Manufacturing 2.0
Rock River Valley manufacturing experts discuss the many facets of manufacturing: technology, education, training, events, people and any other aspects of this important segment of our economy. They’ll use this blog to get the word out and solicit feedback on local and global manufacturing. They hope to better engage our employers, employees and our future work force and increase their understanding of manufacturing.

Slow Growth in Local Economy

May 11th, 2008 at 04:21pm Bob Trojan

Today’s story by Alex Gary and quotes by John Lewis need further expansion. John is right about the local economy and the impact of manufacturing. As it stands now, 21% of the Rockford MSA workforce are employed in manufacturing. If you use a conservative multiplier, another 21% support manufacturing. So around 42% of the regions economy are directly impacted by the manufacturing sector.

Why is manufacturing holding up so well? If you review the Department of Commerce data, exports of Capital Goods have increased by 34% from 2004 through 2007. And the YTD data through March show Capital Goods are 9% ahead of last year. If a company is directly exporting or selling to companies that export, then you will benefit.

Why is this so? The Euro has strengthened against the dollar by 24% from January 2004 through March 2008! That goes a long way in making our products more competitive against the European companies. Going unnoticed is the strengthening of the Chinese Yuan against the dollar by 18% since mid-2005 when up until then, the Yuan was fixed.

Also helping our companies has been the drive to improve productivity through a variety of process improvement strategies. Nationally, Output per hour has improved by 11.6% since 2004, with a +4.1% in the first quarter 2008!

So my message is…get into the export game, either directly or sell to customers who export and keep on making productivity improvements. It’s a good formula for keeping our local manufacturing economy growing.

Bob Trojan

Entry Filed under: Economy

1 Comment Add your own

  • 1. Skip Trotter  |  May 11th, 2008 at 6:09 pm

    In regards to an economy slowing down is true in all sectors. We hear about Cat and Deere doing so well profitability, but what alot of people do not know is this is due to European growth.

    I am becoming a firm advocate that unless you find a way, no matter the size of your company, to go global, you will risk the demise of your company. Over the past year I have entered into a joint venture with another Indian company to produce my product in India. They have a very novel concept, produce product and ship outside the country or support internally, it is very profitable. If you import product from outside the country it is a 22-30% tarriff.

    I am in no way saying that you must sell your soul to the devil, but you have to get involved one way or another to keep your business striving and profit margins at a constatnt level. I bet you all will agree, profit margins are not what they used to be.

    I am finding now that customers know that i have a facility in India, I am having the opportunity to be their “global partner”.

    I agree with Bob 100%, you have to find a way to either export or import goods outside of USA. In the end I anticipate job growth here in the States by subsidizing another percentage of my business offshore.

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