For months the industrial sector has been leading the recovery in the US. Economists pointed to data reflecting growth in manufacturing as a sign that the US economy was on the rebound. However, the recovery in the Manufacturing sector has since stumbled. Growth and job creation, once robust in the sector, dwindled and stagnated in May.

Some areas of manufacturing are still experiencing growth however. For example mining and the manufacturing of tungsten extrusion dies and tungsten carbide tooling remain strong. However, other areas, like the auto industry have experienced setbacks due to the disaster in Japan. Japanese suppliers have been resilient, however power disruptions in the wake of the earthquake and tsunami have impacted their ability to supply needed parts to the Detroit auto makers. Industries related to housing have had little luck as well, in facts housing prices have proven that they have not bottomed out in recent months and have sagged once again. Low prices on existing homes means that construction of new homes will remain anemic in the foreseeable future. Additional factors are worrying manufacturing executives, at the top of their minds is the rising costs of energy, including fuel prices, and soaring costs of raw materials.

The American manufacturing industry is doing better than it has done decades, owners and manufacturing executives remain skeptical, according to a survey released Wednesday by business consultant Grant Thornton LLP. Grant Thornton LLP most recent Business Optimism Index found only 40 percent of respondents surveyed in May saying the U.S. economy will improve in the next six months. The Business Optimism report is generated quarterly and it reflects a 20 percent drop in confidence since February. The survey also found that 16 percent of the owners and manufacturing executives surveyed said they are planning on cutting their work force, up from 6 percent in February.

What this means is that companies will be taking a wait and watch approach over the next 6 months. Executives will be keeping an eye out for any wasteful spending or even any spending that can be put off. Cost cutting initiatives will be launched that can impact the purchasing of new equipment, further weakening the manufacturing sector. As these executives take a hard look at their books anything that can be considered discretionary spending may be cut. Most worrying is that they won’t be hiring new employees and will not be making any large investments, expanding or taking on new large new projects with confidence levels so low.

So what does all of this mean for the US economy? That’s the worse part about it all. The industrial sector has been a bright spot in a generally gloomy economy. There are some up sides though. Despite all of the bad reports, dire projections and the pessimistic views of the manufacturing executives the industrial sector isn’t doing that badly. Companies have more money in the bank and are generally healthier then they have been in the last 20 years.

On top of that some possible relief may be on the way for US manufacturers. President Obama has made plans to find more jobs for Americans. His ideas include training workers for jobs that are tough to fill, such as advanced manufacturing, and streamlining the permit process in hopes of kick-starting infrastructure and construction projects. There is only so much a president can do for an ailing job market though and honestly these programs aren’t likely to excite Manufacturing business owners and management, a group not known for leaning towards the Democratic Party.

The fact is that manufacturing might not be a great thing for Americans to hang their hats on right now, but there aren’t really any great options out there when it comes to finding employment for the 9.7 percent of unemployed workers out there. Hopefully in the end the recent setbacks prove to be nothing more than another bump on the road to a fully recovered US manufacturing industry. One can hope right?

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Manufacturing in the US has been on the decline for decades. It seemed to everyone that the US would not be able to compete globally in these markets|industries do to the lower wages of foreign works and lack of regulations in third world countries. However, despite this the US manufacturing sector has risen for the previous ten straight months. Once again optimism is beginning to appear in the once great powerhouse of manufacturing; however it is unlikely that we will ever see the levels attained at our height.

Still, US manufacturing is experiencing unexpected growth. Closed down factories are reopening and jobs are being created. The devastated economies of manufacturing dependent states have grown unexpectedly. The State of Michigan for example has the exciting problem of what to do with 500 million dollars in taxes that they never expected to receive. The reason is the current upsurge in manufacturing. In markets where the US has been traditionally strong, such as aviation, we have continued to grow while in other areas like the auto industry there has been a marked resurgence. General Motors has once again become the world?s top automaker and all three of the ?Big Three? are posting profit levels that they couldn?t dream about a year ago.

Still America isn?t producing a lot of the smaller, less technological items that we once did. For example nails and screws haven?t been produced in the US for some time and there is little hope in regaining these markets. However, even in these areas the US has found a niche. Items like carbide dies that are required for making nails and screws take a skilled work to create them and the typical US carbide die maker have been able to rebuff their foreign competition. The reason seems to be that companies using these dies don?t want to risk going with the cheapest suppliers do to the fact that if they have to send an deficient carbide die back to the manufacturer that means production will come to a grinding halt. Apparently managers don?t want to explain why their company is losing millions of dollars a day because they are waiting for a $75 dollar part to the company?s owners.

So why is the US manufacturing sector making a comeback? In short, we are becoming more competitive. US manufacturing has been on a downward slide for forty years, and with it the wages paid to our works has decreased. While the owners of US firms have been doing everything possible to trim wages and cut costs the average wage of Chinese works has gone up at an average of 17% per year. It will be a very long time if ever that Chinese and US workers receive the same wages but it?s a step in the right direction. Coupled with the better education of US workers (yes, we still do have that!) America is finding itself on much more equal footing. The fact of the matter is that if you take an average worker from the Peoples Republic of China and one from the good old US of A, the American worker is more skilled on Average. Another advantage is fuel costs. US industries tend to be closer to the major consumer markets and have more reliable access to power.

The disaster in Japan has been a mixed blessing. While US auto production has surged pass Japanese we are finding ourselves hampered by lack of Japanese parts we use in our own cars. It still remains to be seen if the disaster will be a net gain or loss for domestic auto makers. Similar stories are playing out in the electronics, chip manufacturing and other industries. In fact, this month has been the first month without growth in the US manufacturing sector and the reason cited is supply chain problems stemming from the disaster in Japan.

So, US manufacturing is rebounding, but the fact of the matter is that it has a very long way to go if we ever want to reach our former heights of productivity. The fact of the matter is that growth is slow and it will be about ten years before we even hit the levels attained before the economic crash. Of course, the good news is that we are finally on that path and experiencing widespread, if slow paced, growth.

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