Most of us are lucky enough to remember grandparents who had vivid memories of the Great Depression. And like many of you, I would use adjectives such as practical, frugal, charitable and civic-minded to describe the generation that suffered through both the Depression in the 30s and then World War II in the 40s.
Now I do not believe that the recent recession in the U.S. economy was as severe as the Great Depression, nor are the wars in Iraq and Afghanistan as traumatic to our national psyche as was World War II. But I do think that these recent debacles have altered our collective perceptions of our culture and our lifestyles, and this will substantially affect our patterns of consumption in the years ahead. We too will become more practical and frugal, and I can only hope that we will also elevate our charity and civic-mindedness.
So how will this affect U.S. manufacturing? I believe that two beneficial trends are emerging. First, our rising consciousness of factors pertaining to safety, reliability, sustainability and practicality will result in an increased desire for items that are produced locally. Second, this consciousness will reinforce a trend that was already emerging: things produced locally tend to be less expensive in the long run.
After far too long of a hiatus, the information between suppliers and demanders of autos is once again starting to flow, and the focus is on finding a market need and fixing it. Worries about corporate profits, layoffs, executive salaries and market share are subsiding, and ideas pertaining to safety, energy consumption and utility are emerging. In short, companies that supply transportation and consumers who want to be transported are starting to communicate about cars. This process is still in its early stages, but it is a sure sign of the pending market and economic recovery, and it is everybody’s best hope that the North American manufacturing sector will reclaim its status as a viable and healthy driver of economic growth. It may take some time, but the market will correct its own problems if we let it.
If my theory is correct, then we will see clear evidence of it this year in the automobile market. Toyota did not rise to the top of the global automobile market by producing cars that were fast, sexy and sleek. Instead they developed a reputation for cars that were safe, reliable, inexpensive to operate and moderately-priced. Their recent travails will set off a huge battle for their global market share and the winners will be companies that meet the current needs of the marketplace. Demand for cars will rise in 2010 and beyond, but the growth will be gradual. But be forewarned that the American love affair with cars has matured, and muscle cars are not what we need or want at the present time.
The trends in residential construction will follow a similar trend. There will be growth in the coming years in housing starts, sales of existing homes and total construction spending, but here too the gains will be gradual and we are starting from a low base. Market demand will shift from luxury condos and McMansions to structures that are energy-efficient, secure and functional. Homes will still need to be connected to the information superhighway, but home-based activities that do not require electronics (such as cooking) will be desired. Products that promote indoor air and water quality, without an increase in discarded packaging products, will also gain in popularity.
To distill it down, I will say that Americans will likely invest more and consume less. There will be a little more put in savings accounts, and a little less put on credit cards. This not only feels right, but it is exactly what our grandparents would advise us to do if they were still alive.