Manufacturing Sector Will See 'Some' Progress

Progress will be made in 2010, but it won't be stellar progress, according to Dr. Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association, International (FMA).

"Throughout the past year or so, there has been a steady assertion from most analysts that 2010 will be a time of economic recovery, but it will be a slow rebound," says Kuehl. "Many regions of the country will not see much progress until late in the year and some industries will do better than others."

In the current FMA economic update newsletter Fabrinomics, Kuehl outlines four pieces of good news and three notes of caution. Positive trends include:

1.  Growth in both service sector and manufacturing. Kuehl cites an upward trend from the Credit Managers' Index (CMI) prepared by the National Association of Credit Managers and Purchasing Managers' Index (PMI) from The Institute of Supply Management. "The PMI and CMI measure both manufacturing and service sectors and both of these key sectors are growing," he says.

2.  Employment numbers have started to stabilize.  According to Kuehl, job losses peaked in the early part of 2009 and the rate of unemployment shrank a bit in the latter part of the year - falling from 10.2% to 10%. "Layoffs have declined and within a couple of months there should be enough new hires to offset any new layoffs," he says.

3.  Access to credit from banking sector improving.  Access to credit remains the lifeblood of the economy. "The really important news for the manufacturing industry is that community banks and regional banks have become a bit more aggressive," says Kuehl. "This will not help big business very much, but these are the banks that loan to and service mid-sized and smaller businesses."

4.  Next economic threat still seems pretty distant. According to Kuehl, two main fears -- massive inflation and a second recession -- will likely be avoided. "Because banks have been hurting, they have not pushed much money into the economy, limiting inflation," he says.  "Once the economy begins to grow on its own, the Fed can raise interest rates to fight inflation without triggering another recession."

Kuehl balances the optimism with three points of caution:

1.  Recovery depends on right sequence of events. "If the inflation threat manifests itself sooner than expected, the Fed will need to yank in the reins sooner than it wants to and the economy will start to stutter," says Kuehl. "The wild card in all this is that the U.S. is in the grips of an election year and there will be many politically charged decisions that will affect business."

2.  Demand growth brings potential for more expensive inputs. According to Kuehl, manufacturers had but one little bright spot in the past year - lower fuel prices than expected – but the price is likely to head up. "If the summer driving season is close to respectable, gas prices could climb an additional $1.00 to $1.50 per gallon over current prices," he says. "There will be other commodity hikes as well that may have an impact on inflation concerns - everything from metals to farm commodities."

3. Conservative shift of the financial system.  "There are many provisions in Congress that will require more reserves, limit loans, and demand far more clarification when loaning," says Kuehl. "Banks will be reluctant to engage until these issues are settled and that slows business dramatically."

For more information, visit:


More News:

  • IChemE Introduces New Academic Journal

    Sustainable Production and Consumption (SPC), a new academic journal from the Institution of Chemical Engineers (IChemE), in partnership with Elsevier, will launch in 2015 and focus on the importance of sustainability in sectors as diverse as retail, tourism, transport, health, food, energy, construction and the chemical and process industries.

  • Eastman Completes Taminco Acquisition

    Eastman Chemical Company completed its acquisition of specialty chemical producer Taminco Corporation.

  • Vertellus Acquires Dow SBH Business

    Vertellus, a producer of specialty chemicals for the life sciences sector and other industrial applications, signed a definitive agreement to acquire the sodium borohydride (SBH) business, including associated assets, from The Dow Chemical Company.

  • Energy Dept. Awards Pitt Grant To Improve Power Plant Safety

    The U.S. Department of Energy has tapped the University of Pittsburgh’s Swanson School of Engineering to help improve nuclear power plant safety.

  • NABE Forecasts Accelerated Economic Growth In Coming Year

    Economic growth is expected to accelerate in 2015, according to the December 2014 Outlook Survey from the National Association for Business Economics (NABE).

  • CHF Exhibit Features 15th Century Alchemical Manuscripts And Art

    Books of Secrets: Writing and Reading Alchemy, a new exhibit of alchemical art and documents, opened December 5 in the Museum at the Chemical Heritage Foundation (CHF).

  • AIChE Honors Stuart L. Cooper With Founders Award

    The American Institute of Chemical Engineers (AIChE) presented the Founders Award for Outstanding Contributions to the Field of Chemical Engineering, to Stuart L. Cooper, professor and chair of the Department of Chemical and Biomolecular Engineering at The Ohio State University.

  • Economic Reports Show Positive Week

    Economic reports were positive this week for the most part, according to Weekly Chemistry and Economic Trends report from the American Chemistry Council.

  • ACS Names New Executive Director

    Retiring DuPont executive will take helm

  • AkzoNobel Investigates Raw Material Production From Sugar Beet

    AkzoNobel joined forces with SuikerUnie, Rabobank, Deloitte, Investment and Development Agency for the Northern Netherlands (NOM), Groningen Seaports, and the Province of Groningen, to investigate the possibility of producing chemicals from beet-derived sugar feedstock

All news »

What are your comments?

Join the discussion today. Login Here.


No one has commented on this page yet.

RSS feed for comments on this page | RSS feed for all comments