Hopefully this trend can continue and the manufacturing industry can stay strong through this recession. Manufacturing is a vital part to our nations economy and I hope they are able to continue to do business overseas and continue to improve business, which in turn can lead to greater employment.
Friday, October 21, 2011
US manufacturers are making one thing - profits
Recent data shows that U.S. manufacturers are seeing an increase in profits while we still work to get through this recession. Since their low point in 2008, the manufacturing industry has seen new light and profits have been on an incline ever since. After tax profits total nearly $159.7 billion which is three times what is was in the second quarter only two years ago. One of the keys to the success in the industry has been the ability to produce and sell goods in various countries. Another contributor to the success has been the U.S. dollar and how weak it currently is. Weaker dollar has led to more exports which has helped to bring in new profits to businesses. Current employment in the U.S. is at 11.7 million which is two million fewer than in 2007, however, is better than the 11.5 million in 2009.
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While the profits are great unless those companies feel their profits will continue into the future they will not expand and we our natural state of unemployment may become the current levels.
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ReplyDeleteAlthough it is great that manufacturing companies are earning profits again, it is not helping the unemployment situation. Even though they have had profits, their hiring has not increased greatly. This could be due to the fact that they are worried they will not continue to have profits, or that they think it will be more beneficial for their company in the long run to invest in more capital as opposed to hiring more labor.
ReplyDeleteI think that article tells only half of the story. The increased profits may be due also to the rise in technology, which would require less and less workers. It seems that places that rely on manufacturing such as Detroit have been hit harder by the recession. These manufacturing companies are trying their best to make the best profit, which means cutting down on workers and increasing productivity from them. If these companies do not need the extra workers they needed before, then those jobs in manufacturing must be transitioned to another sector, which has a lag, leading to a higher unemployment rate. The U.S. has been becoming a service industry and even the manufacturing jobs that are still available are slowly moving to robots. The rise in profits might actually mean rise in unemployment, especially in the manufacturing sector.
ReplyDeleteThis situation reminds me of what happened to farming in previous decades. We produce double to tripe what we produced in 1950 and with a much smaller work force. Why? Tremendous improvements in productivity. Seems like the same thing in manufacturing as Andrew said above. A massive retraining initiative would help lessen the lag time for manufacturing workers to find jobs in other sectors while also creating jobs in and of itself.
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