FACTORIES GALORE: business expansion

Rebuilding America.  Manufacturers have been expanding at a rapid rate during the past two years.  The largest share of manufacturers in a decade is spending to expand facilities.

And with increased trucking costs and labor market shortages in some areas, the companies are building new factories closer to available workers as well as to their markets.  Manufacturing construction hit a 16-month high in September.  The companies’ executives are making some of those investments in new factories  in different locations to alleviate rising transport bills and supply-chain bottlenecks.  New factories in Alabama and California are being built by Farrelgas Partners, for facilities that make and refill their Blue Rhino propane tanks.  These new locations have allowed the company to cut over a dozen delivery routes and lower their costs by as much as $3 million annually.  The Italian tissue paper maker, Sofidel Group, opened it sixth U.S. plant in Ohio in October and is building another in Oklahoma for a 2020 opening.  The company says that making its products as close to customers as possible allows them to speed up delivery.  And, that means limiting the delivery travel to below 700 miles.  Manufacturing payrolls rose by 32,000 workers in October, the biggest monthly increase this year.  The WSJ reports that “consumer confidence and wages are rising and many companies are counteracting higher costs by raising prices on the expectation that consumers are willing to pay more as the economy charges ahead.”  There are some risks to the approach of operating multiple factories, as there is the need to increase the amount of inventory needed to fulfill the same amount of demand.  Some companies, therefore, are making the decision to make investments and strengthen supply chains to existing factories. But, companies building plants nearer their customers contend that investment costs can be offset in faster turnaround times and increased orders.  Whatever the decision making of individual companies, the result is the same – manufacturing is definitely on the rise in the U.S.

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