Issue link: http://www.insightdigital.biz/i/577447
w w w . i n s i g h t o n b u s i n e s s . c o m O c t o b e r 2 0 15 • I NSIGH T | 33 MANUFACTURING by the numbers October marks the official celebration of Manufacturing Month. In Northeast Wisconsin, we celebrate it more often as manufacturing represents 23 percent of the region's employment base. An often-heard saying is "we make stuff." As vibrant as the sector is, there are challenges ahead. Regionally, manufacturers are struggling to find the talent to meet production needs. As the baby boomers retire from the workforce, there simply aren't enough replacements with the requisite skills to fill the jobs. Nationally, optimism about the future has waned a bit as frustration regarding regulation and health care have collided with concerns over the softening global economy and currency manipulation. While many firms still project growth, those projections are less robust than six months ago. Manufacturing Month: celebrating the things we make in Northeast Wisconsin Source: NAM Summary years after the recovery began, we continue to live in a nuanced economic environment. There are signs encouragement that help lift our perceptions of growth moving forward, including rebounds in housing, consumer spending and the labor market. It is these strengths in the U.S. economy—including a 5.3 percent unemployment rate, its lowest level since August 2008—that provide fodder for those wanting the Federal Reserve to begin raising short-term rates before the end of the year. Along those lines, manufacturing leaders generally more positive than negative in their outlook, even as we have seen some of that optimism diminish year to date. Such positive feelings, however, are paired with nagging worries about the global economy, and since last year, business leaders in the manufacturing sector have grappled with a number of significant headwinds that have held back demand and production, particularly for exports. These challenges include a stronger U.S. dollar, lower crude oil prices and weaker economic growth in key international markets. Activity in the sector has clearly decelerated as a result. While other sectors have begun to rebound from a softer start at the beginning of the year, we have yet to see a significant boost among manufacturers, which has been frustrating. As an illustration this, manufacturing production has downshifted from a robust year-over-year pace of 6.0 percent in January just 1.5 percent in July. The Institute for Supply Management's manufacturing purchasing managers' index also decelerated, falling to its lowest level in two years in August. These headwinds have clearly been top-of-mind for manufacturers responding to the National Association Manufacturers (NAM) quarterly survey. In December, 91.2 percent of manufacturers were either somewhat very positive about their own company's outlook. Since then, that figure fell to 88.5 percent in March, 76.3 percent in June and 67.3 percent today (Figure 1). That represents a significant decline in sentiment over short period of time. The September reading of this measure marks the lowest since the fourth quarter 2012, when manufacturers were worried about the fiscal cliff. It is worth noting that manufacturers were surveyed in the current report during the last two months of August, with anxieties about Chinese growth and correction in the U.S. stock market likely having a negative impact on these responses. www.nam.org/Outlook Figure 1: Manufacturing Business Outlook by Quarter, 2013–2015 Percentage of respondents who characterized the current business outlook as somewhat or very positive. 88.7% 83.1% 69.2% 51.8% 70.1% 72.3% 76.1% 78.1% 86.1% 85.9% 87.3% 91.2% 88.5% 76.3% 67.3% 2012:1 2012:2 2012:3 2012:4 2013:1 2013:2 2013:3 2013:4 2014:1 2014:2 2014:3 2014:4 2015:1 2015:2 2015:3 8.7% 2.0% PRODUCTION (DOWN FROM 2.8% IN JUNE) 0.7% CAPITAL INVESTMENT (DOWN FROM 1.9% IN JUNE) 0.3% FULL-TIME EMPLOYMENT (DOWN FROM 0.8% IN JUNE) 1.5% EMPLOYEE WAGES (DOWN FROM 1.6% IN JUNE) 2.0% SALES (DOWN FROM 2.7% IN JUNE) 0.1% EXPORTS (DOWN FROM A GAIN OF 0.4% IN JUNE) 0.5% PRICES (DOWN FROM 0.8% IN JUNE) 0.7% INVENTORIES (DOWN FROM A DECLINE OF 0.1% IN JUNE) HEALTH INSURANCE COSTS (UP FROM 7.9% IN JUNE) 67.3% PERCENTAGE OF RESPONDENTS POSITIVE IN THEIR OWN COMPANY'S OUTLOOK (DOWN FROM 76.3% IN JUNE) Wisconsin Manufacturing Facts Manufacturers in Wisconsin account for 18.90 percent of the total output in the state, employing 16.36 percent of the workforce. Total output from manufacturing was $53.38 billion in 2013. In addition, there were 474,900 manufacturing employees in Wisconsin in 2014, with an average annual compensation of $66,844 in 2013. Employment and Compensation Manufacturing Employment (2014) (Percent share of nonfarm employment) Average Annual Compensation (Manufacturing, 2013) (Nonfarm Businesses, 2013) Sources: U.S. Bureau of Economic Analysis and the U.S. Census Bureau $40 $42 $44 $46 $48 $50 $52 $54 $56 $2,451 $2,668 $2,679 $2,810 $3,309 $4,033 $4,759 $6,076 $7,206 $7,943 Printing and related support activities Computer and electronic products Plastics and rubber products Motor vehicles and parts Electrical equipment and appliances Paper products Chemical products Fabricated metal products Food, beverage and tobacco products Machinery Figure 1: Wisconsin Manufacturing Output, in Billions of Dollars, 2000–2013 Figure 2: Top 10 Wisconsin Manufacturing Sectors, in Millions of Dollars, 2012 Manufacturing Output and Firms Manufacturing Output ($billions, 2013) (Percent share of total gross state product) Manufacturing Firms in Wisconsin (2012) Revised February 2015 $53.38 18.90% 7,970 474,900 16.36% $66,844 $46,247 Top 10 Wisconsin Manufacturing Sectors, in millions of dollars, 2012 Manufacturing Outlook Index Source: NAM Expected Growth Rate Over the Next 12 Months The National Association of Manufacturers' quarterly outlook survey shows optimism about the future peaked in December 2014. In September, the index hit its lowest point since the fourth quarter of 2012. Total output from manufacturing was $53.38 billion in 2013. In addition, there were 474,900 manufacturing employees in Wisconsin in 2014, with an average annual compensation of $66,844 in 2013.