Brighter Industry Outlook Possible

April – 2016

The manufacturing outlook over the next few years is bound to be impacted by factors both anticipated and unforeseen. However, there is good reason to be optimistic over the near term as factors are coalescing in favor of growth, upturns in key indices, and favorable market forecasts.

“Manufacturing is closing the gap on pre-recessionary growth numbers – but is not there yet…” says MAPI Chief Economist Dan Meckstroth.

Taking a look at subsectors:

Aerospace: The aerospace subsector is “resilient and growing” according to a Boeing forecast. While the need to replace an aging fleet of commercial craft is imminent and looming, near-term demand is surging in developing markets, namely economic expansion in the Asia-Pacific region, according to Meckstroth. Airlines are realizing ever-increasing efficiencies both within the craft and on the ground reaching customers, key components leading to leaner operations and more profitability.

Favorable factors both domestically and on an international stage include increased commercial travel, lower fuel prices, and increasing orders within the U.S.

Within aircraft manufacturing ever increasing efficiencies and new materials and manufacturing technologies are driving growth.

Defense: Within the defense subsector, as the evening news can attest, threats to security continue to mount at the global level. As threats grow budget increases to meet those threats follow. And as a result defense budgets worldwide will signal more moderate growth – offsetting the relatively declines of the past few years.

“Seven straight years of increases in US new vehicle sales.

With an eye on bolstering and maintaining growth, defense manufacturers are not only creating cutting edge, next generation munitions, but are also retooling and learning how to maximize the capabilities of existing product lines while also maximizing manufacturing efficiencies.

Medical: The medical subsector has been steady and is now expected to increase. The “Boomers” are not getting younger. And, based on this aging population subset, the medical device manufacturing industry, coupled with the Affordable Care Act makes medical equipment manufacturing subsector a relatively safe manufacturing harbor for the foreseeable future.

Automotive: Pun intended when we say automobile manufacturers are moving further down the road from the recession when looking at forecasts of the Automotive Industry. 2016 is predicted to be a great year domestically with NADA forecasting 17.7 million new vehicle sales. A seventh straight year of increasing US new vehicle sales according to Steven Szakaly, chief economist of the National Automobile Dealers Association. Challenges exist in the global market regarding new automobile production with the uncertainty of the economy in China and slowing growth in Japan, Domestically, however, the outlook continues to look bullish. The US population is increasing and is bolstered by an economy that is in decent shape. Banks are relatively confident and lending money, employment numbers continue to rise and consumer spending is not in precipitous decline.

Within the automobile manufacturing industry demand for new features, along with mandated regulations in both safety and fuel economy, continue to drive product cycle renewal. Opportunities present themselves on the assembly line to refine efficiencies and impart new and cost saving manufacturing techniques.

In conclusion – manufacturing outlooks and sector forecasts are often cautionary tales with plenty of hedging and harbingers of long term caution. Yet, in the near term, there are signs on the horizon the next few years forward, within manufacturing, should quell fears, increase confidence, and be viewed with renewed optimism.