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 the manufacture of 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 12.3 million workers and generate $7.1 trillion in annual revenue, according to government sources.

    • The manufacturing sector represents 16% of the nation's Gross Domestic Product (GDP) and employs 10% of the country'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
                                Industry Forecast
                                US Manufacturing Sector Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                May 20, 2024 - Job Growth Flat Amid Record High Wages
                                • Employment by the US manufacturing sector was flat in April compared to a year ago, while average wages at manufacturing companies extended their steep and steady climb, rising 5.7% in April over the same period to a record high of $27.60 per hour, according to the latest US Bureau of Labor Statistics data. Seasonally-adjusted new orders for manufactured goods rose 1.67% in March compared to a year ago, with the rise in new orders for nondurable goods outpacing durable goods orders. Overall, manufactured goods shipments increased 1.5% year over year, according to the BLS.
                                • The National Association of Manufacturers 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.”
                                • According to newly released Census Bureau figures, US capital expenditures for robotic equipment totaled $12,960 million (not statistically different than 2021) and accounted for 1.1% of total equipment expenditures in 2022. The manufacturing sector was the largest investor, accounting for more than half (56.2%) of all robotic equipment expenditures – nearly $7.3 billion that year. Amid a stubborn labor shortage, manufacturers rely increasingly on automation, including robots, for some tasks to achieve greater productivity. Also, collaborative robots (aka "cobots”) that work alongside humans are becoming increasingly popular with smaller manufacturers that cannot afford expensive industrial robots.
                                • Some manufacturers struggling to fill positions are finding that offering flexible schedules helps to recruit and retain workers, The Wall Street Journal reports. In a move away from traditional schedules – rigid 12-hour shifts – some manufacturers are allowing employees to choose their start times and shift lengths, making jobs easier to fill. The aging US population and reluctance among younger workers to pursue manufacturing careers are shrinking the pool of available workers. Indeed, US factories are hiring around six people for every 10 openings posted each month, compared with eight or nine in the five years before the pandemic, Labor Department data show. To attract new sources of labor, manufacturing firms like Minnesota-based Land O’Lakes are rolling out “flex work” programs that are proving popular with people with young children, aging parents, and other obligations that make it hard to work traditional employer-set shifts.
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