US Manufacturing Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 286,493 manufacturing establishments in the US produce goods for direct consumption and use in manufacturing other products. Manufacturing operations use machinery, computer systems, and workers to form, modify, assemble, test, and package goods. Major customers include other manufacturers, distributors and wholesalers, retailers, exporters, and end-consumers.
Competition From China
US manufacturers compete for market share domestically and internationally with producers in other nations – most notably China.
Environmental Regulation Tightens
Manufacturers are required to meet environmental regulations to protect air, water, and soil.
Industry size & Structure
The manufacturing sector is comprised of about 286,493 establishments that employ 12.9 million workers and generate $7.1 trillion in annual revenue, according to government sources.
- The manufacturing sector represents 10.3% of US Gross Domestic Product (GDP) and employs 8.3% of the nation's workers.
- The sector is fragmented, with the 20 largest manufacturing firms representing just 18% of revenue
- In addition to employer establishments, the manufacturing sector has 354,200 owner-operated establishments with no employees. Subsectors with the highest numbers of nonemployer establishments are food (14.3%); fabricated metal (11.3%); printing (7.9%); apparel (7.4%); and wood products (7.2%). The owners of nonemployer firms typically perform the work and may outsource support functions like marketing and accounting.
- The manufacturing sector added about 14,350 establishments in 2022, which equals about 5% of existing establishments, according to the Bureau of Labor Statistics.
- The manufacturing sector is forecast to shrink its employment base by 0.3% overall in 2021-2031, which is much lower than the national average growth of 5.3% for all jobs, according to the Bureau of Labor Statistics.
- Transportation equipment manufacturing is the largest manufacturing industry in the nation and 16 states, while food manufacturing leads in 19 states and the District of Columbia.
Industry Forecast
US Manufacturing Sector Industry Growth
Recent Developments
Jan 20, 2025 - Tariffs to Worsen Manufacturing Labor Shortage
- President Donald Trump's tariffs threats, if realized, could worsen the existing labor shortage in the US manufacturing sector, Inc reported in December. If, as the president has suggested, 25% tariffs on exports from Mexico, Canada, the European Union, and other US trading partners, result in largescale reshoring of jobs to the US, it would add to the tally of US factory jobs that currently go unfilled. According to data cited by The Wall Street Journal, the number of available manufacturing jobs that went unfilled each month held steady at about 100,000 throughout 2024. Moreover, the domestic labor pool may not be able to fill millions of new positions expected to be created in the next few years, Inc writes. Trump’s promise to deport undocumented workers and restrict immigration would only exacerbate the current labor shortage, some business owners say.
- Orders of manufacturing technology totaled $448.8 million in November, up 16.8% over October and 12.4% compared to a year ago, according to the latest US Manufacturing Technology Orders (USMTO) report from the Association for Manufacturing Technology (AMT). Year-to-date orders reached $4.18 billion in November, down 5.7% compared to the first 11 months of 2023. While manufacturing technology orders got off to a slow start last year, they picked up in September and ended 2024 on a strong note, according to an AMT press release. The association noted that orders picked up following the International Manufacturing Technology Show in Chicago in September. Because manufacturers typically deplete their capital budgets by year’s end, AMT expected orders in December could be high, capping an irregular year.
- US manufacturers have much to lose if a trade war erupts between the US and its largest trading partner Mexico, The New York Times reports. During his campaign, President Donald Trump vowed to slap 25% tariffs (or higher) on all goods from Mexico unless it stopped the flow of migrants and drugs to the US. While Mexico depends heavily on trade with the US – exporting some 80% of its goods to America – it accounted for nearly 16% of overall US exports in 2022, according to the Office of the US Trade Representative. Tariffs on Mexico and China, another Trump target, would have widespread ramifications for manufacturers, making it more expensive to produce goods that use foreign components. And if other countries respond with retaliatory tariffs, it could also make it more expensive for manufacturers to export goods to foreign markets, according to Manufacturing Dive.
- Employment by manufacturing companies dipped 0.5% in November compared to a year ago, while average sector wages rose 5.3% over the same period to a new high of $28.36 per hour, according to the latest US Bureau of Labor Statistics data. Average sector wages have risen 22.5% since November 2020 and are up 3.9% year to date. While manufacturing wage inflation has shown no signs of stopping, job growth has cooled amid a slowdown in factory activity in 2024. In November, only three manufacturing industries reported growth – Food, Beverage & Tobacco Products; Computer & Electronic Products; and Electrical Equipment, Appliances & Components – while 11 reported contraction, according to the ISM Manufacturing PMI.
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