The Return of Manufacturing to Midwestern States: Debunking Fears and Contrasting Facts

Introduction

The perception that manufacturing has left the Midwestern United States and the USA altogether is a misconception. A closer look at the data and recent developments reveals that manufacturing is, in fact, making a comeback in the Midwest. With robust economic growth and resurgent industrial activity, these regions are seeing a resurgence of manufacturing. This article aims to debunk these fears and present the facts.

Manufacturing GDP and Current Trends

According to data from the Bureau of Economic Analysis, the real manufacturing GDP for the USA has been on the rise, albeit with some fluctuations due to economic cycles and technological advancements.

Real USA MFG GDP:
Year: Billions
2010 - 5502.8
2011 - 5661.8
2012 - 5771.3
2013 - 5936.1
2014 - 5983.2
2015 - 6015.8
2016 - 6018.4
2017 - 6078.0
2018 - 6218.7

Notably, in 2009, the manufacturing GDP of the USA fell by approximately 250 billion due to economic recession. However, the industry has since recovered, and the 2018 figures show a significant increase from 2009. Despite the non-publication of 2019 data, estimates suggest a further increase, indicating a sustained trend of growth in manufacturing.

Common Misconceptions

One of the primary misconceptions is that manufacturing has dramatically declined in the USA. This perception is often based on data such as manufacturing employment figures or the percentage of manufacturing in GDP. However, these figures do not tell the whole story.

Automation: Automation has significantly reduced the workforce required in the manufacturing sector. While this has led to a decline in traditional employment figures, it has also increased overall productivity and GDP. The USA has seen a pronounced shift towards more advanced manufacturing processes, which rely heavily on skilled technicians and engineers rather than large numbers of unskilled labor. Outsourcing and Classification Changes: In many manufacturing plants, service functions such as food service, janitorial services, and engineering are often performed by staff employed by separate service companies. This changes their classification from manufacturing to service, leading to a distorted perception of employment. However, the individuals involved remain engaged in the manufacturing process. Technological Advancements: Advances in technology, particularly in software and automation, have shifted the nature of manufacturing. For instance, in the past, machinery was controlled by manufactured parts such as gears and cams. Today, many of these components are software-controlled, reducing the production of traditional mechanical parts but increasing reliance on more complex and tech-driven manufacturing processes. Economic Expansion: The service sector has expanded rapidly, leading to a larger share of the economy being categorized as non-manufacturing. This does not mean that manufacturing itself has declined; rather, it reflects a broader economic shift towards services. Government Sectors: Growth in government sectors has outpaced manufacturing, largely due to the increased demand for public services and infrastructure. This does not imply that manufacturing has declined; it simply means that other sectors have expanded more rapidly.

Midwestern Manufacturing Data

Contrary to the myths and fears surrounding the decline in manufacturing, data from the National Association of Manufacturers (NAM) and individual state reports paint a very different picture.

Indiana: Indiana boasts over 7,000 manufacturing firms, employing more than half a million people. This robust industrial base not only supports local economies but also contributes significantly to the national manufacturing sector. Iowa: While known for its agricultural heritage, Iowa also has a thriving manufacturing sector. With almost 3,000 manufacturing firms employing over 200,000 people, Iowa's manufacturing prowess is undeniable and continues to grow. South Dakota: With 947 manufacturing firms and 44,000 employees, South Dakota's manufacturing sector is also proving resilient and expanding. These are not just large industrial firms; they represent a diverse array of manufacturing activities from automotive components to food processing.

Conclusion

It is clear that the narrative of manufacturing leaving the USA or the Midwestern states is misguided. Real data and recent developments demonstrate a robust and growing manufacturing sector in the Midwest. Evidently, manufacturing is far from gone, and it continues to play a crucial role in the regional and national economy.