Read more from Dan Davis at www.thefabricator.com/author/dan-davis
Have you ever been at a party that you think is coming to a close, but somehow it keeps going? Did you get the time wrong? Did
someone tip the DJ for some overtime work? Is everyone having such a good time that no one wants
to go home?
I’m kind of like this with the current state of the
U.S. economy. Sure, the economic rebound following the Great Recession was more of a skip than a
big leap, hardly the GDP growth in the 4 to 5 percent range that occurred in the 1980s and 1990s, but
it has been in an expansion phase for 102 months
now. That’s kind of a big deal as we are getting close
to attaining one of the longest economic expansions on record. In fact, it’s already the third-longest
expansion in U.S. history, dating back to 1854, according to Goldman Sachs economists. (For the
record, the longest economic expansion lasted 120
months, from March 1991 to March 2001, and the
second-longest one was 106 months, from February
1961 to December 1969.)
The Great Recession is still fresh in my mind, so excuse me if I’m a bit nervous. The funny thing is that
I’m not so sure I should be, even as we march even
closer to uncharted territory when it comes to modern economic history. Just think about recent news:
•Released in mid-October, the third-quarter
“Forming and Fabricating Job Shop Consumption
Report” (FFJSCR) from the Fabricators & Manufacturers Association (FMA) revealed that 58 percent of the
fabricators surveyed have a generally positive business outlook and 31 percent see business as stable.
That leaves only 10 percent with a negative outlook.
• This same survey revealed that 37 percent see
new order activity improving, and 47 percent report
that it is stable. That’s always a good sign for the future.
• In September, the Institute for Supply Management’s manufacturing index, known as the PMI®,
reached 60. 8 percent, the best reading since May
2004. The October PMI came in at 58. 7 percent, close
to the 58. 8 percent seen in August, but the manufacturing sector remains upbeat. Sixteen of the 18
industry segments, which include fabricated metal
products, the association tracks still appear to be
in expansion mode, while the other two reported
showed similar levels of activity to September. The
last contraction, a reading under 50 percent, was
registered in August 2016.
• FABTECH® 2017, held Nov. 6-9 in Chicago, wound
up being one of the largest in the event’s history, with
more than 1,700 exhibiting companies and almost
45,000 attendees. “…[E]very person who participated in the show had a palpable level of enthusiasm
that radiated across the show floor,” said Mark Hoper,
FMA senior vice president of expositions and media.
Well, that’s a fancy way of saying that people were
happy, and it was evident from conversations held
on the show floor. The most recent FFJSCR provided
a glimpse of what was to come at the tradeshow as
60 percent of the respondents indicated that their
planned capital investment was on track and perhaps growing as they headed into the fourth quarter.
If you look at the U.S. economy from a macro point
of view, job creation seems pretty strong. Spurred
on by the need to repair hurricane-damaged areas,
employers added 261,000 jobs in October, the most
in one month in more than a year. The New York
Times reported that, following an initial report of
negative job creation in September and a later revision to those numbers that actually suggested job
growth, the U.S. economy has now added jobs for
85 straight months following the October jobs announcement.
The one metric that keeps economists scratching
their heads, however, is wage growth, which typically follows drops in the unemployment rate, currently at 4.1 percent. People keep waiting for better
growth in wages, but instead they have to settle for a
never-ending supply of excuses, such as productivity hasn’t climbed or retirements of baby boomers
are bringing down the overall reported numbers.
I have a feeling that pressure is increasing, at least
in manufacturing, to boost those wage numbers. In
a survey of The FABRICATOR readership conducted
in the first quarter of 2017, 26 percent of fabricators
indicated that their companies are paying entry-lev-el welders more than $17 per hour. A similar survey
in 2015 revealed that only 13 percent were offering
a similar wage.
So as we look to 2018, you have to be pretty optimistic, right? That’s normally not the side of the
street I walk on, but it looks like that’s where I am.
For now, let the party go on.
If you ever wonder what some of your peers in
the metal fabricating industry are thinking about
the economy or anything else that affects the shop,
consider attending the 13th annual The FABRICATOR’s Leadership Summit at Talking Stick Resort
in Scottsdale, Ariz., March 7-9. The technology and
business discussions are rich, but the frank talk between shop owners and managers is even better.
Visit annualmeeting.fmanet.org, or call 888-394-
4362 if you want more details.
Will the party continue?
This economic expansion appears to have some life left in it
Chairman of the Board
First Vice Chairman
William “Jeff” Jeffery
Second Vice Chairman
Ohio Laser LLC
MC Machinery Systems/
Chairman of the Board
Texas ProFab Corp.
R. Bruce Benedict
Production Tube Cutting Inc.
James R. (Bob) Bohn Jr.
Rick J. Hargrove
Steel & Pipe Supply Co. Inc.,
Storage & Processors
Kawasaki Motors Mfg. Corp. USA
Amada America Inc.
Industrias Selbor SA de CV
Valley Iron Inc.
Jones Metal Inc.
Wyoming Machine, Inc.
Superior Tube Products
President & CEO
Fabricators & Manufacturers
FMA’S CERTIFIED EDUCATION CENTERS
FMA Certified Education Centers (CEC) are community
and technical colleges, trade schools, and universities
that specialize in training adults for careers in the metal
forming, fabricating, processing, and machining sectors.
They offer coursework for local students year-round and
serve as host locations for many types of FMA professional
development programs as requested. A council of
members convene six times a year to plan and execute
special programs on worker training for educators and
human resource managers from companies of all sizes.
To learn more about FMA’s CEC program and view a list
of the current member schools, visit www.fmanet.org/
To discover how your local community or technical college
can become a member, call 888-394-4362 or send an
email to firstname.lastname@example.org.