Friday, May 27, 2016

Our “State of the Union Address” on U.S. and Michigan Manufacturing

Our “State of the Union Address” on U.S. and Michigan Manufacturing

A Bird’s Eye View - National Perspective

The Bureau of Labor Statistics reported there were 12,293,000 employees holding manufacturing jobs, accounting for nine percent of the workforce in the United States in March 2016. These employees earn an average hourly wage of $25.72, equivalent to more than $50,000, not including benefits or overtime pay.

Manufacturing contributed $2.17 trillion dollars to the United States economy, a sizeable increase since the second quarter in 2009 when manufacturers contributed only $1.70 trillion. This represents a steady 5 percent compound annual growth rate. By comparison, the U.S. economy has grown at less than a 3 percent rate from its inception. For every $1.00 spent in manufacturing another $1.40 is added to the economy. This is the highest multiplier effect of any economic sector!

The most recent economic data indicates 98 percent of the 256,363 U.S. manufacturers are identified as small businesses with less than 500 employees. In fact, three quarters of these businesses have fewer than 20 employees. The remaining two percent are mid- to large-size manufacturers. This information underscores the importance of small manufacturers to the overall health of the U. S. economy.  

Almost two-thirds of manufacturers are organized as pass-through entities such as S-corporations or partnerships. Manufacturing additionally supports an estimated 18.5 million jobs in the United States. Over the next decade, it is estimated that 3.5 million manufacturing jobs will likely be necessary to meet growing labor demand.

An Update on the Great Lakes State

Michigan manufacturing accounts for 19.02 percent of the total production output and employs 13.78 percent of the state workforce. In 2014, there were 574,500 manufacturing employees in the state of Michigan.

Manufacturing contributed approximately 20,000 jobs per year during the past three years. Forecasters at the University of Michigan see the pace of growth for this sector slowing to 5,000 new jobs per year during 2016 and 2017. The deceleration could be evidence of a more mature economy and slower, but more sustainable, growth in manufacturing output compared with today.

Michigan is still recovering from the 2008 recession and is expected to improve through increased auto sales. Unemployment rates are expected to drop below 5 percent in the second half of the year. This is significant as 5 percent is considered to be the “natural” rate of unemployment. Put another way, a 5 percent rate of unemployment is the structural minimum in the United States. Michigan will continue to grow manufacturing jobs in the next two years but at a much slower pace, according to a U-M forecast.

Manufacturing is expected to add only about 10,000 jobs through the end of 2017, down from the 20,000 annual average experienced the past four years. Those jobs will be mainly assembly, machining and other hourly, factory positions.

Manufacturing is still Michigan's fourth-largest industry, employing more than 600,000 people. Production jobs in manufacturing still pay relatively well, particularly in the auto sector. Manufacturing jobs also have a higher employment spin-off effect than most other industries. Experts say a new job in an auto assembly plant can result in the creation of six or seven new jobs in other parts of the economy.

The Michigan Manufacturing Technology Center is a strong supporter of the manufacturing community. To learn more about our programs and services, click here.


Since 1991, the Michigan Manufacturing Technology Center has assisted Michigan’s small and medium-sized businesses to successfully compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.mmtc.org.

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