The manufacturing sector is on an upswing as our first quarter comes to a close. With the popular consensus being that the US economy will continue to improve, an important question comes to mind. Is there capacity in the USA domestic manufacturing sector to handle a full economic recovery?
The increase in manufacturing activity became readily apparent at Universal Polymer in December of 2014. In previous years, for every market we served, there has been a downturn toward the end of the year. Traditionally, December is 60-70% of normal sales, with March and April being pretty consistent.
At the end of 2014, however, we noted at Universal Polymer a sizable boost in rubber extrusion manufacturing activity. This trend is continuing now as we reach the end of our first quarter. The increase spreads across each of our major markets, from the automotive OE supply chain to the construction and pipe manufacturers’ market.
The increases in the manufacturing sector are at least partly due to the strength of the automotive market, with upwards of 17 million cars built in North America in 2014 alone. The forecast was for the auto market to continue to strengthen in 2015. However, the news is not all positive. There is a big looming question of whether the automotive rubber components manufacturers can keep pace with the economic changes.
For example, consider the housing market. While it has incrementally risen over the last few years, if you compare the housing market today to 50 years ago, as was done by Wisconsin Real Estate Viewpoint, it is still in the lower 5% of that period. The capacity has been taken out of the housing market in every level. Housing starts are the lowest per capita that they have been since the Viewpoint study began collecting the monthly data in 1959.
What will the next 50 years hold for the manufacturing sector? Universal Polymer will continue to update you and consider the implications as they relate to the US economy.