The Importance of Manufacturing

As the United States begins its rebound from the recession, it is important to highlight how important the manufacturing industry is the the our nation's economy.  Manufacturing was one of the economic sectors that was hit hardest by the recession, and many of those jobs will either never or take a very long time to return.  

While there has been a significant increase of offshoring with manufacturing jobs, there is still a lot of work done here in America.  While some would argue that manufacturing is not as critical as it once was to warrant government support because of weak job creation numbers, these people miss a critical part of why we need manufacturing jobs in the United States.

large scale employment is not the main benefit of a strong manufacturing sector in our economy.  Support of manufacturing, specifically advanced manufacturing, will help the United States retain its status as a global hotspot for innovation and technological advancement.  Today, this is the main source of US competitiveness.  We have to realize that we cannot make everything anymore.  Manufacturing on large scales is much cheaper in east Asian countries.  Where we do have an edge, however, is the innovative spirit and technological know-how to come up with and create new technologies that will make world a better place.  

Today, the manufacturing sector makes up only around 11 percent of our nation's GDP.  As you can see from the graph above, the United States has experienced a constant downward trend in this statistic.  This is fairly constant with the rest of the world, on average.  However, despite it small share of GDP, according to the Brookings Institution, the manufacturing sector conducts 68 percent of research and development in the United States.  Brookings also notes that 22 percent of US manufacturers introduce new processes that increase productivity, as opposed to only 8 percent of non-manufacturers.  Additionally, manufacturing took up 60 percent of US exports despite its modest share in GDP.  

Although now a smaller part of our economy, the manufacturing sector is still very critical for the well being of our entire nation.