Traditional Manufacturing’s Future | A Shrinking Industry
Look at numbers for the manufacturing economy over the past decade and they’ll paint a picture of one of the most prolific times in the history of American industry. Dive a little deeper and things get a little foggier. While manufacturing is riding high right now, several sectors within the industry are rapidly consolidating. A few are all but gone from the landscape of American manufacturing. What’s really going on, and where is the industry headed?
Industry expert and author Michael Collins recently published an article in Industry Week diving deeper into the state of the manufacturing industry. Instead of looking at the economy as a whole, he dove into individual sectors of manufacturing, by way of the 38 North American Industry Classification System (NAICS) codes.
Collins’ findings paint a picture quite the opposite of what many might expect.
The shrinking manufacturing economy
Despite a decade of manufacturing growth since the 2008 recession and the lowest unemployment rates in more than 50 years, traditional manufacturing is shrinking. Collins’ data shows contraction in employment and total establishments across 37 of the 38 NAICS codes. For a few of them, the situation is dire.
- Communications Equipment, Cut and Sew Apparel, Magnetic Media, Paper Production, Pottery and Ceramics, Print Machinery, Textile Fabrics, and Textile Furnishings have all seen a 50% or more drop in employment since 2002.
- Consolidation has ravaged core sectors including Ferrous Foundries, Industrial Molding, Millwork, and Tool and Die — all of which are down 30-45%. The landscape of available operators is smaller than ever.
- All but 10 of the 38 sectors of the manufacturing economy have lost more than 10,000 total jobs since 2002, with three of them posting losses of more than 100,000 jobs (Household Furniture, Motor Vehicle Parts, Semiconductors).
Collins contributes the contraction to globalization — the ability to get more affordable parts from elsewhere in the world — as well as the lack of skilled laborers available domestically. His assertions would appear to be correct and are further explored in his book, Saving American Manufacturing.
A dim outlook
With the manufacturing economy headed into an apparently rocky time, questions about the true health of the economy are coming to light. A look at predictions from the U.S. Bureau of Labor and Statistics (BLS) is less than reassuring. Projecting to 2026, BLS numbers show American manufacturing losing another 736,000 manufacturing jobs.
There are only 255 major appliance manufacturers left in the U.S., 474 rubber manufacturers, 137 tire fabricators, and just 255 paper mills. How long until these numbers decline to double digits, or worse, drop to zero? As domestic manufacturing headwinds mount, the answer would appear to be “only a matter of time.”
What can manufacturers do?
The solution to salvaging manufacturing isn’t a simple one, and it’s not merely about costs alone. It’s about attracting skilled workers to manufacturing, increasing the ability to produce quality goods at affordable prices, and competing with emerging markets striving to do the same. Tightening costs through digital investments and supply chain management are top priorities, as well.
The coming years are a pivotal time for manufacturing. It’s likely several traditional sectors will continue consolidating, while others will find the recipe for success through advancements in Industry 4.0. When 2026 arrives, the landscape for manufacturing is likely to be very different. What it looks like won’t be fully known until then.
