Manufacturing & The Economy
“Factories will fare better in 2013 than they did last year, but that’s a pretty low hurdle to meet. Manufacturing production finished 2012 with a gain of 2.7 percent over December 2011. That might sound decent, but the prior years had shown gains of 7.5 and 4.7 percent. Last year’s increase would also sound better if we were nearing full capacity, but capacity utilization remains below normal,” writes Bill Conerly for Forbes magazine.
“Chemicals will gain ground this year despite flat activity last year. Cheap natural gas will give the industry a competitive boost on global markets. Also gaining from falling natural gas prices will be primary metals, a sector that slumped early in 2012 with the weakening global economic growth rate as well as increases in production capacity abroad. North American metal producers will gain worldwide market share this year. Fabricated metal products will have a small boost from a drop in primary metals prices that cheap energy costs will trigger. Stone, clay and glass companies will benefit from both cheap natural gas as well as a housing construction rebound. Oil and gas refining will grow in unit volume, though product prices will decline in this energy boom.
“Manufacturers who produce mostly for the business market—machinery and portions of electrical equipment and computers—will find softly growing sales. Most companies see little need to grow their capacity. Their spending on new hardware will focus on lowering operating costs through greater efficiencies in the use of labor and energy.”