July 19, 2010
Growing Expert Consensus on Manufacturing Reaches White House
Amidst an emerging consensus among economic and innovation experts that the government must do more to support a robust advanced manufacturing sector, the Obama administration announced on Monday that it is creating a new cabinet-level Office of Manufacturing Policy to provide greater direction for federal efforts to boost manufacturing.
The new office will be co-chaired by U.S. Secretary of Commerce John Bryson and National Economic Council director Gene Sperling, giving the position and the manufacturing issue cabinet level attention for the first time.
In the past two years, numerous reports by think tanks, academics and industry groups have documented the precarious state of U.S. manufacturing and have urged the government to do more to secure U.S. manufacturing competitiveness.
In March of this year, the Information Technology and Innovation Foundation (ITIF) made the case for a "National Manufacturing Strategy," showing that in the last 10 years output actually declined absolutely in 15 of 19 manufacturing sectors tracked by the federal government. Another ITIF report finds that Germany invests 20 times more as a percentage of GDP than the United States in manufacturing technology and innovation, and Japan 40 times more. Both countries' share of global manufacturing output is stable or growing, while the United States' share has declined. They argue that a comprehensive U.S. manufacturing strategy should focus on the "4 T's": taxes, trade, technology, and talent.
In November, the Breakthrough Institute and Third Way released a report, "Manufacturing Growth: Advanced Manufacturing and the Future of the American Economy," which found that manufacturing is important not just for jobs on the factory floor. Indeed, with advanced automation becoming an increasing feature of high-tech manufacturing, fewer factory jobs are to be expected. Nevertheless, a robust manufacturing sector is core to a healthy economy, because it is central to technological innovation, creates many jobs in manufacturing supply chains and regional communities throughout the country, and is key to closing the nation's large and persistent trade deficit.
Just this week, the Council on Competitiveness, a group of company CEOs, university Presidents, and labor leaders, released a report on U.S. manufacturing competitiveness, citing many of manufacturing's same contributions to national economic vitality. In particular, the study dismantles the myth, highlighted in prior work, that manufacturing can be separated from design and innovation:
"Conventional wisdom emerged that as long as high-value added work--e.g. engineering and design--remained in the United States...the economy would grow and large-scale production could be left to its own devices.
This model is not sustainable...without strong public and private support for the complete life-cycle innovation and production process, the United States cannot maximize the return on its innovation investments--a return measured in jobs, growth and tax revenue."
Fortunately, the U.S. government is finally starting to pay attention. The creation of an Office of Manufacturing Policy is a positive step forward and builds on earlier efforts in the Obama Administration to make advanced manufacturing more of a national priority. Last June, the Administration announced that it would invest $500 million in a new Advanced Manufacturing Partnership among industry, academia and government, which is focused in part on developing next-generation manufacturing technologies that improve productivity and enhance manufacturing competitiveness. After a decade in which the U.S. manufacturing sector lost 5.5 million jobs and as foreign competitors increase their investments in advanced materials and manufacturing technology, such efforts are long overdue.