Signs of the Recovery Begin to Bloom
By Pat McGibbon, Vice President – Strategic Analytics at AMT – The Association For Manufacturing Technology, which owns IMTS – The International Manufacturing Technology Show
Many key economic indicators are showing strong, positive signs for our industry. The Purchasing Managers’ Index moved up for the sixth consecutive month, suggesting continued expansion of the manufacturing sector. February’s 57.7 is the highest level for the index since August 2014. Another key growth indicator for the manufacturing technology market is the expansion of cutting tool — the consumables that go onto the capital equipment. Monthly cutting tool shipments for the last quarter have posted better numbers than in the same quarter for 2015 and 2016, pointing to a definitive trend upward in the cutting tool market.
Meanwhile, the capacity utilization rate for durable manufacturing grew at an annualized rate of 7.8 percent, thus edging manufacturing closer to a utilization rate that will test older equipment’s durability and require significant demand for new replacement machines and most likely capacity expansion as well.
Activity across the market is picking up. USMTO data points to a continued, fast-paced expansion of the Southeast region’s demand for manufacturing technology, as well as a broadening breadth of the market with no one industry dominating the region. Eight years ago, automotive plants and expansions were the driver in the region. Then fabricated products, such as HVAC, led to growth six years ago, yielding to Boeing’s move into Charleston with its Dreamliner campus, which brought along a significant portion of its supply chain. Today the announcements of new capital spending in the region include Honda’s new aerospace plant for business jets, Volvo’s new plant for cars, Braun Medical’s IV product solutions manufacturing facility, and the recently opened NOXON Automation factory, the company’s first in the country. While the North East Central remains the largest region with respect to orders, the Southeast is clearly the fastest-growing region for new manufacturing businesses.
We are seeing some strong commitments by major customer sectors to expand their U.S. production capacity. Toyota announced in January that they would invest $10 billion in new plants and expansions of current facilities in the next five years. The company backed that pledge this past month by announcing a $600 million expansion of their Princeton, Ind., facility. Pratt & Whitney has recently announced a $400 million expansion of its Columbus, Ohio, plant that will add hundreds of new jobs in the facility. Gestamp announced that it is spending hundreds of millions of dollars to expand its Union County facility in South Carolina to increase capacity in its automotive parts business, which will create 130 jobs.