Manufacturing: Renaissance or Decline?

March 20, 2012

Some may think that the Innovation and Information Technology Foundation (ITIF), in its new report on U.S. manufacturing, is undermining the efforts of the U.S. Chamber, NAM, MAPI, and others to promote a manufacturing renaissance.  On the contrary, Rob Atkinson isn’t saying manufacturing’s not important – he’s saying this nation (from its government policies to its cultural evolution) has done little in recent decades to help maintain US manufacturing competitiveness in an increasingly global marketplace.  Moreover, the focus of this new report, on how we calculate productivity, affects manufacturing not just in the U.S. but everywhere.  MAPI will releasing a similar report today that shows how the federal government also miscalculates the value of exports and imports.  Globalization of supply chains has made the job of calculating such data all the more challenging. 

ITIF’s report just adds to a growing list of studies (e.g., Michael Porter and Gary Pisano in the January edition of the Harvard Business Review) that demonstrate a need for new efforts to maintain and increase manufacturing competitiveness.  These reports all share a common underlying theme:  the US needs to maintain a vibrant manufacturing base.  Manufacturing provides more research and development (R&D), more exports, and generates more economic activity throughout the economy than any other sector.  Manufacturing’s R&D leads to vast spillover effects that expand innovation and raise our living standards.  Without a vibrant manufacturing base, economic growth will be much harder to achieve. 

ITIF’s bottom line, and ours:  We need policies that will allow US manufacturers to become all the more competitive in the coming years.