NCPA - National Center for Policy Analysis

Factory Construction Surges

September 30, 2014

There was zero growth in spending on factories in 2013, as American factories have been in decline since 1998, and many producers have moved offshore. However, USA Today reports that the United States has seen a 12 percent increase in spending on new or renovated factories in 2014.

According to the Department of Commerce, the higher-than-expected growth seen by the United States in the second quarter was in large part due to the rise in spending on new factories. Why the new spending?

  • Auto sales have increased, leading manufacturers to build new plants or renovate their old ones.
  • The same trend has taken place due to the recovery within the housing industry and the oil and gas boom.
  • USA Today reports that factory output is up 3.2 percent already in 2014.

As of August 2014, factories were running at 77.3 percent of capacity. That figure is close to the levels seen prior to the recession and is an increase from 63.9 percent in 2009. As companies build additional factory space to accommodate increased demand, they tend to hire more workers, spurring employment. While manufacturing employment increased 88,000 during 2013, it has already increased by 105,000 in 2014.

Source: Paul Davidson, "Factory construction boosts economy," USA Today, September 28, 2014.

 

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