American manufacturing shrank for the first time in three years, according to a report from trade group Institute for Supply Management (ISM). It announced on July 2 that its measure of manufacturing activities dropped to 49.7. This index, called the Purchasing Managers Index (PMI) is calculated by looking at five areas: new orders, production, employment, supplier deliveries, and inventories.
The number just released is the lowest the PMI has been since July 2009. In May, the figure was 53.5. The “Great Recession” officially ended three years ago in June 2009 when manufacturing numbers went above 50 and stayed there, despite persistently high unemployment.
The U.S. Census Bureau Report on Manufacturers’ Shipments, Inventories, and Orders is hard to compare with the ISM report. It has not published figures for June yet, but its preliminary report for May showed anemic growth, 1.1 percent.
Certain cities are bucking the trend, and the keys to manufacturing success include education, infrastructure, and cooperation, according to one expert.
Hank Hyatt is vice president of economic development with the Greenville Chamber of Commerce in South Carolina. He credited both history and active adaptation to modern conditions for the city’s success. He said, “We have a long history of manufacturing. We have strengths. A long time ago, Greenville was the textile-manufacturing center of the world. We’ve had a continuous energy around manufacturing for a long time.”
The most important thing is the workforce. Greenville has a “good technical college system. There’s a lot of training hand-in-hand with manufacturers in the region. They are aligned with the needs of industry,” Hyatt said.
The technical colleges and universities planned ahead and developed curricula that supported business needs. “Clemson University created the International Center for Automotive Research,” said Hyatt. “They talked to BMW and asked them, ‘What are your most critical needs?’ They needed a pipeline, a supply of talented engineers to build the car of the future.”
He said the communication between education and industry led to “research partners, academic partners, [and] key faculty that bring graduate students,” all contributing deep expertise to keep the local economy vibrant.
“One of the good things is the international flavor here,” with more than 200 international companies in the area. That helps them recruit talented people, according to Hyatt.
Other good news came as the gloomy figures were announced. Airbus will open a new manufacturing facility in Mobile, Ala., on the Gulf of Mexico. The aircraft maker is expected to bring about 1,000 new jobs to the small city.
“Today’s announcement is a clear signal to companies around the world that the United States remains a major manufacturing hub that welcomes investment,” said Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, in a statement.
“A leader in the global aerospace industry, Airbus’s decision shows enormous confidence not only in U.S. markets, but also in U.S. workers,” he wrote. Airbus and its suppliers support 210,000 jobs, according to the Chamber.
In the South, three cities are among the top 10 growing manufacturing cities in America, according to the American Composites Manufacturers Association (ACMA), also a trade group. Greenville, Summerville, and Columbia, S.C., have been increasing their manufacturing jobs, exports, and shares of Gross Domestic Product.
In Summerville, “the area’s skilled manufacturing workforce grew by more than 5 percent, while nationally it fell by 28 percent” from 2000 to 2009, according to the ACMA.
The top five cities for manufacturing growth are, in order: Milwaukee, Wis., where 14 percent of jobs are in manufacturing; Youngstown and Toledo, Ohio; Greenville, S.C.; and Grand Rapids, Mich.
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