Statistics have been released that show US manufacturing slowed down in February 2015 to a thirteen month low. That has sent shock waves through the economy and left many experts wondering if this is the shape of things to come. Does it make that much difference if manufacturing slows for a single month though? We thought it would be wise to find out.
The reasons for the slump in activity might not be as obvious as they seem. In fact, we were surprised to learn that at least part of the industry slowed down on purpose. After speaking to many of the manufacturing world’s top companies, we now know exactly why things seem to be winding down. Thankfully, it is not a sign that manufacturing will once again move overseas in the near future.
Reasons for the slump in production:
- Firstly, a lot of companies chose to wind down their operations during the month of February to make necessary changes to their processes. While so much emphasis on going green and dealing with pollution control, many company bosses decided the best time to make alterations would be at the start of the year. January is quite a busy month for the manufacturing industry, and so February seemed more suitable.
- The state of overseas economies has had a negative effect on production in the US. While exports to China and Middle-Eastern countries might be thriving, we’re doing less business with the UK and Europe. A reduction in requirements obviously leads to a reduction in manufacturing.
- Some of the largest firms operating in this industry decided that February would be the best time to deal with their expansion plans. It is almost impossible to keep production at 100% when you are in the process of moving your operations to new premises. We should be thankful they chose that month. At any other time, consumers could have suffered.
It’s important we don’t forget that only certain parts of the industry have been affected by the reduction. Some areas of manufacturing are thriving more now than they have done at any time during the last ten years. For instance, some of the top producers of ball bearing casters posted very high profits last year. That is a sign that manufacturing is not dead in the US. It’s just having a day off while the people in charge rearrange the way in which they do business.
Now that you understand the main reasons for the slump in production, you should feel a little more relaxed about what the future might hold. Even so, manufacturing was down in February, experts still predict growth of around 3% for the quarter. That figure is much higher than it was at the same time last year.
So, is there anything to worry about? Well, not just yet. So long as things pick up over the coming months as we expect, everything should be back on track pretty soon. Indeed, the changes made to deal with pollution control and going green could help to boost profits over time.