Lisa Simpson
Oct 28,2009
In: Finance

Are There Hopeful Signs of Life in the Factories of USA?

There are vibrations in the air – the winter of discontent is passing and factories are making noises awaking from one of the worst financial crisis in many decades. But how strong the stirrings are the investors will have to gauge

The jumbo manufacturers like Boeing, 3M and Caterpillar will release their reports and consequently give proof of consumers spending once more.

USA is not as dependent on the factories as it was two decades previously. The economy is largely driven by consumer spending but this has recently shrunk as jobs vanish and houses are swallowed by foreclosure. This has led to discussions about a recovery headed by manufacturing although the data is confusing. It is being hoped that jumbo industrial hubs will give a kick to the stock market.

The manufacturers are totally reliant on the consumers to purchase stuff like packaged edibles, clothes, toys etc. But manufacturers also deal with items that the ordinary person does not purchase. Government programmes aimed at stimulating the economy like road construction, improvement in health care and military requirements for war planes will fill in the vacuum.

American factories are beginning to get busy and general production has slowly begun to inch upwards. GEC reported 4% growth in profits in the third quarter. The idea is that even the hint of a growth will start getting things moving. 2 million jobs have vanished since the recession started from 2007 December. It will not be a quick recovery but years before the pre-recession level is reached. Thomas J. Duesterberg of Manufacturers Alliance said, “We have reached bottom and we are at worst bouncing along the bottom.” If jumbo manufacturers start picking up then the smaller units too will benefit. Thus there is a chain link that will push the train forward.

Caterpillar is a big name manufacturing bulldozers and many machines used to build anything from highways to also hospitals. It builds engines for ships that are essential for international trade. It has its mining trucks hauling treasures from the belly of the earth. Its key ingredient is steel – an essential raw material for making either cars or dishwashers. Caterpillar is set to increase its revenue by 7 cents per share. If Caterpillar shows improvement then the government will put in more funds for stimulating the nascent economy.

Boeing is another name to reckon with. Its success is linked with the carringy of people and cargo across the globe. It is also involved in manufacturing items for the military. It is however expected to report a loss. The downturn has made people put off their travel plans whether for business or pleasure.

foreclosure-listings468x602