U.S. machine shops’ and other domestic manufacturers’ capital-equipment orders totaled $448 million during May, up 10.9% from April and 99.4% from May 2020, raising confidence that growth in manufacturing in 2021 will “return to the pre-pandemic trend but also to exceed previous forecasts,” according to AMT – the Assn. for Manufacturing Technologies, announcing its latest U.S. Manufacturing Technology Orders Report.
Through the first five months of 2021, the USMTO record shows new orders at $2.017 billion, 50.2% higher than the January-May 2020 total.
AMT’s USMTO report is a forward-looking index to manufacturing activity, presenting actual data for manufacturers’ capital investments in anticipation of future work orders – specifically, new orders of metal-cutting and metal-forming and -fabricating equipment. The report includes data for new orders nationwide and in six geographic sectors, based on information supplied by participating producers and distributors of that equipment.
“Given the state of the economy last year, orders were expected to be up, but so far, 2021 is shaping up to be a historic year,” stated AMT president Douglas K. Woods. president of AMT. “In only three other years since 1998 have orders surpassed $2 billion by May.”
The new-order volumes were especially strong in the North Central-West (+189.0% year-over-year), South Central (+124.0%), and Northeast (+108.0%) regions; and still impressive in the North Central-East (+88.7 year/year), West (+88.4%), and Southeast (+40.4%) regions.
“Despite the general optimism felt across manufacturing sectors, one common impediment to growth is the inability to find sufficient labor,” Woods offered. “Manufacturing employment is still about half a million jobs below pre-pandemic levels, and the current number of open positions in the manufacturing industry is double the February 2020 level.”
Woods cited a Brookings Institution study to note that “growth with fewer employees occurs regularly during manufacturing recessions, ... Studies have found that manufacturers in a position to do so will leverage a slowdown to invest in greater automation and more sophisticated production equipment. The result is a more productive in-place workforce, but continued growth is dependent on a larger, more skilled manufacturing labor pool.”
The AMT executive also pointed out that automation and new-tech sales continued to grow or barely saw a pause in order levels. “Without these investments, growth in recovery would have been more susceptible to supply-chain disruptions,” he said.
“We have seen industries with modest domestic capacity increase investments in production capacity by multiples of pre-2020 levels,” Woods continued. “Metal valve manufacturers, whose products are used as components in nearly every corner of manufacturing, increased orders by staggering margins in May 2021, suggesting that U.S. manufacturers are shoring up supply chain risks by looking to domestic sources.”
