Study: U.S. Manufacturing, Logistics Industries Grew Dramatically over Last Generation

U.S. manufacturing production grew 11% since the dot.com bust (2000-03) and the ensuing economic turbulence of the 2001 and 2007-09 recessions, according to Manufacturing and Logistics: A Generation of Volatility & Growth, released today by the Ball State Center for Business and Economic Research (CBER) and Conexus Indiana.

“According to folklore, this has been a terrible generation for manufacturing and those who move goods,” says CBER Director Michael Hicks, George and Frances Ball Distinguished Professor of Economics and Business Research. “That isn’t really what the data says. Indeed, 2015 was a record manufacturing production year in inflation-adjusted dollars. While 2016 fell just short with some weakness in the first and second quarter, 2017 looks to be a new record year.”

More goods produced by fewer workers

“Most of the confusion about manufacturing and logistics is due to declining employment over the past generation,” Hicks notes. “The fact is, manufacturing firms have become very lean, and productivity growth means more goods produced with fewer workers.”

Three factors contribute to a decline in employment: the workforce is better educated and trained, increasing productivity; mechanization has displaced some workers; and improved processes, such Lean Six Sigma and other management methods, have increased manufacturing production, according to the study’s authors.

Since peak manufacturing employment in 1979, the U.S. has lost approximately 7.5 million manufacturing jobs but gained more than 9 million jobs in trade, transportation and utilities, the broadest measure of the logistics industry.

“Trade and productivity growth shifts job opportunities to other places and other sectors even as employment grows,” Hicks says. “We are at peak U.S. employment right now.”

The 2017 Manufacturing and Logistics Report Card for Indiana, 2017 Manufacturing and Logistics Report Card for the United States and Manufacturing and Logistics: A Generation of Volatility & Growth were written by Michael Hicks, George and Frances Ball Distinguished Professor of Economics and Business Research, Miller College of Business, and Srikant Devaraj, CBER’s research assistant professor. The reports can be downloaded from the CBER website.