Court Carruthers, president of Grainger U.S., discusses some of the key issue his customers face as 2013 begins.

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With some of the federal issues resolved for the moment, how would you evaluate the growth potential for the U.S. manufacturing sector?

Some manufacturers, especially those in heavy manufacturing, are beginning to “re-shore” some production back to the U.S., primarily due to increased transportation costs, increased offshore labor costs, supply chain risk mitigation, and the need to closely connect R&D to the manufacturing floor in an effort to respond faster to emerging trends. With an increase in U.S. driven demand for products, it’s also far more attractive to have production closer to the customer, which, among other things, reduces warehousing while improving quality and protecting intellectual property.

How much of that growth is determined in the U.S., and how much is a matter of global issues? And how would you assess the global health of manufacturing?

As the U.S. begins to see re-shoring, China and emerging markets are experiencing salary inflation, but it is not cost-prohibitive at this point. While labor costs are a major consideration, questions need to be answered around quality, transportation cost, the cost/benefit of being first to market, and supply chain risk. These are the key factors driving the manufacturing infrastructure and manufacturers’ next steps. The health of the sector will significantly depend on answers to these questions.

What factors outside of government will continue to affect manufacturing in 2013?

Beyond the factors outlined above, employment, in the U.S. in particular, will be the key to driving the manufacturing sector forward. The manufacturing industry has a large amount of skilled jobs to fill and not enough qualified applicants. And as the baby boomer generation continues to retire, that gap will widen even more and hinder manufacturing growth considerably.