Based on Record Profits, U.S. Manufacturing is Alive and Well and Had Its Best Year Ever in 2011
The chart above compares data in 1995 and 2011 for: a) inflation-adjusted manufacturing profits (2011 dollars, Census data here), and b) average manufacturing employment levels. The year 1995 was selected as a representative year during the period when U.S. manufacturing employment exceeded 17 million workers and inflation-adjusted profits were typical for a non-recession year in the era of what might be considered the "golden age of American manufacturing." It was definitely well before the unprecedented contraction in manufacturing employment that started in about 2001, and by the time it ended in 2009 resulted in the elimination of more than five million factory jobs over a short eight-year period, possibly the greatest loss of jobs in one U.S. industry in such a short period of time ever in American history. And it was that period of major job losses in American manufacturing sector that stoked frequent media stories about the "decline, demise, or death of U.S. manufacturing," which continue today. We've heard countless stories about the manufacturing job losses, but haven't heard much about the major rebound and renaissance of profitability in American manufacturing, which likely surged to all-time historical levels in 2011. Although fourth quarter data are not yet available, projections based on profits through the third quarter suggest that the after-tax profits of American manufacturing corporations exceeded $600 billion last year for the first time in history, and will be more than double the profits in 1995. Thanks to investments in advanced technology and major improvements in efficiency, the American manufacturing sector will be more than twice as profitable in 2011 as in 1995, adjusted for inflation. And part of that surge in manufacturing profitability to record highs is a direct result of the reduction in staffing levels by 5.5 million workers between 1995 and 2011. Bottom Line: The true economic measure of the success of any company or industry is not the number of workers, the amount of output, or the level of sales revenue, it's the level of profitability. Based on that measure, American manufacturing is alive and well, and doing better than ever before.