Manufacturing update

The Institute for Supply Management issued their February report. Here’s the highlights from Fox News:

U.S. factories boomed at close to a 20-year high in February, according to a survey released Monday that also suggested a turnaround in hiring may be on the horizon after a three-year struggle. The Institute for Supply Management said its monthly manufacturing index fell to 61.4 in February from January’s two-decade high of 63.6, showing the ninth straight month of expansion in the sector that makes up less than a fifth of the U.S. economy…. A reading above 50 in the index shows expansion. All 20 industry sectors in the survey also showed expansion…. The employment index jumped to 56.3 in February — the highest since December 1987 — from January’s 52.9. ISM’s Ore said more and more factories were reporting hiring though it has yet to show up in government employment statistics.

One source of increasing manufacturing employment will come from Japanese auto firms, according to the Chicago Tribune:

Amid the furor over the loss of U.S. jobs overseas, a movement is under way in the opposite direction, fueled by the foreign companies blamed for employment migration decades ago. Steadily, the three big Japanese auto companies–Toyota, Honda and Nissan–are expanding their U.S. operations and adding workers. Honda is hiring 2,000 in Alabama to build sport-utility vehicles, and Nissan will add more than 2,000 in plant expansions in Tennessee and Mississippi. Toyota, the largest of the three with 25,000 U.S. manufacturing workers, will add 2,700 jobs within two years, 2,000 at a truck plant under construction in San Antonio. When it opens in 2006, the Japanese Big Three will have capacity to build 4.3 million vehicles in North America and will employ nearly 70,000 U.S. autoworkers. The Japanese car companies, blamed for taking U.S. auto industry jobs in the 1970s and 1980s, are building and hiring here because they are selling more cars here.

[Must be because their productivity is lower and therefore they need to hire more workers–ed.] Actually, the reverse is true:

In recent years, Toyota has rolled out North American-built models that are bigger, better equipped and less expensive than previous versions. The 2004 Toyota Camry Solara convertible, built in Georgetown, Ky., has a base price $2,095 less than the 2003 model, despite new features such as a larger engine. Part of the price cut stems from a new body welding line at the Kentucky plant that Toyota is adopting worldwide. It uses fewer welding robots, takes up less space and costs $20 million, half the cost of the previous welding line. “They’re masters at that,” said David Cole, director of the Center for Auto Research in Ann Arbor, Mich. “The way you compete with low-cost labor is you get really good as fast as you can.” The 2003 Harbor and Associates productivity report, a widely watched study of North American auto plants, bears out the Japanese efficiencies. Nissan’s Smyrna, Tenn., plant was the most productive, requiring 17 labor hours per vehicle. Toyota averaged 22 hours per vehicle, with Honda close behind. GM averaged 24 hours, Ford 26 and Chrysler 28.