ALLENTOWN, PA – In 2016, US manufacturers contributed $2.18 trillion to the US economy, representing 11.7% of the overall GDP, according to just-released data from the Bureau of Economic Analysis.
With the manufacturing industry being the largest area of employment in the US, any decline could have a catastrophic effect on the overall US economy, said Creditsafe USA, according to recent analysis.
The manufacturing sector includes approximately 600,000 actively traded companies. Representing 16.35% of all companies in the country, it is the biggest sector for both the number of people employed and annual sales revenue.
The recent Creditsafe USA study highlights several areas of concern across the manufacturing sector, in particular the rate of bankruptcy signaling the possibility of an industry slowdown. The manufacturing industry ranks third in the highest number of bankruptcies per 100,000 companies with 362.
"Although the manufacturing industry currently appears to be healthy, there may be signs this strength may be short lived," said Matthew Debbage, CEO of Creditsafe USA and Asia. "The biggest indicator lies in the number of bankruptcies, with an overall bankruptcy rate of 0.34%. While this has improved in recent years, it is still higher than the overall national average. In addition, this industry faces increasing pressures with competition from lower cost offshore importers, increasing cost of raw materials."
Small companies – those with fewer than 100 employees – comprise 94.5% of the sector, compared to 94.8% of all US businesses.
The majority of US manufacturing businesses have been in existence longer than those in other industries, with more than 23.9%
operating for two to five years, compared to only 2.32% nationally.
"Having nearly double the number of subcategories of its nearest rivals – wholesale and retail – the manufacturing industry is the most diverse of all the industry categories, ranging from pet food to electronic goods manufacturers,” said Debbage. “This sector includes some of the largest companies in the world, such as US Steel, General Motors and Motor, as well as many thousands of smaller ones. The sheer size and nature of this industry makes it extremely vulnerable to many external market forces. It is a sector that needs to be closely monitored, as it poses a significant risk to the health of overall US economy if there is continued decline."
Register now for PCB West the Silicon Valley's largest PCB industry trade show: pcbwest.com!