The economic downturn in the U.S. Has played havoc with the countrys manufacturing and engineering sectors for more than a year, leading to the longest continual month-over-month decline in industrial production since World War II.
But if there is a bright spot in what economists are predicting for manufacturers in the year ahead, it is a trend toward increasing e-commerce revenues and initiatives within the industrial sectors.
The Federal Reserve reported at the end of September that production in American factories fell 1.1 percent, the 11th consecutive month that output declined. The Sept. 11 terrorist attacks created additional uncertainty in all markets, but particularly in manufacturing, where inventory levels among retailers and suppliers were already high. Consumer spending for durable goods took a drop in the wake of the attacks, and as a result of the developing war on terrorism, well into October. Analysts also say they do not expect an uptick in manufacturing production until consumers begin spending with confidence.
Still, companies like General Electric and General Motors were reporting increases in online sales, and predicting gains in e-commerce by the end of 2001. Officials at GE say they expect to increase the amount of online revenue calendar-year-over-calendar-year from $8 billion to $13 billion.
Historically, online revenue figures in manufacturing, engineering and supply sectors have been difficult to determine because most companies in those sectors do not separate online revenue from other income.
Economic statistics compiled by the U.S. Department of Commerce and others have consistently noted that while e-commerce activities have continued to grow despite unfavorable economic conditions, determining the exact portion of the national economy they represent is difficult.
A study earlier this year by the National Association of Manufacturers — the leading industry group of industrial producers — saw dramatic increases in the number of companies developing Web-based activities to reach both new customers and suppliers.
“Despite the intense hype surrounding e-commerce, right now its still just a small fraction of most business and manufacturing operations,” NAM president Jerry Jasinowski says. “But . . . nearly three quarters [of the companies surveyed] reported they were developing e-commerce initiatives to grow their revenues, a harbinger of dramatic change down the road. As capital spending rebounds . . . I would expect to see a significant increase in networking and business-to-business software investments.”
Another study of e-business activities within the manufacturing sector — commissioned this year by Interbiz, a division of Computer Associates International— showed a significant increase in focus on e-commerce activities in 2001 within manufacturing and related industrial areas.
According to the survey, 45 percent of manufacturing concerns say they were actively involved in e-commerce, with 78 percent reporting effectiveness within their e-business strategies; 11 percent reported those activities as “highly effective.”