of $29.15 billion through the Trans Pacific Partnership. In 2013 small business contributed to a 89.4% share of total exporters. The top five markets account for 66.80% of manufactured goods exported. The top five are Canada (41%), Mexico (13.3%), China (5.1%), France (3.9%), and the United Kingdom (3.5%).

Ohio is regarded as a very attractive state for aerospace manufacturing. The aerospace industry employees more than 110,000 people. The aerospace firms based in Ohio generate annual revenue of $44 billion. The top three employers in this sector include GE Aviation (General Electric unit), UTC Aerospace Landing Systems (United Technologies Corp) & Honeywell.

There are also many small independent manufacturers like CDMC that work to support the aerospace industry in one way or the other through their services or products and/or parts manufactured. New investments on the horizon will likely only improve our standing in the aerospace manufacturing industry.

Ohio also has a strong chemical and polymer industry. Many of the world’s fortune 1000 companies have their manufacturing plants here, including Goodyear Tire and Rubber Company, Parker Hannifin, PolyOne Corporation, and Schulman. The chemical and polymer industry employees 46,000 people with an average salary of $64,600 a year, which is 24% higher than some other manufacturing jobs.

The future of manufacturing in Ohio is looking bright with major investments lighting the pathway and as Ohio residents we can definitively say, “Ohio is one of the best states for manufacturing in the U.S.”.

For information on a deburring machine to fit your manufacturing needs or a free evaluation, contact CDMC today via contact form or call us at (216) 472-0200 to speak directly with one of our experts!

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