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Manufacturing & The Economy

Study: Manufacturing Demands High-Level Skills Equal to the Task

Given that globalization, technological advances, and changing business practices are dramatically transforming employment and operations across the board in manufacturing, U.S. companies, government, and educators should partner to strengthen workforce training and improve innovation and productivity to ensure manufacturers are “making value” for customers, says a new report from the National Academy of Engineering.

“Advancing skills and creating skilled jobs are the best bet to aid the workforce that has been left behind by changes in manufacturing and the broader economy,” said Nicholas Donofrio, former executive vice president of innovation and technology of IBM, and chair of the committee that conducted the study. “Access to higher education and training, including certification programs and flexible pathways to degrees, is especially important for lower-skilled workers, who are most affected by the changes.”

Fourth Quarter GDP Revised Downward to 2.2%

Real GDP increased at an annual rate of 2.2% in the fourth quarter of 2014, according to the second estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 5.0%. In the advance estimate, the increase in real GDP was 2.6%. With the second estimate for the fourth quarter, private inventory investment increased less than previously estimated, while nonresidential fixed investment increased more.

The deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in imports, a downturn in federal government spending, and decelerations in nonresidential fixed investment and in exports that were partly offset by an acceleration in PCE, an upturn in private inventory investment, and an acceleration in state and local government spending.

ISM: Manufacturing Growth in Feb. Lower Than Expected

The February PMI® registered 52.9% (53.0% estimated), a decrease of 0.6% from January’s reading of 53.5%. The New Orders Index registered 52.5%, a decrease of 0.4% from the reading of 52.9% in January. The Production Index registered 53.7%, 2.8% below the January reading of 56.5%. The Employment Index registered 51.4%, 2.7% below the January reading of 54.1%. Inventories of raw materials registered 52.5%, an increase of 1.5% above the January reading of 51%. The Prices Index registered 35%, the same percentage as in January, indicating lower raw materials prices for the fourth consecutive month. Comments from the Institute for Supply Management (ISM) panel express a growing level of concern over the West Coast dock slowdown, negatively impacting exports and imports and requiring workarounds and added costs.

NAM Monday Economic Report – March 2, 2015

While manufacturers remain mostly optimistic in their outlook, we have seen softness in a number of recent economic indicators. Slower economic growth internationally, a stronger U.S. dollar, reduced crude oil prices and the West Coast ports slowdown have been cited as reasons for this weaker-than-desired performance. Along those lines, real GDP growth in the fourth quarter was revised lower, down from 2.6 percent to 2.2 percent. In addition, surveys from the Dallas, Kansas City and Richmond Federal Reserve Banks all reflected decelerated levels of new orders and exports. Most notably, Texas manufacturers have been adversely impacted by the sharp drop in petroleum prices, dampening demand throughout the energy supply chain and for the larger regional economy. Yet, even in the Dallas report, respondents continued to be more positive than negative in their expectations for sales, production, employment and capital spending over the next six months.

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Michael Wessel & Dan Slane to U.S. Manufacturers: 'The Chinese Don't Want You Any More'

In a recent op-ed for Manufacturing & Technology News, Michael Wessel and Dan Slane warn about what some U.S. firms have already discovered. Namely, that China is becoming more hostile to foreign manufacturers. Now that they have acquired a sufficient amount of IP and marketing from us, Wessel and Slane write, a series of sweeping new Chinese anti-trust laws have been used to selectively target foreign companies.

"The law is being used to selectively control prices of foreign-made products and services and to demand outrageous concessions before approving mergers."

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