Outlook on U.S. manufacturing: Optimistic, yet challenging

As we have previously reported, the slowdown in the manufacturing industry has begun. This presents new challenges for manufacturers, not because there is little in the way of jobs, but that there is an excess of supply. Businesses with effective enterprise resource planning software such as Microsoft Dynamics NAV and other services can stand to gain a lot by making adjustments to improve efficiency while minimizing the need to cut costs through the lack of work. Still, there is hope in the industry through other aspects, including hiring talent and consumption shifts among businesses and consumers.

Everything slowing
Recently, Markit released its preliminary Purchasing Managers Index for the month of April. Along with giving a final reading on March, it showed a decline in the total PMI score of 54.2 from 55.7. While there is still growth in the sector, it's slowing down. The most significant numbers worth noting in this regard are factory output, which contributes to the overall economic contribution of the industry. The numbers there showed a significant month-to-month decrease from 58.8 to 55.4. Related to that was a drop in new orders, which went from 57.2 to 55.4.

Part of the reason this may be happening is due to factors that haven't changed in the last couple months: a weak European market, the strengthening of the U.S. dollar affecting the purchasing price of items overseas and a slowdown in the Chinese economy, as well as some international turmoil.

People looking
At the same time, some companies are planning ahead and hedging on getting top-quality talent in order to get results. According to the Orlando Sun-Sentinel, manufacturing employment has grown particularly strong in areas such as central and southern Florida. The newspaper cited CareerSource Broward, which said that manufacturing jobs have risen 2.6 percent over the last year in Broward County, 1.9 percent in Palm Beach County.

Part of the draw of manufacturing jobs in the area has been the pay factor, which is becoming increasingly important for people looking to find a decent industry to start a career in. Wages in the sector were higher than average in both Broward and Palm Beach Counties. While these companies may have workers starting low, with training on machines and software such as mobile warehouse management and barcode scanning, their pay becomes significantly higher over time.

Customers buying
At the same time this is happening, there is still a high demand for American-made products, which is helping maintain the manufacturing industry's growth. Combined with changes in overall labor costs that puts the country within striking distance of China, manufacturers in the United States are definitely looking to grow, even if it's slower than usual.

Interestingly, this strengthening isn't merely limited to a close proximity to actual customers. There is also an increase in efficiency in several different aspects of manufacturing, including inventory management and quality control, as noted by Bank of the West. These factors, combined with a strong Microsoft Dynamics implementation, can help manufacturers improve productivity on different levels, including business intelligence and mobile ERP.

To discuss Microsoft NAV solutions for manufacturing, join the Microsoft Dynamics NAV for Manufacturing LinkedIn group.