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
Jul 20, 2024 - Wages Keep on Rising
- Employment by manufacturing companies was unchanged in June compared to a year ago, while average industry wages rose 5.5% over the same period to a new high of $27.77 per hour, according to the latest US Bureau of Labor Statistics data. US manufacturers are taking a more cautious approach to hiring this year amid economic uncertainty, a greater focus on retaining current employees, and wage pressures, among other factors. The eight manufacturing industries reporting growth in June, as measured by the Manufacturing Purchasing Managers Index (PMI) — in order — are Printing & Related Support Activities, Petroleum & Coal Products, Primary Metals, Furniture & Related Products, Paper Products, Chemical Products, Miscellaneous Manufacturing, and Nonmetallic Mineral Products.
- China's monthly trade surplus reached a record $99 billion in June, prompting concern among its trading partners that a glut of Chinese manufactured goods would harm their own industrial output and economies, The New York Times reports. China’s trade surplus with the US rose to nearly $32 billion in June, up from $29 billion a year earlier, as China exported more and bought less, according to NYT. Meanwhile, China’s imports shrank as Chinese companies and households took a more cautious approach to spending. As Chinese consumers pull back, China is looking to international markets to keep factories humming. Governments in the US, the EU, Brazil, India, Turkey, and elsewhere are responding by raising tariffs or imposing new ones on manufactured goods from China. Factories in China already make almost a third of the world’s manufactured goods.
- In June, the National Association of Manufacturers launched a campaign to extend the pro-growth tax policies in the 2017 Tax Cuts and Jobs Act, set to expire at the end of 2025, according to a press release. The campaign seeks to preserve 2017's tax reform in its entirety to avoid economic damage to the manufacturing sector. Should Congress fail to extend the Act, NAM says manufacturers would face tax increases that would cost jobs and stifle growth and innovation. Notably, small manufacturers organized as pass-through businesses that pay tax at the individual tax rates face increases in their income taxes and a loss of tax reform’s 20% pass-through deduction. Investments in manufacturing growth will be delayed without action to restore immediate R&D expensing, accelerated depreciation for capital equipment purchases, and a pro-growth interest deductibility standard. Some 94% of manufacturers believe Congress should act to prevent these tax increases, says NAM.
- The NAM has published “Working Smarter: How Manufacturers Are Using Artificial Intelligence,” detailing use cases for AI in manufacturing, according to a May press release. The whitepaper addresses how AI can improve efficiency, product development, safety, predictive maintenance, and supply chain logistics. Key findings include that AI tools are being broadly adopted across the industry and are advancing modern manufacturing; manufacturers are consuming, developing, and deploying AI throughout their production processes; and the fact that manufacturing companies are implementing and testing AI programs in a way that keeps workers as the central drivers and decision-makers for AI processes or products. Beyond generative AI, manufacturers have been developing and deploying intelligent systems and AI technology in the form of machine learning and deep learning, natural language processing, machine vision, digital twins, and robotics, which fall under the heading of “advanced manufacturing” or “Manufacturing 4.0.”
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