Drop in U.S. manufacturing output capacity less than expected

July 20, 2012

While many experts have noted that the U.S. manufacturing sector took a significant hit during the late 1980s and 1990s, due to the ever-present outsourcing trend that was thought to be created during this period, data may actually prove otherwise.

Supply Chain Digest reported that a chart that measures U.S. manufacturing output actually shows that the sector has, more or less, been on an upward tick over the past two decades. Though there were several dips in total output, the majority of the chart highlights how the industry has increased since 1990.

According to the news outlet, while many indices deal with overall industrial production, it is important to separate this data from figures that only relate to manufacturing output to get a more accurate view.

Despite what many people in the industry say, manufacturing output grew by roughly 58 percent during the 1990s, slowing down to a little more than 12 percent expansion from 2000 to 2008. These numbers prove that outsourcing did not damage the sector as bad as what is often said, and that manufacturing has been a key support of the entire U.S. economy for the past several decades.

Supply Chain Digest also reported that the 2008 recession did not have as much of a negative financial impact on the sector as initially thought, as the total capacity for the industry fell by less than 10 percent during this period.

Current manufacturing capacity is only down 5.3 percent from its peak in April 2008, showing that any losses that were incurred during the Great Recession have been mitigated by a change in business strategy or an uptick in demand.

This data highlights how U.S. manufacturing has actually withstood many of the outside influences that were said to drag down the rest of the economy, and given a number of new prospects, the industry could be back with a vengeance.

Forbes reported that companies like Apple, that moved much of their manufacturing work overseas, are actually bringing operations back to the U.S.

According to the news outlet, many of the components for the company's new iPhone are being manufactured in the U.S., despite the fact that these devices are assembled in China.

"We do as many of these things [in the United States] as we can," Apple chief executive Tim Cook told Forbes. "And you can bet that we’ll use the whole of our influence to do this."