Recently, I wrote about how the 2000s were a lost decade for U.S. manufacturing. Ensuring that the 2010s are not more of the same will require a robust national manufacturing policy to help producers in America become much more productive and innovative. Unfortunately, to date, Washington has not embraced such a policy.
The key question is why?
One reason is that there are three major camps in manufacturing policy and only one puts a national innovation agenda at the top of the list.
Camp 1: Manufacturing Doesn’t Matter, So No Need for a Manufacturing Policy
These advocates have a clear policy message regarding U.S. manufacturing. Don’t do anything specifically to help manufacturing. The reason? Manufacturing doesn’t matter. The members of this camp are numerous. Kenneth Green, a resident scholar at the conservative American Enterprise Institute (AEI), writes: “As long as China is selling us the products we need, the location of manufacturing isn’t really that critical for the economy.” Meanwhile, Columbia University’s Jagdish Bhagwati dismisses anyone who says manufacturing is important as suffering from a “manufacturing fetish,” while economic columnist Robert J. Samuelson writes that … Read the rest
On Capitol Hill yesterday, ITIF hosted an event making the social and economic case for autonomous vehicles. The event featured presenters from Toyota, Google, and Texas Instruments, as well as DC Councilmember Mary Cheh, who introduced the Autonomous Vehicles Act of 2012, which authorizes autonomous vehicles to operate on the District’s roadways. (Similar legislation has also been enacted in California, Florida, and Nevada and introduced in nine other states.) Collectively, the panelists made the case that the advent of automated driving (i.e. driver assistance) technologies—and ultimately fully autonomous vehicles—is poised to deliver tremendous safety, personal mobility, environmental, productivity and efficiency, and economic benefits.
Regarding safety, with human error the definite or probable cause of 93 percent of traffic accidents, autonomous vehicles could dramatically reduce accident incidence because they will obey all traffic laws, won’t speed, and won’t drive while distracted, tired, texting, or inebriated. This could significantly ameliorate the over 4 million traffic accidents which occur annually on U.S. roadways and which cause more than 35,000 traffic fatalities (almost 100/day) and an estimated $450 billion in economic losses. In the meantime, a range of automated driver assistance technologies, … Read the rest
Innovation is one of America’s most prized assets. If our country is going to successfully compete on the global stage over the course of the next several decades, we must develop the new technologies, businesses and industries that will allow us to keep pace. President Obama’s just-released budget for 2014 contains several key components that further this goal.
ITIF applauds the President’s $1 billion request to create a series of manufacturing innovation institutes that will help propel advanced manufacturing and rejuvenate a sector of our economy that has been hit especially hard over the past decade. The National Network for Manufacturing Innovation will create 15 advanced manufacturing centers across the country that will spur research, development and deployment of next generation technologies, products and processes. As ITIF has shown, improving manufacturing innovation is central to enhancing American competitiveness and furthering economic development and business creation.
On energy innovation, the President’s budget request continues to push for greater public investment in the development of new clean energy technologies. The budget proposes boosting clean energy research to nearly $5 billion, a 15 percent increase compared to the FY2013 Continuing Resolution (CR) … Read the rest
After already slashing R&D funding, the Sequester is about to deliver another kick in the teeth to American competitiveness: it’s going to sharply reduce our ability to measure it. This one comes courtesy of the Bureau of Labor Statistics, which announced last month that the sequestration has forced it to eliminate its International Labor Comparisons (ILC) program, a neat little database that adjusts foreign data to a common framework, allowing you to compare the traded sector health and competiveness of the United States against that of other countries.
This may not sound like much, but in the nerdy world of competitive analysis economics, it’s huge. No one else provides this data to the same extent as ILC. The OECD does a bit,[i] but their data are rife with warnings about the perils of cross-country comparison among their indicators. Moreover, the OECD has little-to-no data on the big boys such as China and India, which renders its data useless for any “big picture” comparisons of our competitive health. Other organizations, such as the UN Industrial Development Organization, provide limited competitiveness data that is vastly incomplete.
In contrast, the ILC … Read the rest
In my inaugural article I tried to make the case for why Washington should care about manufacturing (Reason: it’s the key traded sector for the U.S. economy.)
But once one accepts the importance of manufacturing, the next question is how is the manufacturing sector doing? Is U.S. manufacturing healthy and not in need of a national manufacturing policy or is it in trouble and in need of smarter policies?
One key indicator to answer this question is change in the number of manufacturing jobs.
America lost 5.7 million, or 33%, of its manufacturing jobs in the 2000s. This is a rate of loss unprecedented in U.S. history—worse than in the 1980s, when BusinessWeekwarned of deindustrialization and worse than the rate of manufacturing job loss experienced during the Great Depression.
While U.S. manufacturing has clawed back, regaining about half a million of those lost manufacturing jobs since 2010, there’s little doubt that the 2000s constituted the worst decade for manufacturing employment in the Republic’s history.
Moreover, the recovery of manufacturing jobs is actually worse than in most prior recoveries.
