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By Rhoda Miel
STAFF REPORTER
Published: July 17, 2013 3:53 pm ET
A new U.S. report on industrial production points to a recovering manufacturing base, but one researcher is warning that the numbers are not as good as they appear, and that the plastics industry in particular still has a lot of ground to make up.
The capacity and utilization rates in the plastics industry overall is still about 20 percent below what they were in late 2007, before the recession, said Alan Tonelson, research fellow with the U.S. Business and Industry Council.
“If we are indeed seeing a genuine manufacturing renaissance, the manufacturing data would be a lot higher,” Tonelson said in a July 16 telephone interview. “The fact that it hasn’t restored everything lost from the recession is telling.”
The Federal Reserve’s Industrial Production and Capacity Utilization survey for June showed that industrial production in the U.S. increased by 0.3 percent in June after a flat result in May. For the second quarter as a whole production was up at an annual rate of 0.6 percent.
Production capacity also increased slightly, by 0.1 percent, to reach 77.8 percent — which is 0.1 percent higher than a year ago but still 2.4 percent below the average from 1972 to 2012.
Manufacturing in plastics and rubber products as a whole were up 4.8 percent for June 2013 compared to the same time a year ago, the study reported.
But in the raw data, Tonelson pointed out, the results are much more murky. The higher numbers are just part of a cyclical recovery from recession, he maintains, and not a sign of a true growth spurt.
“There’s been a great deal of talk and commentary in the last two years that manufacturing is in or on the verge of entering a renaissance,” he said. “I’ve been deeply skeptical of that since I have seen no evidence of it in the data.”
At its pre-recession height, the plastics material and resin category was measured at more than 103 points in a graded scale during December 2007. It is now at a little more than 83 points. That number is up from a low of 62 in December 2008, however.
There are also pockets of the industry which are doing far better, which further blurs the overall picture, Tonelson said. The auto sector, for instance, is at 110 on its scale compared to a low of 34 in January 2009. The synthetic rubber category is also over its 100-point scale.
“It seems what [industrial renaissance supporters] are seeing is comparing manufacturing to is the dreary period it went through during the previous decade,” he said.
Individual industry improvements provide anecdotal evidence of a full recovery for those who believe in it, he said, but anecdotes are not data.
Manufacturing in plastics and elsewhere is improving, Tonelson said, but he maintains that until numbers really begin to pass pre-recession data, there is no reason to celebrate. The cyclical waves of business could easily undermine the growth that has been seen.
“We’ve seen this movie before,” he said. | |
