C&W Special Report Examines the State of Manufacturing in North America

Share Article

Following Steady Decline, Sector’s Recent Momentum and Outlook Encouraging

John Morris

“The future of manufacturing here will depend on how well industries and governments work together to address the competitive challenges needed to ‘seize the moment’ and take full advantage of the trends that favor North American production.” John Morris

Manufacturing remains a driving force of innovation, jobs and prosperity in North America, according to a special report released today by commercial real estate services firm Cushman & Wakefield. The study, “Manufacturing in North America,” examines the status of manufacturing in the region, and explores the opportunities and risks that are likely to shape the sector’s future – and inform important real estate decisions.

“While the manufacturing sector in North America may not play as large a role in the regional economy as it once did, the outlook is encouraging,” noted John Morris, leader of Cushman & Wakefield’s Industrial Services Group. “On the heels of a steady decline that seemed a permanent trend, the positive story revealed in our report is one that some would have doubted was possible just a few short years ago. Competitive disadvantages of the past that hurt the North American region have been muted and in some cases have flipped over to the positive side.”

In fact, critical factors including labor costs, proximity to customers, time to market, currency volatility, and transportation concerns are now bigger assets for this region. In particular, though, for those manufacturers who want to access the coveted U.S. consumer market, North American locations are enticingly close, and no longer disproportionately expensive. When these and other variables are fully weighed, reshoring can make good business sense.

The report outlines reasons for optimism as well as continued challenges for growth for U.S., Canadian and Mexican manufacturing. It also provides a market-by-market short-term outlook, including:

  •     U.S: Slow but Steady – Despite being walloped by a first-quarter drop in energy-related investment and a severe winter, the U.S. manufacturing sector stabilized in mid-2015 and is on track to record steady growth into 2016. Manufacturing is expected to grow by about 2.5 percent in 2015, which is in line with real GDP growth expectations.
  •     Canada: Non-Energy Exports Lead the Way – Despite a rough start to 2015, the outlook for the Canadian economy looking ahead is much brighter, with average growth expected to head back toward 2.0 percent for this year and average 2.2 percent in 2016. Manufacturing and export-related industries will get a lift from economic activity in the U.S. and the lower Canadian dollar.
  •     Mexico: Solid Growth For 2015 – Mexican real GDP growth should range between 2.5 and 3.0 percent, and accelerate to 3.5 percent in 2016 on the back of increased U.S. demand. While weak domestic demand and planned cuts to government spending may temper overall growth, manufacturing output is projected to increase 4.0 to 4.5 percent through to 2016.

“Manufacturers face a barrage of challenges as they navigate a changing world,” Morris noted. “Still, North America offers many advantages over other global regions. The future of manufacturing here will depend on how well industries and governments work together to address the competitive challenges needed to ‘seize the moment’ and take full advantage of the trends that favor North American production.”

Through the balance of this year and into 2016, Cushman & Wakefield expects the recent momentum of North American manufacturing recovery to continue at a modest but steady rate. “The industry will benefit from anticipated gains in employment in the U.S. and further upticks in consumer spending – a net benefit to both Canada and Mexico,” Morris noted. “At the same time, the sector will also face uncertainty, and undoubtedly headwinds, from declining Asian demand and continued sluggishness in Europe. Long term, however, the manufacturing industry here stands in a better position to compete globally for investment and jobs than it has in decades.”

The full Cushman & Wakefield report is available at: http://www.cushmanwakefield.us/en/research-and-insight/2015/manufacturing-in-north-america/.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Evelyn Weiss Francisco
@CarylComm
Follow >
Visit website