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Have you ever wondered how many factories are in the U.S.? While it’s hard to pinpoint an exact number, one estimate shows there are currently over 590,000 in the U.S. alone, according to the latest data from IBIS World. Not only does this impact how consumers purchase products on a daily basis across North America, but manufacturing employs a staggering number of people. Manufacturing plays a critical role in the U.S. economy, as well as the personal economy for numerous families. Let’s take a closer look at why it’s so important to understand the impact this industry as a whole has on our daily lives.
How Many Factories are in the US?
One number from IBIS World suggests there are 591,720 manufacturing businesses in the U.S., representing a multitude of industries and services. This number represents facilities for industries such as food, transportation and manufacturing equipment, chemicals, petroleum and coal products, machinery, and electronics.
Keep in mind though, it’s difficult to determine the exact number, since manufacturing is a broad term and includes businesses and industries of all shapes and sizes. The sheer volume of the industries that rely on manufacturing to produce their products is so massive, it makes it difficult to capture the exact number.
As a whole, the number of factories in the U.S. appears to have declined slightly. Over the last five years, manufacturing has declined by 0.3%. The main reasons given for this recent decline mostly contributed to the COVID-19 pandemic and major supply chain disruptions.
Despite this small decrease, the manufacturing industry is expected to grow over the next several years, mainly due to increased demand and the prices of fuel leveling out.
Factors Affecting the Number of Factories in the US
There are several factors that impact the number of factories in the U.S. Like other large segments of the U.S. economy, there’s not simply one factor you can point to, but rather a mix of many of them.
Technological advancements are creating both a positive and negative impact on the number of factories we see in the U.S., as manufacturing relies on technology for improved automation. On the positive side, technology can:
- Improve the quality of the products produced
- Reduce certain costs
- Make the production time more efficient
- Help with supply chain efficiencies
- Make the workplace safer
But technology has a downside for manufacturing too, which may account for some of the decline in recent years.
- Increases number of lost jobs
- Limits creativity from workers
- Carries high costs initially
- Increases environmental concerns
Like technology, regulations on manufacturing can be helpful and harmful. One one hand, regulations can improve worker safety, hold manufacturers accountable to their customers and employees, and operate more ethically or responsibly.
On the other hand, too many regulations can bottleneck production, cause costly updates for companies, and create a complex burden on both small and large facilities. Manufacturing business loans could serve as a partial solution for covering these costs.
How Has the Number of US Factories Changed Over Time?
The number of factories in the U.S. has changed over time as a result of reacting to the changes in how goods are produced.
Manufacturing started during the First Industrial Revolution, in the late-1700s, from handmade items, to using steam to power production. Naturally, this increased the number of manufactured products.
The car production demand of the early 1900s, followed by the World War II boom for weapons and supplies, fueled another increase.
The mid-1900s gave us an increase in automation and introduced some computerization, but this led into the lean manufacturing years starting in the 1980s, where factories focused on streamlining production and making factories run as efficiently as possible.
Now we are in another increase as we experience what some refer to as the Fourth Industrial Revolution. Today’s manufacturing is highly connected to data, the internet, and smart products, resulting in greater demand for manufacturing.
What States Have the Largest Number of Factories?
California leads the way with 36,052 manufacturing businesses, according to IBIS World, Texas is the second highest, with 20,179 businesses. New York rounds out the Top 3 states, with 14,257 businesses.
Other states with a heavy manufacturing presence include Ohio, Illinois, Pennsylvania, and Michigan.
What US Cities Have a lot of Factories?
Manufacturing is not concentrated in one particular region of the U.S., but is found in numerous cities across the country. Some of the cities with the biggest manufacturing presence include Houston, Texas, New York, New York, Chicago, Illinois, St.Louis, Missouri, and Fort Worth, Texas.
What Type of Goods are Produced in US Factories?
