For the Supplemental Survey Report released this month by the Federal Reserve bank of New York respondents were asked about past and expected changes in both the prices firms pay for inputs and the prices they charge their customers. On average, Prices Paid For Inputs in both the manufacturing and service sectors rose 2% over the past 12 months while Selling Prices rose only 1% for manufacturers in the same time frame (it rose 2% for service sectors). Looking ahead, respondents do not expect any significant changes in the next 12 months. The median manufacturing respondent expected input prices to rise 2%, while the median service sector respondent anticipated a 2.5% increase. As far as selling prices go, the median expected increase was 2%, among both manufacturers and service sector firms. Read the full report.
The results of the latest quarterly survey from the National Association of Manufacturers (NAM) show continuing economic challenges as well as some encouraging signs for growth. 61.7% of manufacturers are either somewhat or very positive about their own company’s outlook, up from 56.6% in March. Activity levels remain well below ideal however, manufacturers anticipate sales to grow 1.6% over the next 12 months, up from 0.4% in March but down sharply from in December 2014 where they grew 4.5%. As with the past few surveys, the numbers are highly correlated with trade data. Firms that are more upbeat about exports are more positive in their company’s outlook. Overall, respondents expect exports to increase 0.2% over the next 12 months, improving from an expected decline of 0.6%. Full-time employment levels are expected to grow 0.2% over the next year.
The top challenges reported were an unfavorable business climate and rising health insurance costs, both cited by roughly three-quarters of respondents. 82.6% said that their company’s total spending on state and federal regulatory compliance had increased in the past few years.
It was business as usual for the state’s manufacturers, according to the Federal Reserve Bank of New York’s monthly Manufacturing Survey for June. The report found that general business activity expanded modestly, reflecting an industry that has been performing steadily if not spectacularly.
The headline general business conditions index climbed fifteen points to 6.0. The new orders index and the shipments index rose from negative values to 10.9 and 9.3, respectively, meaning that orders and shipments were increasing after last month’s decline. Inventories were lower this month than last, causing the inventories index to fall to -15.3. Meanwhile the employment index was zero, signaling that employment counts were unchanged. The prices paid index held steady at 18.4, suggesting that moderate input price increases were continuing, and the prices received index was near zero, indicating that selling prices were stable. Firms were more optimistic about the six-month outlook this month, and capital spending plans picked up.
American manufacturers are trying out a new plan to recruit new workers and relieve their much discussed labor shortage. In an effort to appeal to millennials thousands of companies, including industry giants like GE, are trying to rebrand manufacturing as a high-tech industry full of opportunity, the Wall Street Journal Reports. A second Silicon Valley as it were.
Manufacturers are recruiting both to attract skilled labor to a growing number of positions and to replenish a workforce from which baby boomers are retiring at a rapid pace. Some studies predict that by 2025 there will be two million unfilled manufacturing jobs. Manufacturing has always been tech-heavy but recent outreach efforts aim to showcase that side of the industry to a far greater extent by using everything from quick online videos to virtual reality tours.
The Wall Street Journal published a piece Tuesday suggesting 9 policies the US could adopt to encourage growth in the manufacturing sector. For a quick Thursday read I thought I’d list them all here and then you can pop over to the original article to learn more:
- Make exports more valuable- Companies that export goods from the U.S. would accumulate certificates equal to the value of their exports. But companies that wanted to import goods would have to purchase certificates from exporters.
- Impose a value-added tax- The tax, which is used by more than 130 countries, is applied to each step along a production chain as a product or material increases in value or is consumed. Almost all countries with VATs waive them on exports but impose them on imports-letting domestic manufacturers off the hook.
- Deal with an overvalued currency- The U.S. dollar’s status as the world’s reserve currency is hurting demand for U.S.-made goods in global markets.
- Look at the true cost of offshoring- When companies decide to offshore production, they often simply seek the lowest initial price per unit. If they were required to take into account the hidden costs of foreign production, US goods would ideally look more cost-competitive.
- Purge duplicate regulations- When federal agencies impose new rules, they rarely repeal old ones or check to see if another agency has a similar or conflicting regulation.
