Plant Services - January 2008 - (Page 13) KEN SChNEPf THE PS FILES In adversity comes opportunity Recession or not, there are bright spots in manufacturing f you were waiting for an official pronouncement Midwestern manufacturers like Peoria, Ill.-based Caterabout the state of the economy, it’s here: “Recession pillar Inc. Strauss says that as a result of the expanding in the U.S. ‘has arrived,’” the BBC News reported in oil sands extraction business, the company is sold out on early January, based on a study of economic indicators from its heavy-duty 797B, the largest truck they manufacture. “The companies that are buying these vehicles are able to Merrill Lynch. pay for them in about a month’s time with the return on The economically chilling term crept back into the nainvestment,” he says. tional consciousness around the time the U.S. mortgage crisis began. Maybe we’re still in denial about it, for it’s not Aviation is another hot field, and Chicago-based Boesomething that’s easy to accept for Americans who have ing also is a manufacturer that “had a fantastic year and been working harder and longer just to mainis booked out until the middle of the next tain the status quo. decade,” Strauss says. “They’re getting a lot Whether you believe we’re in a recession or Productivity has of foreign orders, though, and it’s softer for not, one axiom certainly remains true: Crisis increased output U.S. business.” – especially that of the economic kind – is a One silver that by 600% on 0% the weakness lining to the economy is U.S. powerful motivator for change. of the dollar has helped 2008 promises to be a year of change on job growth since manufacturers. “Now that our currency has many fronts, including economic, political and, the post-World dropped about 22% from its peak, it makes closer to home, manufacturing – and not all of domestic goods less expensive,” Strauss says, War II period. it good. Layoffs, plant closings and outsourcboosting the market for exports. ing aren’t news to anyone, but what impact will “People think we haven’t been effective in this latest economic news have on an already hard-hit sector? creating manufacturing jobs, but growth has been steady at William A. Strauss, senior economist and economic ad1%,” he says. “The number of jobs needed has been reduced viser in the economic research department at the Federal because we have become more productive.” Reserve Bank of Chicago, is confident that the overall econU.S. manufacturing continues to show great output gains. omy will continue to expand. Strauss analyzes the Midwest Productivity has increased output by 600% on 0% job economy and the manufacturing sector’s performance for growth since the post-World War II period, beginning in use in creating monetary policy. “We’ll still be weighed 1947. “We’ve driven inefficiencies out of production with down by the housing sector, which many expect will modergreat technological improvements,” he says. ate through 2008,” he says. “We’re looking for it to improve To put the situation in context, “China has lost more jobs and be less of a drag on the economy.” in manufacturing than we have in manufacturing in the The November 2007 Chicago Fed Midwest ManufacUnited States,” he adds. turing Index (CFMMI) report backs up Strauss’ tempered Jerry Szatan, founder and principal of Szatan Associates, optimism. The CFMMI, which rose 0.5% in November, is a business site selection and location strategy consulting a monthly estimate by industry of manufacturing output firm, says, “Even in a recession, not everyone is a loser. Not in the bellwether manufacturing states of lllinois, Indiana, every sector is seeing weakened sales. Companies are still Iowa, Michigan and Wisconsin. The composite index of 15 investing in new opportunities.” manufacturing industries uses hours worked data to meaMaybe recession is too harsh a term for many to swallow sure monthly changes in regional activity. when things aren’t as bleak as they seem. How are you feeling about the U.S. economy in general, and manufacturing Despite what you might be hearing in the news about in particular? Send me your thoughts. the overall economy, there are several bright spots in manufacturing. “Strength is in energy extraction,” Strauss says. The oil sands market in Canada has been a boon to E-mail Managing Editor Lisa Towers at ltowers@putman.net. January 2008 www.PLANTSERVICES.com 13 I http://www.PLANTSERVICES.com
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