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Highlights of Manufacturing Conference

January 11, 2022

Approximately 750,000 Americans work in welding and fabrication.

As mentioned in my final 2021 column, I just came back from WESTEC, the West Coast’s largest manufacturing conference, and want to share some of the biggest takeaways. Along with 10,000 friends, including Disney, Big Tech and a number of defense contractors, I was like a sponge trying to take it all in. The highlights for me were the keynote addresses, including a speech from Chris Kuehl, the economist for the Fabricators and Manufacturers Association.

Not to sound like Captain Obvious, but the government was not prepared for a novel coronavirus. Despite this, the first quarter of 2022 should produce an economy that is comparable to the fourth quarter of 2019, when the word COVID was not in anyone’s vocabulary.

The death of American manufacturing has been exaggerated. As a share of our gross domestic product, it is the smallest since World War II, at 11%. However, that is more an effect of having the most diverse economy in world history. Professional services and the government are at 12%. No one sector dominates. The notion that China makes everything also is a falsehood. The U.S. is second only to China in global manufacturing, with the position difference being due to consumer goods. A future article on the supply chain will address why that may be changing.

Direct employment in U.S. manufacturing is 12 million, while, indirectly, 15 jobs are dependent on every position working directly. Just because you work in the office, if the end product of your company is still manufacturing, it would be nice for the government to categorize that.

The vast majority of manufacturers are small, with 76% having fewer than 20 employees. Small businesses are thriving, despite the challenges presented by a global pandemic. From 2015 to 2020, growth for firms with less than 50 employees increased from 31,000 to 42,000. It is true that COVID-19 had a negative impact, doubling the number of closures in a calendar year. But, being in business and job creation is tough, as 50,000 to 100,000 small businesses close annually. A major concern is the amount of baby boomer owners nearing retirement. What do their operations look like without original management?

The energy sector, logistics, construction and automotive are coming back faster than retail, travel and tourism. You will see more warehousing and medical buildings constructed in the future. Office buildings will be repurposed. And, in an environment where remote and hybrid work is becoming popular, look for suburban and exurban areas to be growth hubs. This bodes well for communities like Acworth and Kennesaw.

And, finally, in short, cough up, employers. In this historically tight labor market, 4% pay raises will be the norm in 2022.

– Ryan Blythe is the founder of Georgia Trade School, which for the sixth consecutive year, was named one of the Cobb Chamber Top 25 Small Businesses of the Year.

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