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American manufacturers can look forward to another strong year in '95, as they are once again ex- pected to outshine the overall U.S. economy.

"The outlook for manufacturing continues to be quite good," says 3M Corporate Economist John McDevitt. "Technological innovation, creativity, improvements in quality, and focus on the customer will result in continued growth--regardless of who's in Washington."

McDevitt is projecting 2.5 to 2.75% real growth, adjusted for inflation; Cahners Economics predicts a similar rise of 2.2%, as the current business cycle matures.

That's a bit of a slowdown in the U.S. expansion, which was an estimated 3.5% in '94; but OEMs here should benefit from economic rebounds abroad. "More and more, U.S. manufacturers are finding that exports offer opportunities for growth that had previously been limited by small gains in domestic activity," according to the Cahners 1995 Economic Outlook.

As American manufacturers continue to make advancements in productivity and quality, exports are expected to soar. "By the year 2000, we should see a trade surplus of $5 billion," McDevitt predicts.

Industrial machinery. Aggressive capital-investment programs helped propel the industrial-machinery and equipment sectors to strong increases in the past two years. "Although some slowdown in growth is inevitable in 1995, most sectors will enjoy another good year," Cahners predicts. One top growth area: machinery for service industries and construction.

The electronics industry showed stronger-than-expected expansion in 1994, with component sales rising almost 18%. Cahners is expecting "a solid, if more moderate, expansion in mid-1995." Semiconductor sales should increase an overall 9%, while metal-oxide semiconductor microcomponents--including microprocessors--are predicted to rise 14%.

Two high-tech sectors Cahners expects to cool: Computer and office equipment, from almost 16% growth last year to 3.3% in '95; and communications equipment, from 22% last year to 3.5%. General test-and-measuring equipment should see 5% growth.

Post-Cold-War fallout. Defense electronics, which have seen a major slide following the breakup of the Soviet Union, should slow from an 8.8% decline in 1994 to a 6.1% drop this year. Aerospace, though, faces a shakeout as post-Cold-War mergers and cutbacks reshape the industry. "There's no indication that it's hit bottom," says James E. Challenger at Challenger Gray & Christmas, an agency which tracks job losses. "Over the last two years, they've seen more cuts than any other industry."

The auto industry should enjoy another year of respectable gains, with auto sales expected to rise 2.1% in '95 and light trucks--including popular minivans and sport-utility vehicles--increasing 3.8%.

And, consumer electronics should post a 5.9% growth in 1995, bringing shipments of household audio and video equipment to $13.3 billion.

Productivity boost. One of the most stunning achievements of U.S. manufacturing companies has been a steady increase in productivity, which rose about 5.5% last year, McDevitt notes. "Manufacturers have done a better job of managing their businesses than anybody anticipated," he maintains. "As a result, U.S. manufacturers are the envy of the world."


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