April 2, 2015

Small Business Manufacturing Is Up. One Reason: Reinvention

Small Business Manufacturing Index

Small business manufacturing is growing, according to a recent analysis.  One big reason for the growth is the ability of small manufacturers to reinvent themselves to take advantage of new industries and new business opportunities.

The PayNet Manufacturing Index found that American manufacturing by small businesses is up 48 percent since 2009.   While it still hasn’t rebounded to pre-Great Recession highs, the trend overall is significantly upward since 2009. See chart above (black line is the full index – green line reflects the industrial machinery sector).

PayNet’s index measures investments by small manufacturing businesses in property, equipment, tools and business units.  In other words, small businesses in manufacturing are investing again – a positive signal.

Manufacturers of industrial machinery and equipment are one category of manufacturers fueling this resurgence in an area of the economy that has been losing jobs since the 1990s. Companies manufacturing equipment like gas compressors, carburetors, tools, and industrial fans fall into this category. They did better than manufacturers as a whole.

PayNet President William Phelan said with the release of the new data, “This sector is the biggest example of the resurgence of U.S. manufacturing. The process of re-invention and recreation is core to business right now and surviving companies have figured this out.”

Instrument manufacturers make up another category showing positive gains since the 2009 recession lows.

One sector that has not seen growth is small manufacturers in the printing and publishing sector.  They appear to be a casualty of the digital age. There’s less need for book binding and other traditional printing technologies, PayNet points out.

PayNet also notes that these investments by small business manufacturers are driving productivity increases of 15%.  Small businesses are “producing more manufactured goods for the same level of capital.”

PayNet is based in Skokie, Illinois. It was founded in 1999 and maintains a large proprietary database of small business loans, leases and lines of credit encompassing over 20 Million contracts. The company also publishes the Thomson Reuters/PayNet Small Business Lending Index.  PayNet recently launched a Small Business Delinquency Index.

Chart credit: PayNet


Joshua Sophy - Staff Writer

Joshua Sophy Joshua Sophy is a staff writer for Small Business Trends, covering technology and business news. He is a journalist and editor with 15 years experience in media. A former newspaper reporter and editor, Joshua also serves as President of the Board of Directors of a curling club and is editor of a regional newsletter focused on the sport of curling in the Eastern U.S.

5 Reactions

  1. Hi Josh,
    Thanks for the report. Definitely interesting about small manufacturing’s ability to reinvent itself to adapt to changing markets. Especially given the poor state of U.S manufacturing in general as it is portrayed in the mainstream media and imagined by the public consciousness.

    • Shawn: The small business manufacturers are the lifeblood of the production in the United States. For an inspiring read, I recommend you to check out American Steel by Richard Preston.

      I wonder what will happen when the 3-D printing will become more widespread. Do you think it will revolutionize the manufacturing industry in the same way as Nucor changed the steel industry with its mini-mill concept?

  2. Joshua Sophy: Have you compared the PayNet Manufacturing Index with the Purchasing Managers’ Index?

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