The U.S. manufacturing industry is now growing at its fastest pace in two-and-a-half years, according to The Associated Press. New technology, such as warehouse management systems, has helped production speed up, as well as hiring and the number of orders received. A recent report from The Institute for Supply Management showed the index of manufacturing activity grew to 57.3 for November, up from 56.4 in October. While any number over 50 signals growth, this is the highest number since April 2011.
Hiring measured some of the biggest growth in the industry, as the report found it to be at its highest level in 18 months. Overseas demand is has improved as well due to moderate recoveries in Europe, Japan and China. This is now the sixth straight month of gains across the industry after running into a tough spot due to the economy previous to that time span.
Joshua Shapiro, chief U.S. economist at MFR Inc., told the AP it is still difficult to discern a clear trend due to weaker factory activity. It may be too early to say the industry is in full recovery, but it is good sign to see some life across manufacturing.
Saving through new technology
Jessica Leber wrote on Fast Company that technology in the manufacturing industry has been and will continue to play a huge role in its recovery. One reason is due to the reduction of the cost of human labor. Many organizations have been offshoring to China or other countries, but with the ability to adopt technology in-country and have fewer employees running operations, there may be a less expensive price tag on domestic production.
The cost of capital investments is also cheaper than it has been in past days, as companies can more easily make products at the point of need and stay competitive. New technology also means spending less energy on operations, something that will definitely save on costs within the industry.
“Manufacturers in energy-intensive industries like cement and chemicals have celebrated the shale gas revolution, which has brought cheap domestic energy and lowered the cost of their operations,” Leber said. “But it’s not just brute force drilling that could change the energy calculus for many companies. New biological methods of manufacturing materials or compounds could lower the amount of energy that is required in the first place in some sectors.”
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