SAVANNAH, Ga. – The U.S. economy may still be slumping, but two analysts are predicting better times for industrial manufacturing companies in America.
        Jeff Thredgold, president of Thredgold Economic Associates in Salt Lake City, told 175 attendees at the first-ever Industrial Asset Management Council (IAMC) Professional Forum on Oct. 27-30 that "the worst times are behind us" and that 2003 is shaping up as a very positive year for U.S.-based industrial firms.
        "It may surprise you how well the industrial manufacturing sector will perform next year," Thredgold said at the Savannah, Ga., gathering of Norcross, Ga.-based IAMC (www.iamc.org). "The recession of last year was the result of an inventory imbalance, but that situation should be corrected soon."
        One reason manufacturers should fare better in 2003 is the fact that they became leaner and more efficient in 2002. "Some 1.6 million industrial manufacturing jobs were trimmed in the last 24 months," said Thredgold. "But despite this drop, we are still not losing ground overall in terms of manufacturing's impact on our economy."
        Manufacturing, construction and mining, Thredgold noted, accounted for 25 percent of the U.S. economy in 1960, 1970, 1980 and 1990 - and still accounts for 25 percent of the economy, despite the job cuts of the past two years.
        "The only difference today is that it takes fewer American workers to do these jobs," he said. "As a result, productivity rose 4.6 percent in the last 12 months – the strongest growth we have seen in 26 years."

"The U.S. is still the least expensive major industrial nation for manufacturing," said Bruce (pictured).

Bruce: 'U.S. Still Least Expensive
Major Industrial Nation for Manufacturing'

Jim Bruce, president of Business Facility Planning Consultants in Norcross, Ga., told IAMC attendees that cost competitiveness is another reason U.S.-based manufacturing firms will remain world leaders.
        "The U.S. is still the least expensive major industrial nation for manufacturing," said Bruce, who has conducted industrial site selections in several countries, including Mexico. "The bad news is that the U.S. has no national industrial policy, and that's not good."
        Bruce said that manufacturers today must pay special attention to rising labor costs, taxes, transportation support networks and speed to market.
        One pressing issue for many communities in America is a lack of available industrial land, noted Bruce. "Many cities are running out of land, utility capacity and other essentials for development."

Economic Recovery in 2003
Among Thredgold's Predictions

Thredgold, one of the most influential economists west of the Mississippi, offered several other predictions for IAMC members during his presentation in Savannah:

• The U.S. will not enter into a double-dip recession. Instead, the economy will recover in 2003, but economic growth will be only half the rate of a normal recovery.
• The federal government will experience budget deficits for the next three to four years as the slow growth continues. However, the budget should return to annual surpluses by the end of the decade.
• The six most critical industries of the next decade will be technology, transportation, telecommunications, financial services, entertainment and bio-medicine. "The U.S. is still the leader in all of these sectors," Thredgold said.
• The current U.S. unemployment rate of 5.6 percent should rise to 6.0 percent by the end of this year.
• The current U.S. inflation rate of 1.5 percent is not expected to rise and won't be a problem for the economy for a long time. The reason, said Thredgold, is that there is 33 percent in excess capacity for every major industry in the world, and that creates competition that keeps prices for durable goods low.
• Short-term interest rates will not increase any time soon. In fact, just days after Thredgold's speech, the Federal Reserve Board reduced the overnight discount rate yet again.
• Canada is doing very well right now, but Mexico is performing better and should only continue to improve.
• The excess supply of commercial real estate throughout the country will continue to make the office sector a poor performer for some time to come.

        For more information on IAMC and reports on presentations at the first Savannah conference, go to www.iamc.org and click on "More Details, Including Daily Briefings and e-Briefings."