U.S. Manufacturing Shows Promise of Growth, Efficiency

According to December 2011 Department of Labor figures, U.S. manufacturing employment is on the rise, reflecting a second consecutive year of job creation.  And although the addition of some 334,000 manufacturing jobs does not return the workforce to pre-recession levels, the recent uptick of American exports suggests that U.S. firms are emerging from the economic downturn  with a focus on lean and productive operations, both as a means to weather an unstable economic climate, but also to underpin future competitiveness.

Energy Efficiency to Optimize Production, Underpin Competitiveness

The economic recession, beginning in late 2008, prompted a long period of consolidation for U.S. manufacturers due to shrinking demand worldwide. As a result, individual firms have exercised a diversity of business tactics in response to this prolonged period of economic uncertainty including decreased production, layoffs and tightening capital budgets. Many U.S. manufacturers have also initiated aggressive energy efficiency campaigns to capitalize on energy cost savings and other associated non-energy benefits—increased productivity, reduced scrap, and process optimization, among others—to bolster competitiveness. This is evidenced by the prevalence of manufacturers’ public commitments to energy efficiency, including explicit efficiency targets and participation in public programs such as the U.S. Department of Energy’s (DOE) Better Buildings, Better Plants program (formerly “Save Energy Now LEADER”).

Given limited capital budgets over the past three years, energy efficiency improvements have tended to focus on projects capable of a rapid return on investment, requiring little or no capital investment.  Subsequently, some observers are predicting that these years of deferred capital investments have created pent-up demand for capital improvements and that the U.S. manufacturing sector is poised for significant cyclical investment in the modernization and upgrade of process technologies as the economy improves.  This creates an opportunity for industrial plants to upgrade both process and cross-cutting equipment to maximize energy efficiency, thereby gaining a competitive edge in energy intensity.

Renewed Focus on Energy Management

Restricted budgets have also contributed to market interest in “energy management,” a concept that focuses initially on behavioral and institutional modifications instead of simply retrofitting discrete technologies to generate energy efficiency gains. In fact, aligned with market activity, the International Organization for Standardization released the highly anticipated ISO 50001 Energy Management Standard in mid-2011 to assist companies and institutions in managing their energy use effectively. In addition to elevating energy efficiency into an organization’s management practices, ISO 50001 also includes provisions for procurement of energy-efficient equipment. Therefore, firms may shape procurement strategies and ensuing investments in energy-efficient technologies to achieve conformance with the standard.

This standard, which was developed under the guidance of industry representatives from 56 countries around the world, will also be featured as a core component of Superior Energy Performance (SEP), a new DOE plant certification program expected to launch in 2012. SEP certification will be granted to U.S. plants that conform with  ISO 50001 and achieve energy performance improvements. 

Manufacturing Central to Job Growth, GDP

Public initiatives to support U.S. manufacturing have been fundamental to economic recovery strategies. This is based on broad recognition that a strong manufacturing base is critical to both short-term economic vitality and long-term competitive positioning for the manufacture of next generation materials and products. One recent example, the Advanced Manufacturing Partnership—a collaborative of federal agencies, leading manufacturing executives and top research universities—has assembled at the request of the Obama administration to identify explicit research and development (R&D) priorities to advance the global competitiveness of U.S. manufacturing. This initiative is expected to invest up to $120 million over the next three years to nurture some of the most promising advanced materials and manufacturing processes to ensure continued industrial innovation and energy efficiency will contribute to future economic growth.