Analysis of US manufacturing sector warns of possible pitfalls, severe declines

June 27, 2017 - 04:00pm

 Creditsafe USA has released the findings of an in-depth analysis of the US manufacturing industry.  Despite recent overall consistent performance, the study highlights several areas of concern across the entire sector in particular the rate of bankruptcy signaling the possibility of an industry slowdown. With the manufacturing industry being the largest area of employment in the US, any decline could have a catastrophic effect on the overall US economy.

"The Creditsafe Guide: US Manufacturing—Globalization, Automation and Robotization" looks at the overall credit risk for US companies within the manufacturing sector. According to data from the Bureau of Economic Analysis, the manufacturing sector is the largest in the United States with approximately 600,000 actively traded companies. Representing 16.35% of all companies in the country, it is the biggest sector for both the number of people employed and annual sales revenue. In 2016, U.S. manufacturers contributed $2.18 trillion to the U.S. economy, representing 11.7% of the overall GDP.

"Although the manufacturing industry currently appears to be healthy, there may be signs that this strength may be short lived," explained Matthew Debbage, CEO of Creditsafe USA and Asia. "The biggest indicator lies in the number of bankruptcies, with an overall bankruptcy rate of 0.34%.  While this has improved in recent years, it is still higher than the overall national average. In addition, this industry faces increasing pressures with competition from lower cost off shore importers, increasing cost of raw materials. Recent bankruptcy filings by companies such as Kansas City-based CST Industries Inc. and Georgia-based manufacturer of solar cells - Suniva, underscore the potential future for this sector."

Highlights of the report include:
**U.S. manufacturing industry is the single largest contributor to the country's GDP accounting for 11.7% in 2016 which totaled $2.18 trillion.

**Small companies—those with less than 100 employees—comprise 94.48% of the sector as compared to 94.82% of all U.S. businesses

**Majority of US manufacturing businesses have been in existence longer than those in other industries with more than 23.88% operating for two to five years as compared to only 2.32% nationally

**From 2012-2015, there was a 35% decrease in the number of bankruptcies  within the manufacturing sector but the overall bankruptcy rate significantly higher than that of all other US businesses.

**The manufacturing industry ranks third in the highest number of bankruptcies per 100,000 companies with 362, following behind Construction with 459 and Other Services at 412

"Having nearly double the number of subcategories of its nearest rivals - wholesale and retail - the manufacturing industry is the most diverse of all the industry categories, ranging from pet food to electronic good manufacturers. This sector includes some of the largest companies in the world such as US Steel Corporation, General Motors and The Ford Motor Company, as well as many thousands of smaller ones. The sheer size and nature of this industry makes it extremely vulnerable to many external market forces. It is a sector that needs to be closely monitored, as it poses a significant risk to the health of overall US economy if there is continued decline," said Debbage.

The Creditsafe Group is the world's most used supplier of company business intelligence, with ten Creditsafe Group reports downloaded every second. Privately owned and independently minded, Creditsafe is looking to change the way business information is used by providing high-quality data in an easy to use format that every-one in an organization can benefit from.

Founded in Norway in 1997, Creditsafe has offices in countries all over the world including: the UK, Germany, France, Sweden, Ireland, Italy, Belgium, the Netherlands and the United States. Globally, Creditsafe employs over 1,200 people and has more than 90,000 subscription customers. Three years ago, the Creditsafe Group opened offices in the U.S. under the name Creditsafe, Inc. Its U.S. operations are headquartered in Allentown, Pa. with another facility in Phoenix, AZ.

Edited from information supplied by Creditsafe USA. To download a copy of this study, please visit: