Manufacturing remains a strong focus to the American economy. However, the industry relies heavily on making proper investments. Without capital going into the right places, there is little potential for companies to grow. This is especially the case with IT infrastructure and utilizing ERP software such as Microsoft Dynamics NAV 2015. By expending money on the right tools, manufacturers can stand to be more efficient in regular operations, building up profit margins. Still, the recovery from the general manufacturing downturn compounded by the Great Recession has impacted the overall expansion of the sector. However, recent developments in investment indicate that the future for firms that produce goods in the United States is looking bright.
More machines, more orders
The big story for many manufacturers is that they're buying more machine tools once more. In fact, the scale in which this development is occurring is much higher than it has been in the last 15 years, according to a study conducted by Gardner Research in conjunction with Modern Machine Shop Magazine. The amount of investment in equipment such as milling machines, lathes and additive printers is expect to reach $8.8 billion in 2015. Not only would that be an increase of over 30 percent from 2014, but would put the nation as the leading consumer of this hardware over the likes of China and Germany.
There are several factors that are helping this growth. For one thing, capacity utilization has been growing at a fast clip, with the odds likely that industry output will be at around 80 percent of its maximum limit over the course of the year. Correspondingly, production has been at its highest level in U.S. history, which corresponds with a Such a high level usually correlates with increased machine tool usage and purchases. On top of that, the monetary base of the Federal Reserve, which controls the dollar, has quintupled since 2009 due to quantitative easing measures. While that has ceased, the practice has led the spurring of machine tool consumption by about two years.
There are other factors that have affected investments as well. Auto parts manufacturing output was at 88 percent capacity in July 2014, the highest in 25 years. Combined with new car lineups by several manufacturers, production is set to take off, which will lead to greater investments in machine tools and other infrastructure like a Microsoft Dynamics implementation. Similar developments have been noted in the aerospace and medical device industries as well.
Foreign money leads
There are investments being made as well from the foreign front as well. The Commerce Department has noted the rise in use of its Hollis Manufacturing Extension Partnership program with foreign direct investment. With every dollar invested in the federal government to an MEP, $19 of sales is generated, resulting in $2.2 billion in revenues overall. These developments have led to several distinct partnerships through FDI, with local MEP programs facilitating as a bridge. An example of this is with Igus Bearings, Inc., a German manufacturer that has set up a partnership with a large shop based in East Providence, Rhode Island through the Polaris MEP in nearby Providence.
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