Why Manufacturing Won’t Go Off The Fiscal Cliff

A recent story from Reuters analyzed two different viewpoints on whether or not the uncertainty caused by the fiscal cliff is affecting the US economy. I’m not here to say who’s right and who’s wrong, but I can tell you what I think the fiscal cliff means for US manufacturing.

 

Over the past year or so, America has been going through the beginning of a manufacturing renaissance. Roughly 70% of our work is in the manufacturing sector, so I can vouch for the sector’s robust health.

 

More recently, I have seen companies taking time to wait and see if a compromise is reached and what it means. This pause in normal business activity has caused our list of prospective leads to dwindle a bit. Despite this, I don’t see reason enough to panic. Why?

 

 

 

First – experience. Manufacturers have armies of smart, educated people helping them prepare for the worst. With the 2008 recession still fresh in their minds, it stands to reason that they are ready for whatever comes.

 

 

Two – foreign investment. The US is an attractive place for foreign manufacturers. They want to be close to the American consumer base, employ our skilled labor force, and use our affordable energy. These advantages don’t depend on a certain outcome of the fiscal cliff to remain strong, so I’m not concerned about the US losing its appeal to foreign investors.

 

 

Three – cheap energy. In addition to creating thousands of jobs, the natural gas boom is giving manufacturers more certainty about one of their biggest costs. The ability to offer manufacturers a steady supply of reliable and affordable energy is a huge long-term advantage for our country.

 

 

Regardless of what happens in Washington, US manufacturing has a lot going for it. I still see big opportunities for the future, and I have little reason to expect that to change. So from my perspective, the fiscal cliff is something I don’t worry about in the long term.

 

 

However, something to worry about long term is how our national debt will hurt manufacturing. We’ll discuss this in a future column.

 

 

    January 03, 2013

    Some opinions expressed in this article may be those of a contributing author and not necessarily Gray.

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