- Look at more than jobs- State and federal governments typically view manufacturing as employment generators. But economic development policies that place too much emphasis on boosting head counts risk missing the broader trend coursing through manufacturing even in low-cost locations: automation.
- Turn community colleges into career factories- While community colleges offer programs for skilled trades, businesses executives complain the course work is often too generalized to suit companies’ needs.
- Spend more on manufacturing R&D- The government needs to spend more on applied research to solve specific problems in manufacturing and bringing new products to market.
- Create regional centers of expertise- These centers typically start with a group, a chamber of commerce for example, that assembles businesses, schools and government agencies into a network that can work together to attract new businesses.
If there’s one albatross above all others hovering over America’s manufacturers, it’s the difficulty of finding a qualified workforce. While technological innovation has eliminated many of the jobs once done by low-skilled workers, manufacturers still struggle to fill high-skilled jobs as older workers retire and people entering the field often don’t have the skills or experience needed to run complex machines in a fast paced environment. In an effort to combat that some Wisconsin high schools have launched for-profit businesses that give students experience in areas such as product design and metal fabrication.
One such businesses is Husty Heavy Manufacturing, at Hustisford High School, which is gearing up to do work for area companies. The projects could be something simple like cutting, grinding and sanding metal parts for a manufacturer, or something more complicated like creating custom products using 3-D printers. The business takes metal-shop experiences to a higher level that includes areas such as budgeting, marketing, product design and real-world problem solving, as well as “soft skills” like communication with clients. The businesses at some schools have even generated enough revenue to pay students something for their efforts, participants with student-run Cardinal Manufacturing at Eleva-Strum High School have received upwards of $2,000 for their hard work. And that is the sort of thing that would get any high school student’s attention.
For the third straight month American factories expanded, according to a new report from the Institute for Supply Management. The institute said Wednesday (via the NY Times) that its manufacturing index rose to 51.3 last month, up from 50.8 in April. Anything above 50 signals growth. After being stuck below 50 from October through February, the index has rebounded a bit thanks to a weak dollar that makes American products cheaper in foreign markets. The index showed an increase in deliveries from suppliers while export orders and a measure om employment were essentially unchanged. Overall 12 of 18 manufacturing companies reported growth, with most of it coming manufacturers of wood products and textiles.
For obvious reasons, Manufacturing Day is always a big deal around here. A celebration of modern manufacturing that’s also meant to inspire the next generation of manufacturers is right up our alley.This year it falls on October 7, just over four months from now which means now is the time to start making plans. Something that’s always a guaranteed Manufacturing Day favorite is a tour of an active factory or plant. There’s no better way to make manufacturing come alive to students than to show them where it all happens. You can invite others to tour your facility too. This year Manufacturing Day organizers have suggested inviting local, regional, and national representatives who are running for office to help them understand the realities of the manufacturing industry and how they can best support it. They’ve even put together a special guide to hosting a tour specifically for elected officials. So don’t miss your chance and register today.
Last week we brought you up to date on the New York Federal Reserve’s latest manufacturing survey, now let’s dive into the Fed’s supplemental report on workers and employment. When asked how their ability to retain employees had changed over the past year roughly 25% of firms in the manufacturing sector reported that it had gotten harder while just 1% said it had gotten easier. The responses were more negatively skewed than in June 2015, the last time these questions were asked. When asked about raising wages by more than usual in order to retain existing workers 55% of manufacturers said they were doing that for “some” job categories, while 20% said they were doing that for “most” of them. Roughly a third of manufacturers reported plans to increase employment in the year ahead, and 13% said they planned to reduce it. Nearly 80% reported having at least some difficulty finding qualified job candidates.
The Federal Reserve Bank of New York released its monthly manufacturing survey this week. The report indicates that business activity declined for the state’s manufacturers. Following a brief foray into positive territory in March and April, the general business conditions index turned negative, falling nineteen points to -9.0, while the new orders and shipments indexes also fell below zero, to -5.5 and -1.9 respectively, pointing to a decline in both. Additionally, survey results indicated that inventory levels were lower and delivery times shorter. Employment levels remained fairly steady, with the index for number of employees roughly the same at 2.1, while the average workweek index declined ten points to -8.3, evidence that the average workweek was shorter this month. Read the full report.