By the time financial markets around the globe started to tumble in October 2008, much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home, their labor and their experience no longer needed because of more efficient machines and the rise of globalization. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was all gone for good.
Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession. Publishing and newspapers had been on the decline for years, and the domestic automotive industry, technically under the umbrella of general manufacturing, had been in a slide for a generation. But perhaps no industry was affected more since the turn of the millennium than manufacturing. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, millions of workers were laid off from the collective work force, but manufacturers often still let go of the most employees.
The cycle was vicious, and it continued, month after month.
How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, not yet, but all of the indicators do point up, however modest, rather than down.
“Two years ago, we hit the wall, and as a result, sales volume dropped off,” says Stephen R. Ferrara, partner, regional business line leader, BDO Seidman LLP. “Most of our manufacturing clients have taken a look at their business and said, ‘OK, what do we need to do to improve processes, streamline our head counts and really make our operations as efficient as possible to maximize our potential in a down cycle?’ So I think most of the streamlining and cost cutting has been done, and now these businesses are poised as we come out of this recession to really improve the profitability of their businesses dramatically as we move into 2011.”
