Monday, August 21, 2006

Manufacturing Productivity Gains

Indiana lost 6,711 manufacturing jobs even though the number of manufacturing plants grew by 81. The data was compiled for the 2006 Indiana Manufacturers Directory. The data from IN is similar to what I’m seeing all over the USA. Improvements in productivity and the increasing development of more focused factories are having a profound impact upon the manufacturing sector.

“Manufacturing capacity utilization is at a four-year high and production is climbing,” said Tom Dubin, president of Manufacturing News, Inc. which compiled the data.

Last month the Bureau of Labor Statistics released their manufacturing productivity figures, which have increased by an average of 5.5% annually for the past four years. If this unprecedented improvement in productivity continues it would mean that the USA would double its manufacturing production within only 13 years!

As you can see from the following graph, the level of productivity growth in the USA manufacturing sector is dwarfing what is occurring in other sectors of our economy. It grew at twice the pace! This means that our economy can grow at a faster rate without fears of inflation while allowing workers to make more in real wages. It is the classic win-win.

Our business at Agracel is seeing some of the strongest demand for new manufacturing space in years. The manufacturers that are expanding are smart, focused and world-class.

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