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For years manufacturing has been one of the strengths in the overall U.S. economy, and an especially.jpg) strong force in the Houston economy. However, in 2007, according to a report out from the Institute for Supply Management, factories produced less, saw their orders decline, cut workers, and manufacturing activity in December was the slowest in 4½ years. These findings are raising recession worries, especially amid troubling signs the economy is fragile such as last week’s global Stock Market plummet.
Manufacturing, nationwide, accounts for about 12% of the U.S. economy and one out of every 10 jobs. So, when the ISM’s gauge of manufacturing activity fell for a sixth-consecutive month to a seasonally adjusted 47.7% in December, down from 50.8% in November, the lowest since April 2003, there is justification for concern.
Even foreign presses, such as Russia’s Pravda, are running articles with statements like Alexander Timoshik’s claim, “Great economic recession is in store for USA.” And while it’s true that a number of factors will probably damage manufacturing growth during 2008, the most damaging possibly the housing market and high gasoline and fuel oil costs, the fears of zero growth this year may be a little too negative, at least for Houston.
On the bright side, particularly for Houston, four industries had strong year-over-year growth in the last quarter of 2007, including aerospace products, electrical equipment, communications equipment and private, non-residential construction, so downstream industries like machine shops, fasteners and heat treating are doing especially well. Since these are all strong area in the Greater Houston area, we can, I believe, expect a better year than what is predicted at the national level.
As in all industries, how individual manufacturers are affected by a recession depends, to a large extent, on what businesses they're in, how prepared they are for periods of bad economy, and how diversified and global their customer base. My experiences with Houston manufacturers gives me faith that while much of the nation’s manufacturers may find themselves truly facing recession conditions, Houston manufactures will be experiencing a “soft” economy.
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