Don't tell Michael W. McLanahan that manufacturing in the United States is dead. His family-owned, privately held company has made mineral processing and farm equipment since its founding way back in 1835 -- and is enjoying a boom.
"It was our best year ever," said McLanahan, during a tour of the busy factory in central Pennsylvania that illustrates why manufacturing is growing twice as fast as the broader economy.
McLanahan, 73, is the fifth generation of his family to run the capital-intensive company. It builds equipment to help mining companies separate product from waste, the dairy industry to remove manure from sand and the energy sector to segregate gravel from silica sand used in fracking - the process of drilling through shale deposits thousands of feet below ground to reach natural gas.
McLanahan Corp. boomed even as U.S. economy struggled to gain momentum in 2011 and the global economy was panicked and fearful that Europe's debt problems would drag everyone down. One important reason for McLanahan's success - and for U.S. manufacturing's rising luster - is an export revival.
McLanahan Corp. is no outlier. The manufacturing sector as a whole bounced back in 2011, adding more than 287,000 new positions over the last 13 months and shifting into higher gear after a summer slowdown brought on by Europe fears.
During 2011, exports of U.S. goods and services were up by 14.5 percent over 2010, to a record $2.1 trillion, the Commerce Department reported Friday. And despite Europe's economic problems, U.S. exports to Europe rose 3.6 percent in December.
In the 1990s, as environmental regulation stiffened on the U.S. mining industry, McLanahan refocused the company to take advantage of export opportunities. Back then, about 10 percent of the company's product went overseas. Today it's about 70 percent.
Mineral-rich Australia is a big customer, and McLanahan has benefited greatly from that country's high labor costs and weaker manufacturing base.
"We can build here and ship into Australia for cheaper than they can make it there," said McLanahan. He laments that mining in the United States has shrunk so much and with it, domestic sales opportunities. "I knew that the future of our company depended on a robust export effort."
During a recent visit, the Pennsylvania manufacturer was busily filling orders from Iceland and Colombia, as well as actively building log washers for the timber industry and equipment for dairy farmers. It recently installed equipment in Glen Rose, Texas, to prepare fracking sand for shipment. Natural gas drillers in Pennsylvania are consuming so much silica sand, he said, that the price now varies between $240 a ton to $400 a ton, compared to $10 a ton for sand used in concrete mix.
Other data also signal a nationwide manufacturing rebound. December orders for durable goods - big-ticket items such as cars, refrigerators and industrial equipment - rose by a better-than-expected 3 percent. That was on top of November's upward revision to a 4.7 percent increase.
Similarly, Federal Reserve data for December show manufacturing output rose nine-tenths of a percentage point. For the final three months of 2011, industrial production rose at an annualized rate of 3.1 percent, the 10th straight quarter of growth.
It's good news for a sector that accounts for about 12 percent of the U.S. economy but lost more than 6 million jobs over the past decade. There's even anecdotal evidence that some companies that had shifted production overseas are beginning to come home, a process known as in-sourcing or re-shoring. Some orders for iron castings that McLanahan had lost to China are returning because of quality and supply issues.
