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Made in the USA: U.S. production trends to watch

April 30/May 7, 2018: Volume 33, Issue 23

By Lindsay Baillie

Approximately eight in 10 American consumers say they would rather buy an American-made product than one that’s imported, according to a recent Consumer Reports survey. This is great news for manufacturers already in the U.S. manufacturing game as well as those just now entering. What’s even better is the same survey found that over 60% of consumers are willing to pay 10% more money for American-made goods.

U.S. manufacturing is important to the U.S. economy because it not only has the potential to increase business growth, but also add value to the power of the country’s economy and is an essential component of gross domestic product (GDP).

When looking at U.S. manufacturing trends, domestic production was actually a larger component of the U.S. economy than it is today. Products made in the U.S. drove approximately 11.7% of economic output in 2016. Back in 1970 it was 24.3%. This change, experts say, is the result of multiple factors, including a shift to a service-based economy, growth in the healthcare sector and the high U.S. standard of living—to name a few.

Despite this decrease, U.S. manufacturing is currently the largest in the world, producing 18.2% of the world’s goods, according to Kimberly Amadeo, author and president of worldmoneywatch.com. While U.S. manufacturing is still on the rise, it is continuously threatened by high operating costs, which provides an advantage to other countries. For example, China is currently producing 17.6% of the world’s goods.

One major benefit to producing goods in the U.S. is it is easier for manufacturers to reach the North American market, proponents say. In fact, according to a survey by AlixPartners, 37% of manufacturers prefer the U.S. precisely for this reason. Interestingly, that percentage is the same for suppliers who prefer Mexico.

Looking ahead, manufacturing is forecast to increase faster than the general economy, according to Amadeo. Production is estimated to grow 2.8% in 2018 and is expected to slow to 2.6% in 2019 and 2.0% in 2020.