Recession's Sizable Effect on Manufacturers
Large manufacturers seem to have weathered the economic storm the best, according to a recent survey of 150 manufacturers, commissioned by Advanced Technology Services with Frost & Sullivan.

The findings, reported last week, indicate that 29 percent of larger companies (those with 1,000 or more workers) reported no impact at all on their business due to the recession, while 19 percent of respondents said the economic downturn has had a "great" impact or "very great" impact on their business. Medium-sized organizations reported seeing the greatest impact.

"This recession was a reality check for many businesses," ATS President Jeff Owens said in a statement. "I think those that reported seeing little or no impact were certainly in the minority."

As manufacturers attempt to move forward following the recession, expectations of when a real recovery will take place vary widely. While 36 percent of respondents expect economic growth to resume by the first or second quarter of this year, 23 percent expect growth later in the third or fourth quarter. One-fourth of respondents do not expect growth until 2011 or later.

Nearly a third of small manufacturers surveyed expect to see no growth in demand at all in 2010, with business only starting to pick up in 2011. Meanwhile, many large companies say they are already seeing tentative signs of growth and expect economic recovery to take hold this year.

U.S. Productivity Rises in 2009
Productivity in the United States continued to increase through 2009, lifting prospects for the country's global competitiveness and widening the productivity gap with certain other economies, according to The Conference Board last week.

U.S. productivity rose by 2.5 percent in per-hour terms last year, due in large part to reduced work hours that counterbalanced declines in output, the report said. Productivity growth for 2010 is expected to be 3 percent.

By comparison, European productivity fell by 1 percent last year in terms of output per hour, falling further behind the U.S. and matching the worldwide average in decline. The Conference Board expects Eurozone productivity to rebound to 1.7 percent growth in the new year.

"These are unusually large differences in productivity growth between the U.S. and Europe," Bart van Ark, chief economist of The Conference Board, explained in an announcement of the findings. "U.S. employers have reacted much more strongly to the recession than their European counterparts in terms of cutting jobs and hours."

Meanwhile, China saw productivity growth of 8.2 percent in 2009, making it a productivity leader among emerging markets. The Conference Board projects China's productivity gains will continue in 2010, rising a further 7.7 percent after a strong year of growth.

"Emerging economies are charging ahead on one especially important measure of worker productivity called 'total factor productivity,' which teases out productivity improvements that come from firms investing in new technology or hiring better-educated workers. What's left is a pure measure of workers and firms learning to operate more efficiently," the Wall Street Journal's Real Time Economics blog reported.

Global Container Freight Rates Show Year-on-Year Increase
For the first time since mid-2008, average global container freight rates experienced a year-on-year increase in late 2009, according to U.K. consultant Drewry's December 2009 Container Freight Rate Insight report.

Drewry's Global Freight Rate Index, released last week, recovered by 3 percent in the year to November 2009, after falling 18 percent between July and September 2009 and rising 6 percent between September and November.

During the September to November period, the global "all-in" container-freight rate index rose from $2,040 per 40-foot container to $2,160, "maintaining a trend of price rises that has lasted for more than six months," Drewry said in a statement. However, recent average global freight rates in late 2009 were still about 20 percent below the peak of 2007.

The firm's consultants have forecast that average container freight rates, including fuel surcharges, will be about 15 percent higher this year than they were in 2009.

DARPA's Next Project: The Manufacturing Sector
As the manufacturing sector struggles to stabilize from the economic downturn, new help may be coming from an unlikely source: the Defense Advanced Research Projects Agency (DARPA), a division of the Department of the Defense responsible for many cutting-edge, and often unusual, devices and concepts.

In an early-January meeting with the President's Council of Advisors on Science and Technology (PCAST), DARPA director Regina Dugan said that by modeling manufacturing along the lines of the thriving semiconductor industry, which relies on foundries for fabrication while companies focus on product design, manufacturing may experience a similar financial boom, Popular Science reported.

According to PhysicsToday, DARPA is now beginning a five-year effort, funded with $1 billion, to conceptualize ways to reverse declines in the manufacturing industry and strengthen its role within the economy.

"DARPA wants to do for U.S. manufacturing what it did for the communications and IT industries with the Internet," Dugan told the PCAST.

The key component in this large-scale overhaul, according to Dugan, is separating design processes from production processes because connecting each stage of development in a vertical integration process — from prototyping to large-scale manufacturing — produces delays, rework and cost overruns.

"In proper DARPA fashion, details concerning this great economic panacea are scarce," Popular Science explained. "That's probably because, while this sounds good from a macro perspective, a closer look at America's manufacturing sector reveals diverse industries across which the semiconductor paradigm might not necessarily fit."