A monthly round-up of the MAPI resources available to NFPA members through NFPA's membership in MAPI.

Issues in the Brief

China's Future Growth Prospects: Heading Toward a Middle-Income Trap?
While the consensus among researchers is that China is nearing or already at the end of its high-growth era after more than three decades of double-digit economic expansion, there is still heated debate about what the new normal growth rate will be, whether the downward shift will be gradual and modest or abrupt and profound and whether China will be stuck in the so-called "middle-income trap." Forecasting the timing and magnitude of China's growth slowdown is an imperfect science, but it is clear that China is at a crossroads, and how the government responds to these challenges will play a crucial role in determining whether China can settle down smoothly around its new potential growth rate.

A Look at KORUS FTA One Year In
March 15, 2013 was the first anniversary of the entry into force of the U.S.-Korea Free Trade Agreement, and the debate as to its potential impact that raged during its protracted negotiation, renegotiation and ratification process endures. The U.S. and South Korean governments and free trade proponents say that the agreement, at this early date, is living up to its promise, with greater benefits likely upon further implementation. Critics continue their mantra that free trade agreements expand the U.S. trade deficit and thus cost the country jobs

Weakness in Entrepreneurship and Small Business: Challenges for U.S. Employment
Public dialogue on the multidimensional U.S. job growth challenge often overlooks the vital issues of entrepreneurial dynamism and the health of the small business sector. These are critical omissions. Research supports the importance of new businesses for employment recovery and employment expansion. This Issues in Brief spotlights two concerns. The entrepreneurial thrust to both private sector and manufacturing employment gains has been weakening fairly rapidly, a problem which appears to have begun well before the most recent recession. Second, small businesses have had a disturbingly tepid rebound from the 2007-2009 downturn, a problem shared by small manufacturers.

Reinventing Sales Compensation at Siemens
When Siemens recently redesigned their incentive compensation system, they sought to strengthen the link between pay and performance, reward profitable sales and simplify plans so they were both easier to understand and more competitive with industry peers. The company spent six months on due diligence, defining roles and testing assumptions. That upfront work yielded big dividends: volume is up 19% and sales productivity is up 22%.

Where Did All the Displaced Manufacturing Workers Go?
What happened to displaced manufacturing workers following the 2008-2009 recession? Did they find new jobs? If so, in what industries? The sharper employment loss in manufacturing and the less complete jobs recovery both beg the question as to why the unemployment rate for manufacturing workers is so much lower than that of the general economy.

U.S. Trade in Manufactures Flat in the First Quarter While Chinese Trade Continues to Soar
U.S. exports of manufactures in the first quarter of 2013 of $299 billion were the same as in 2012, and the trade deficit was up by only $2 billion to $109 billion. Chinese exports, in striking contrast, rose by 19% to $484 billion, while the trade surplus soared by 28% to $175 billion. This report presents these figures in greater detail, including for the nine largest high-technology sectors. It also provides figures for U.S.-China bilateral trade in manufactures, which is extremely unbalanced.

Economic Review

China's Economic Growth in 2013; Economic Recovery Lost Some Steam in the First Quarter (no video)

Economist Yingying Xu provides an update of China's economic growth in the first quarter of 2013 as well as her forecast for GDP and industrial production growth this year. She discusses trade, housing prices, inflation and credit and lending. With China's leadership transition, she believes that economic activities may be held back by policy uncertainties on many important issues, including the property market, shadow banking and the buildup of local government debt.

Manufacturing Facts: A New MAPI Production, is a collection of the key facts and figures that define the state of the U.S. manufacturing industry.

Manufacturing Facts: The Sector has Improved Living Standards
Manufacturing has substantially increased American consumers' standard of living. Strong productivity gains, rapid advances in innovation and international competition have led to deflation in manufactured goods, caused primarily by the dramatic quality improvement in computers and a corresponding reduction in prices of electronics. Between 1995 and 2011, manufacturing prices have hardly changed as the overall price level increased by 39%.

Manufacturing Drives Productivity Growth
Manufacturing productivity (excluding computers) consistently outpaces such growth in other sectors; between 1998 and 2011, it grew at an average annual rate of 3.3%. In contrast, service sector productivity grew by 1.5%. Higher productivity means that we can produce more with our stock of resources (labor and capital) and it is thus the basis for higher wages and living standards.

Investment in Equipment and Software Drives Demand for Manufacturing
Investment in equipment and software totaled $1.1 trillion in 2011, representing 8% of GDP (as measured in inflation-adjusted dollars). Inflation-adjusted investment in this area grew by an average annual rate of 5.4% from 1995 through 2011, greatly outpacing the average GDP growth rate of 2.4%. The strong growth in investment in equipment and software helps explain why productivity growth in the manufacturing sector has been strong.

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This report is made available by NFPA as a service to the fluid power industry and contains information provided by companies in the industry. NFPA does not recommend or endorse any particular use of this report. NFPA, its directors, members and employees are not responsible for errors or omissions in the report or for loss arising from its use and disclaim all warranties and guarantees, express or implied, with respect to the information in this report.