In response to these statistics, … Read the rest
Manufacturing has been the focus of much attention lately — a key theme of President Barack Obama’s Inauguration and State of the Union addresses and the subject of numerous recent books and articles. But why does manufacturing matter? Why should Washington in particular care? Most commentators miss the real reason.
And getting the answer right is imperative because many economists, like Nobel Laureate Gary Beckerand Columbia’s Jadish Bhagwati, persist in trying to convince policy makers that America can thrive without manufacturing, and in fact would be better off without it.
Here are some reasons that don’t really matter.
Manufacturing is inherently better than services.
The notion that making a widget is better and more ennobling than selling it or marketing it is simply wrong. Both produce income and output.
Manufacturing jobs pay more.
Sure, but manufacturing jobs pay just $2.50 more per hour than the average of $30.44 for all U.S. jobs. And despite the much-ballyhooed creation of some 500,000 manufacturing jobs over the past two years, many of the new jobs are on tiered wage scales and pay around $15 per hour. If we tie the … Read the rest
This is the 5th and final post in a series analyzing and detailing federal investments in clean energy innovation. Part 1 defined “clean energy innovation.” Part 2 broke down the federal clean energy innovation budget. Part 3 took a look at federal investments in clean energy demonstration projects. Part 4 took a deeper dive into clean energy deployment policies.
In the first post of this series, I called attention to the eminent need for supporting a well-developed and funded clean energy manufacturing sector as part of a robust innovation ecosystem. The feedback loops between manufacturing and research is explicitly linked. Even with all the R&D, demonstration, and deployment of clean energy, the United States could lose its competitive advantage over production resulting in the industry (and future innovation) to move overseas without strong policy support for advanced manufacturing. But like many other parts of America’s energy innovation budget, support for advanced manufacturing is rapidly declining.
The figure below shows that investment in clean energy manufacturing has fallen from nearly $9 billion to only $700 million between FY2009 and FY2012, or a 92 percent decrease. Direct spending in FY2009 and FY2010 … Read the rest
President Obama Calls for Creation of a National Network for Manufacturing Innovation in State of the Union Address
In his State of the Union address this evening, President Obama called on Congress to support creation of a network of at least fifteen manufacturing innovation institutes that would bring together industry, universities, community colleges, federal agencies, and states to accelerate innovation by investing in industrially relevant manufacturing technologies with broad applications. The first institute in this network, the National Additive Manufacturing Innovation Institute, launched in Youngstown, Ohio in August 2012 to pioneer additive manufacturing and 3D printing technologies and tonight the President announced the launch of three more of these manufacturing hubs “where businesses will partner with the Departments of Defense and Energy to turn regions left behind by globalization into global centers of high-tech jobs.
As ITIF explains in Why America Needs a National Network for Manufacturing Innovation, these institutes are poised to play a pivotal role in spurring U.S. industrial competitiveness and revitalizing American manufacturing by helping bridge the gap between basic research and product development, providing shared assets to help companies (including small- to medium-sized enterprises, or SMEs) access cutting-edge capabilities and equipment, and creating a compelling environment in which to educate and train … Read the rest
This week, the Brookings Institution released three papers with recommendations to revitalize the domestic manufacturing sector. One proposes the creation of a national network of advanced industries innovation hubs, which would “focus on cross-cutting innovation and technology deployment challenges …by drawing universities, community colleges, state and local governments, and other actors into strong industry-led partnerships.” Another paper calls for an annual, $150 million national “Race to the Shop” competition involving multidisciplinary proposals “to address the manufacturing workforce and skills challenges” of states and regions. Finally, the third paper, authored by ITIF President Robert Atkinson and ITIF Senior Analyst Stephen Ezell, recommends the designation of 20 U.S. “manufacturing universities,” which would receive an annual, federal award of at least $25 million and be obligated to “revamp their engineering programs much more around manufacturing engineering, with particular emphasis on work that is relevant to industry.” The release of the reports helps highlight the need not only for a robust domestic manufacturing sector in general, but a robust clean energy manufacturing sector in particular.
As Atkinson and Ezell note in their book, Innovation Economics: The Race for Global Advantage, “Perhaps no canard … Read the rest
American manufacturing is in crisis. Over the last decade the United States lost one-third of its manufacturing jobs, more than any other industrialized nation, and our total industrial production was actually less in 2010 than at the start of the 2000s. And for those who think the movement of manufacturing to lower cost countries is simply the natural order of things, you only need to look at the impact of manufacturing loss on innovation to see the true danger in this decline.
As industrial production has moved overseas, the engineering, product development and technology innovation that are key components of manufacturing has gone with it. And it is getting worse. Countries like China and India are pumping millions into their R&D and university infrastructure, while adopting mercantilist trade policies that are only enhancing our loss of intellectual property and technical know-how. Given this environment, the United States is in serious jeopardy of permanently losing the race for innovation advantage, further hampering our overall economy and the standard of living of our citizens.
In an effort to address this potential catastrophe and restore American leadership in manufacturing, the Information Technology and … Read the rest