Canadian economic review and outlook | The decline in number of U.S. manufacturing plants | MAPI: 80 years and counting
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January 31, 2013
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MAPI Research and Insight
Canadian economic review and outlook
David Boisclair and Anne Motte, economic consultants
For the Canadian economy and its manufacturing sector, 2012 was a difficult year. Nevertheless, there is confidence that 2013 will bring positive news. The MAPI industry forecasting model suggests that recovery will be stronger in 2013 and 2014, especially for durable goods industries. Anticipated 2013 growth leaders include motor vehicles and machinery industries. Projected annual GDP growth for 2013 is above 2%; there is great uncertainty, however, and improvement of the U.S. economy will definitely contribute to reaching these growth rates. Economic Outlook
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The decline in number of U.S. manufacturing plants
Daniel J. Meckstroth, Ph.D., vice president and chief economist
Single-minded attention on runaway plants, and for that matter their return to the United States, is misplaced. Relatively few plants are shut down in the United States by an owner who opens up an identical facility abroad and supplies the U.S. market with imports from the foreign affiliate. A widespread, more fundamental reason for plant closings and openings is the sourcing decision (where firms purchase intermediate goods and services -- from domestic or foreign suppliers). Policy Analysis
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MAPI: 80 years and counting
Happy anniversary to MAPI! We launched in 1933 as the Machinery and Allied Products Institute, with headquarters in Chicago. "We are delighted to be celebrating our 80th anniversary in 2013, and going stronger than ever," said MAPI President and CEO Stephen Gold. "It is a testament to those who have gone before and who set the vision that we begin our next 80 years continuing to provide our members with the tools to help them perform their jobs better." 80th Anniversary
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The Fiscal Cliff Deal: A Missed Opportunity for Tax Reform
Marie K. Lee, council director
The last-minute fiscal cliff package delayed deep, automatic spending cuts and did not address the debt ceiling, but it did contain several tax provisions important to manufacturers. The American Taxpayer Relief Act of 2012 provides some much-needed certainty with respect to the individual rates, but it does not solve many of the deep, underlying problems with the tax code that undermine the United States' economic growth and international competitiveness. It's possible that the deal killed the prospects for tax reform in 2013; however, tax reform needs to remain on Washington's must-do list for the year. Issues in Brief
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Manufacturing facts: Sectors critical to the U.S. R&D picture
This week's excerpt from The Facts About Modern Manufacturing: A number of sectors have outsized R&D intensities that are broadly critical to the innovative strength of the U.S. economy. Pharmaceuticals and aerospace are two sectors with strong innovation investment propensities. During 2009, R&D investment in pharmaceuticals and medicine was 13.2% of domestic net sales, nearly three times the manufacturing average. In aerospace, R&D investment was 10.4% of domestic net sales. Manufacturing Facts
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MAPI in the News
U.S. economy faces pushing and pulling in 2013
The U.S. economy is starting the year in a neutral position, facing several forces that are pushing it in the right direction and also pulling it back. A rebounding housing market, gaining stock market and businesses that are expected to spend cash could push the economy forward, but there are factors that threaten to pull it back, including defaulting on U.S. debt. MAPI chief economist Daniel Meckstroth said default is more dangerous than the "fiscal cliff." "The last thing you want is a default on the interest on your securities," he said. "Just the possibility is a dangerous situation." The Christian Science Monitor (1/24)
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Durable-goods orders beat estimates for December
Durable-goods orders were up by a better-than-expected 4.6% to $230.7 billion in December, with transportation accounting for the largest increase at 11.9%, according to a U.S. Census Bureau report. Shipments of manufactured durable goods increased in five of the last six months of 2012, but MAPI senior economist Cliff Waldman warned that manufacturing will face uncertainty in 2013. IndustryWeek (1/28)
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In the Industry
Teske to serve another term as WMC chair
Briggs & Stratton CEO Todd Teske, a member of MAPI's board of trustees, was re-elected as the Wisconsin Manufacturers & Commerce's chair at the group's annual board meeting last week. WMC is the largest business association in the state and serves as the state's chamber of commerce. American City Business Journals/Milwaukee (1/25)
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Midwest manufacturing on the rise in last two months of 2012
Manufacturing output in the Midwest was up for the second month in a row in December, posting a 0.7% increase, according to the Federal Reserve Bank of Chicago's Midwest Manufacturing Index. Two of the four sectors of the index improved, causing the overall index to be up 6.2% compared with December 2011. The Wall Street Journal (tiered subscription model)/Real Time Economics blog (1/28)
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IBM says social business is today's reality
Social enterprise workforce strategies are progressing to become the reality for today's businesses, according to Alistair Rennie, IBM's general manager of social business. "There is no way that the way we think about computing today is going to be enough," he remarked. ZDNet (1/28)
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Leadership and Strategy
How functional stupidity can help your productivity
Functional stupidity allows businesses to suspend doubt and create an environment of open communication, which can help productivity in the short term, says Mats Alvesson, a professor of organization studies at Lund University in Sweden. However, he warns that using the strategy in the long term can carry damaging consequences. "It is a double-edged sword. It is functional because it has some advantages and makes people concentrate enthusiastically on the task in hand," Alvesson says. "It is stupid because risks and problems may arise when people do not pose critical questions about what they and the organization are doing." BusinessNewsDaily.com (1/28)
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SmartQuote
Good judgment comes from experience, and often experience comes from bad judgment.
Rita Mae Brown,
American writer
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About MAPI
The Manufacturers Alliance for Productivity and Innovation, founded in 1933 and located in Arlington, VA, contributes to the competitiveness of U.S. manufacturing by providing economic research, professional development and an independent, expert source of manufacturing information. www.mapi.net
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