When you stop to think about the number of goods produced by factories across the country, the amount is simply spectacular. Some of the common goods produced include:
- Housing products, including appliances, paint, and tools
- Aerospace and defense products
- Clothing and shoes
- Other consumer goods
Manufacturing is one of the segments of the U.S. economy that truly impacts daily living for anyone who works or lives in the U.S.
The Role of Government Policies in Supporting US Manufacturing
In 2021, manufacturing contributed $2.3 trillion to the U.S. GDP, which is about 12% of the total. With numbers this large, it’s no surprise there are government policies to support and boost the manufacturing segment.
It’s the role of the government to put policies in place to support manufacturing businesses and one example of this is the Made in America policy. This policy incentivises manufacturers to produce more in the U.S. and bolster the American supply chain process.
Other examples of past and current policies designed to support U.S. manufacturing businesses include tax credits, trade protection agreements, subsidies, and loan guarantees.
The Importance of Factories in the US
Factories and manufacturing are of extreme importance to the economy and livelihood of the U.S. Manufacturing not only brings jobs to communities, but brings revenue and other positive contributions, such as:
- Stronger economy. Creates jobs, drives innovation, and boosts economic growth at a local and regional level.
- Develops infrastructure. When manufacturing comes to town, it brings with it the need for improved roads, bridges, buildings, and utilities.
- Optimizes resources. Manufacturing leads the way in reducing waste and optimizing resources to operate lean and make as little negative impact on the environment as possible.
- Promotes global connections. Promotes trade and collaboration with other parts of the world as manufacturing companies work together for operational improvements or sourcing.
- Offers consumers more choices. When manufacturing is robust, it puts more power into consumers’ hands by offering more products to purchase and more customized products.
- Grows resilient communities. When manufacturing is stronger, it makes a community and the nation as a whole, more resilient, self-reliant, and more prepared to deal with a crisis.
How Many People Work in US Factories?
Manufacturing is clearly a large part of the U.S. economy and one of the reasons is because of the massive amounts of people it employs. In 2020, the U.S. Census Bureau recognized that manufacturing was one of the Top 5 Employers in the U.S. At the time, it was estimated there were over 11 million people employed in a manufacturing role in this country, producing a value of shipments of over $6 trillion.
What Challenges are Faced by Factories in the US?
As critical as manufacturing is to the U.S. economy and as bright a future this segment holds, it also faces unique challenges both right now and in the near future.
Supply chain disruptions
It’s no secret that supply chain disruptions have become the norm over the last few years. However, the impact is still causing a strain on the manufacturing segment. Global port congestion and high shipping costs are two examples of some of the major hurdles facing manufacturers.
Hiring skilled labor
Manufacturing is facing unprecedented challenges not only in labor shortages, but also in the quality of workers. Nearly one-quarter of manufacturer workers are aged 55 and over, according to the U.S. Census Bureau. Many of the Baby Boomers are retiring, which is putting a strain on the number of workers.
Additionally, as the older workers retire, they’re taking with them the knowledge and skills needed for manufacturing, and it’s getting increasingly tough to find quality replacements with workers.
Data is everything
Using data in multiple ways throughout the manufacturing process is another challenge facing manufacturers. Data can provide insights in everything from sourcing and production, to fulfillment and cost reduction. However, manufacturers are still struggling with how to use the insights to make decisions. The ones that can figure it out, are going to be more competitive.
Many manufacturers are already making progress with meeting the strict regulations and requirements for sustainability. However, manufacturers will have to make operational changes if they want to truly fulfill their commitment to sustainability. Examples of this include electrifying their industrial fleets of vehicles where possible and using technology to manage waste and improve recycling efforts.
What’s the Industry Outlook for Manufacturing and Factories in the US?
Despite the numerous challenges manufacturing and factories face, the industry is expected to grow over the next few years.
Fueling this expected growth is the leveling off of the supply chain constraints we’ve all seen over the last few years. Another boost may come from a steadiness in fuel pricing. However, there are big question marks too, including the ongoing Russia-Ukraine conflict and sustainability concerns as manufacturing tries to ramp up.