WASHINGTON (October 5, 2012) - ITIF is celebrating National Manufacturing Day today, but unfortunately, there is actually not much to celebrate.
Despite all the recent optimism about a U.S. manufacturing rebound, the reality is manufacturing is a critical sector of our economy that has yet to regain its competitive strength.
As ITIF's Rob Atkinson and Stephen Ezell wrote in their recent Yale University Press book Innovation Economics: The Race for Global Advantage, "In no previous decade has the United States ever lost such a large share of its manufacturing jobs. Even with the destruction of the Great Depression in the 1930s, the rate of manufacturing job loss was less than it was in the 2000s."
Atkinson, ITIF's president, continued, "U.S. manufacturing jobs have been lost not simply because the sector is more productive. It is producing less. And unlike some high-wage nations, the United States is not replacing low-value-added manufacturing with high-valued-added manufacturing or opening new plants to replace closed ones. There is a difference between restructuring and decline. American manufacturing is in decline."
Unlike virtually all past recoveries from recessions after World War II, the recent rebound in manufacturing has been far weaker than portrayed by recent news and comes off the steepest decline of any post-war recession.
Innovation Economics finds the commonly expressed view that other industrialized high-skill nations are also struggling in manufacturing is wrong. Many U.S. competitors are adding to their manufacturing base.
Recent proposals, such as the creation of a National Network of Manufacturing Institutes and expanding the R&D tax credit, can help turn around U.S. manufacturing. Other countries have demonstrated the effectiveness of similar approaches for creating and sustaining dynamic manufacturing sectors while also maintaining high wages and global market share.
"The future of manufacturing transcends party identification. We need to make sure we are clear about the direction of the manufacturing debate in this election. At ITIF, we believe the conventional explanations for the Great Recession and halting recovery miss the fact that it was the decimation of U.S. manufacturing that played and continues to play the largest role. Unless policymakers realize that sustained and robust U.S. economic growth is not possible unless the U.S. traded sector (including manufacturing) is healthy, it will be difficult to generate the political will needed to put in place a vibrant national manufacturing strategy. Until this happens, we better get used to a long pattern of feeble growth and wishful thinking," Atkinson argued.
ITIF is highlighting our manufacturing resources on www.itif.org today, including our new policy memo on traded sectors.
The Information Technology and Innovation Foundation (ITIF) is a Washington, D.C.-based think tank at the cutting edge of designing innovation strategies and technology policies to create economic opportunities and improve quality of life in the United States and around the world. Founded in 2006, ITIF is a 501(c)(3) nonprofit, non-partisan organization that documents the beneficial role technology plays in our lives and provides fact-based analysis and pragmatic ideas for improving technology-driven productivity, boosting competitiveness, and meeting today's global challenges through innovation. For additional information, visit ITIF at www.itif.org or contact Alexis Fearon at (202) 524-4390 or firstname.lastname@example.org.