Analysis by: John Schulz
Analysis of: U.S. Factories Buck Decline
Published at: online.wsj.com
American manufacturing, long written off as a economic loser, is making a comeback. For the first time since 1997, the number of manufacturing jobs grew last year by 1.2 percent, of 136,000 new jobs. And it's not a one-shot deal. Economists are predicting a 2.5 percent gain, or 330,000 new manufacturing jobs, this year.
This may be the best thing to happen to the trucking industry since economic deregulation in 1980. The number of net U.S. manufacturing jobs increased last year for the first time since 1997. Manufacturing jobs grew by 1.2 percent, of 136,000 jobs, and that growth is expected to more than double this year. As one who has never bought into the Great Globalization Theory, I welcome this news. And so should everyone connected with the trucking industry.
These are jobs that will directly affect freight volume, and thus rates and profitability, in the industry. As the offshoring craze begins to show cracks -- anybody else had an offshore call center experience worthy of "Saturday Night Live?" -- U.S. manufacturers are beginning to see value in keeping plants here.
Economists for Moody's Analytics and IHS Global Insight insist this is not a one-shot deal. They expect this trend to continue at least for the beginning of this decade.
Ford, Caterpillar, and Whirlpool are some of the names taking advantage of tax breaks, excess capacity and infrastructure and other built-in advantages of employing a U.S.-based work force.
As trucking volume is roughly divided 50-50 by retail and industrial, any increase in industrial utilization in this country is good news for the big industrial truckload carriers such as Werner Enterprises, Schneider National, J.B. Hunt and many others. LTL firms such as beleaguered YRC Worldwide, Con-Way and FedEx Freight also figure to gain from this growth.
Of course, it will take more than a year or two of manufacturing increases to get the U.S. economy out of its doldrums. More than 144,000 factories -- that's factories, not jobs -- were lost during the George W. Bush administration. Manufacturing now accounts for merely 11 percent of U.S. total economic output, compared with 27 percent in 1950.
Entire domestic industries -- furniture and footwear come immediately to mind -- have been wiped out because of cheap labor and non-existent environmental regulations in places such as China.
With Chinese president Hu Jintao in the Nation's Capital for talks with President Barack Obama, I would like to submit a question to his excellency: there will be no U.S. middle class to buy your cheap Chinese-made goods if you continue your mutually destructive economic path. There, I said it.