Some analysts believe the sector's woes may worsen when demand for industrial products rebounds -- and manufacturers discover key suppliers cannot rebound with them because they are effectively -- but not yet officially -- out of business.
Call them zombie suppliers. Analysts say the speed with which major manufacturers cut output in this recession put unprecedented strain on thousands of small manufacturers that supply the industry with critical parts.
That has left the supply chain with an unknown number of suppliers who are dead but do not know it -- companies so undercapitalized and overleveraged they will never raise the money they need to get their idle plants running again.
Last month's Industrial production and capacity utilization data was spun to some glorious V for victory recovery, at which point I noted a contraction is a contraction, which is what last months data was.
I've been looking over industrial production and capacity utilization for July 2009, trying to analyze a trend. July's industrial production index rose to 96.0.
Here is last months graph, not including this months number, zeroing in on this depression recession.
Our national goals, in the medium term, must be to near fully employ those 30 million currently unemployed American workers, and in the process to more than double the number of Americans working in manufacturing, which is the least amount needed to get our economy back on track sustainably.
It's all about jobs -- whatever it takes!
I will reprint their main policy recommendations, all topics we've covered here.
Fund a 10-year (not the current two-year) program of significant public investment to upgrade and rebuild our nation's infrastructure, which will provide the much-needed foundation for higher-value added production and advanced business services.
Ralph Gomory explains comparative advantage once again and also calls cash on the latest nonsense in trade policy suggestions from the Financial Times claiming Japan should abandon manufacturing and is the cause of Japan's financial malaise.
Ignored in all these discussions is the obvious fact that when you don't make for yourself the things you need, you will have to trade for them. If you have to import cars and all sorts of manufactured goods, you will be importing on a large scale; to trade for them you will need to create additional goods or services that you can export on an equally large scale.
This week's Economist magazine finally covered my favorite topic, manufacturing. The leader article is all about it, though of course its from the global perspective. Which if you think about it, makes sense for them. Anyways, read it, basically its "demand falls, too much production capacity" meme.
Here Come the Stats. The Institute of Supply ManagementPMI is now at 36.2. That is the lowest number since 1980, when it was 24.2.
PMI is a manufacturing index with nine components: New Orders, Production, Employment, Supplier Deliveries, Inventories, Prices, New Export Orders, Imports, and Backlogs.
Does anyone know where I can find out about the manufacturing process of each of the automakers? I want to learn, from start to finish, how a car or truck is made by each of the companies. Right now, I'm thinking of visiting several plants, if that is even doable. The reason is I'm doing research for a series I plan on doing for Economic Populist. Any assistance would be greatly appreciated.
The Institute for Supply Management's factory index fell to 38.9 from 43.5 in September; 50 is the dividing line between expansion and contraction. The Commerce Department said separately that construction spending fell for the eighth time in 10 months in September
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