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« Light Friday: New IMT Blogger, Industrial-Strength Junk Food, Americans Hate their Jobs ... | Main | U.S. Economic Outlook Upbeat, Manufacturing Not So Much »


March 5, 2007

'Going, Going, Gone' is a Myth, but Concern is Essential

By Fred White

The UK government's perception of manufacturing is out of date. This according to Richard Wilson at Electronics Weekly, at least. Could the same be said of the U.S.?

With mainstream media repetitiously noting outsourcing (offshore) and mergers and acquisitions leading to job cuts, who would seriously not give pause in concluding that American manufacturing is healthy and growing? Prominent economists have been saying for years that the U.S. has become a solely service economy. Fifty years ago, there were precious few software writers; now information technology is here to stay. With the graying of the boomers, it appears there'll be more healthcare providers too. And there's always been a robust insurance industry, not to mention bankers and entertainers — think athletes and actors.

While all these professions have grown (and continue to do so), they don't necessarily have to mean that manufacturing is going the way of the family farm. According to the National Association of Manufacturers (NAM) in fall 2006, the perception all too often is that the heyday of U.S. manufacturing is in the past, but nothing could be further from the truth.

Standing by itself, U.S. manufacturing would be the eighth largest economy in the world. There are six manufacturing pillars that support today's U.S. economy, as the data in NAM's seventh edition of "The Facts About Modern Manufacturing" show. According to NAM's facts book, manufacturing:

• Makes the highest contribution to economic growth of any sector;
• Is responsible for +70 percent of private sector R&D;
• Is the center for myriad advanced tech that cut energy use and lead to a cleaner environment;
• Achieves a high productivity rate year in and year out, increasing by more than 50 percent in the past decade;
• Contributes more than 60 percent of U.S. exports or about $50 billion a month;
• Pays wages and benefits that are about 25 percent higher than in non-manufacturing jobs; and
• Multiplies every dollar spent into an additional $1.37 in economic activity, greater than other sectors.

Returning to the question about governments, though, it seems fair to say that with the National Academy of Sciences' "Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future" report published last year, that those politicians and bureaucrats who take some time to reflect on the future should realize that, although we should be concerned, we can also be proud of where we are regarding manufacturing in the U.S. economy.

The concern we want to feel as manufacturers lies in our supporting R&D, basic and applied. We're so busy paying rent or mortgage, spending money for education and health or for a more comfortable lifestyle, we tend to neglect the importance of investing for our future. Some among us may feel this is a corporate or company responsibility; others will feel it's a government responsibility. This can lead to finger pointing with shrill accusations, and allowing a nation to fall into the muck of uncompromising dispute enables other nations to take the glory for innovating products and services.

The Europeans have already ramped up investment. In "ERC: an idea whose time has come," President of the Czech Science Foundation Josef Syka told CORDIS News of his bewilderment over talk of the launch of the European Research Council (ERC) — the first pan-European funding body set up to support investigator-driven frontier research — being a "miracle." This is no miracle but a necessary development. "Otherwise European science will die out," Syka said.

Professor Syka explained that since the EU began to fund science, there has been a focus on innovation and applied research. "Now they [EU policy makers] realise [sic.] that there must be something at the beginning. You cannot have applied research if you do not have science to apply."

Manufacturers must support R&D. It creates new products, and each new product requires manufacturing. If we support R&D, we can manufacture hundreds of types of nanoparticles, dozens of medications, more efficient solar cells, new microbes to provide energy and untold other products to help us and our many neighbors live more healthy and fulfilling lives.



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