It’s National Manufacturing Day!

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Today, October 5, is National Manufacturing Day. The day is being marked with events around the country highlighting the importance of manufacturing to the U.S. economy and celebrating innovations in fields ranging from aerospace and automobiles to nanotechnology and medical devices.

Manufacturing remains a vital component of America’s economy. However, as Neil Irwin wrote Monday in the Washington Post in “The manufacturing recovery that wasn’t,” despite claims that U.S. manufacturing sectors have recovered and put the United States on track to regain its status as a global industrial powerhouse, the reality is that U.S. manufacturing recovery—just like broader U.S. economic recovery—has a long way to go. As Irwin points out, while “the U.S. manufacturing sector isn’t collapsing, it’s definitely flat-lining.” Industrial production by U.S. manufacturers fell in June, July, and August at a 1.4 percent annual rate and the factory sector added an average of 5,000 jobs nationally each month this summer compared to 19,000 per month during those months in 2011.

In other words, American manufacturing has a long way to go to recover from the 5.7 million jobs it lost and 11 percent decline in output it suffered during the 2000s. As ITIF has written before, the conventional wisdom that US manufacturing job loss is simply a result of productivity-driven restructuring (akin to the way that U.S. agriculture lost jobs but is still healthy) is fundamentally flawed. US manufacturing lost jobs because manufacturing lost output. And it lost output because its ability to compete in global markets—some manipulated by egregious foreign mercantilist policies, others supported by better national competiveness policies than ours, including much lower corporate tax rates—declined significantly.

American manufacturing can again become a strong driver of economic and employment growth. But we’re not there yet. As ITIF explains in Fifty Ways to Leave Your Competitiveness Woes Behind: A National Traded Sector Competitiveness Strategy, there are a range of policies regarding technology, tax, trade, talent, access to capital, and streamlining of regulations that Congress, the Administration, and U.S. states should undertake to spur revitalization of American manufacturing.

Congress has already taken the first step in the form of the introduction of H.R. 5865, the American Manufacturing Competitiveness Act of 2012, introduced by Rep. Daniel Lipinski (D-IL) and Rep. Don Manzullo (R-IL), which calls for the creation of an American Manufacturing Competitiveness Board that would perform a comprehensive analysis of the nation’s manufacturing sector and, using results from the analysis, develop a strategy to improve the competitiveness of domestic manufacturing efforts. The House passed the Act on September 12, 2012 and now the Senate is evaluating similar legislation in S. 751, introduced by Sen. Sherrod Brown (D-OH) and Sen. Mark Kirk (R-IL), which would require the Secretary of Commerce to develop a comprehensive national manufacturing strategy.

But while Congress should pass this legislation and task the Secretary of Commerce with developing a national manufacturing strategy, there’s no need to wait for such a report before Congress takes action on a range of other policies from creating a National Network of Manufacturing Institutes; to reducing corporate taxes while preserving incentives to invest in R&D, capital equipment and workforce training; to funding a national skills standards initiative. For their part, businesses should look at the true cost of foreign manufacturing operations (such as by using tools like the Total Cost of Ownership (TCO) estimator developed by Harry Moser at the Reshoring Initiative) and evaluate the attractiveness of reshoring manufacturing operations to the United States.

It’s Manufacturing Day, so think about what you can do to revitalize American manufacturing today!

 

Image Credit: Flickr Creative Commons by Christopher Dilts 

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About the author

Stephen Ezell is a Senior Analyst with the Information Technology and Innovation Foundation (ITIF), with a focus on innovation policy, international information technology competitiveness, trade, and manufacturing and services issues. He is the co-author with Dr. Atkinson of "Innovation Economics: The Race for Global Advantage" (Yale, 2012). Mr. Ezell comes to ITIF from Peer Insight, an innovation research and consulting firm he co-founded in 2003 to study the practice of innovation in service industries. At Peer Insight, Mr. Ezell co-founded the Global Service Innovation Consortium, published multiple research papers on service innovation, and researched national service innovation policies being implemented by governments worldwide.