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Focus: Manufacturing

Feature Article from Our Manufacturing Subject Area - See All

From SCDigest's On-Target E-Magazine

- April 17, 2013 -

Supply Chain News: How is US Manufacturing Doing Five Years after the Great Recession? (Part 2)


Despite Slow but Steady Growth from the Bottom, Manufacturing Overall, Many Sectors Below 2007 Levels


SCDigest Editorial Staff

Last week, we provided some numbers in chart form on how well US manufacturing has recovered from the Great Recession that started in 2008 and bottomed in mid-summer 2009.

SCDigest Says:


A much different story for plastic and rubber products, which at 68.7 is almost 33% below 2007 production levels

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The bottom line: despite a steady if gradual recovery in manufacturing after reaching that nadir, overall US production is still four percent below levels seen in 2007 (See last's week's story: How is US Manufacturing Doing Five Years after the Great Recession?)


That was true for many other industries as well. In each case, the way the Federal Reserve data works, 2007 average putput is set as the base year of the index, and all the numbers are in comparison to that base.

Among the industries we looked at last week, below are the current indices (meaning, for example, that output in consumer goods manufacturing is currently 6.1% below 2007 levels):

  • Consumer Goods: 93.9

  • Consumer Durables: 94.3

  • Chemicals: 87.3

  • Computers and Electronics: 132.4

  • Primary Metals: 98.8

  • Furniture: 72.0

Below we offer charts for another set of US industry sectors. Note that you can mouse over each chart to see individual data points and also change the time view of the data.

We'll start with automobiles and parts. Most know that the US auto industry in general seems to have recovered nicely, and that's shown in the data, where after having reached a level of just 47.6 in June 2009 production is now nicely back over 2007 levels, at 106.7.




A much different story for plastic and rubber products, which at 68.7 is almost 33% below 2007 production levels. Our guess is that these are often low value-added parts that are prime candidates for offshoring to low cost countries.




(Manufacturing Article Continued Below)




Not surprisingly, food manufacturing has recovered nicely, now up almost four percent from 2007 levels. While the food supply chain has certainly gone global too in recent years, most US food is still produced right here.




Perhaps surprisingly, the category of general machinery has done even better, up currently to a level of 104.8, rising nearly five percent from 2007, and making some nice gains recently after dropping back a bit in late 2012.




Not quite as good a story for fabricated metal parts, which seems to us like a good proxy for the overall economy, and sure enough at a level of 94.9 it is pretty close to the number for the overall manufacturing sector.




The roll-up category of electrical equipment and appliances has struggled to recover, now still about 14% below 2007 levels.




Finally, and most gloomily, the apparel manufacturing industry in the US has been devastated by offshoring, and not really come back at all. At a level of 57.3, it is 40% below 2007 levels, seeing no recovey at all since the 2009 general bottom, but worse, even that 2007 output was just a fraction of the levels seen in the 1990s.




What does this all mean? We're trying to digest all this ourselves. One thing is clear is that these US numbers, while far from robust, are certainly much better than have been seen in Europe.The sectors most subject to outsourcing certainly have seen slower recovery - in any recovery at all.

What is your reaction to these manufacturing numbers? What surprised you?
Let us know your thoughts at the Feedback section below.

Recent Feedback

I would go further with your remark about the diminishing returns of additional DCs. Assuming customers receiving docks operate on 10-hour days, the difference between 2 DCs @ 1.53 days and 3 DCs @ 1.33 days is merely two hours. With the exception of "extreme retail," such a difference is negligible.

David Gaskill, CPIM
Mgr - Logistics Planning
Apr, 17 2013

I agree with the general locations on the map for a 10-DC setup but when you click through to the specific destinations they recommend most Supply Chain Managers would have some serious qualms with this - Chicago, IL? (yes Romeoville or Bolingbrook or someplace else along the I-55 corridor but Chicago?), Brooklyn, NY? (Brooklyn??? Maybe if you're warehousing artisanal goods that will be delivered to Park Slope by bike messenger, but come on....who sites a DC in Brooklyn?) They are claiming these locations drive the lowest possible lead times to customers but it must be based on miles only, not actual transit times.

Bill Seliger, CPIM, CSCP
Director of Supply Chain
RR Donnelley
Apr, 20 2013