This paper builds the intellectual case for why the United States needs a serious national manufacturing strategy. The paper focuses on three key questions where to date consensus has been lacking:
- Does the United States need a healthy manufacturing sector?
- How healthy is U.S. manufacturing at the moment and for the foreseeable future?
- Does the United States need a national manufacturing strategy?
Until there is a consensus that manufacturing is important, that it is not healthy, and that a national manufacturing policy is needed, it will be difficult to create a platform for reframing the conversation. Meanwhile, other nations are putting in place manufacturing strategies that include key components such as tax incentives and large investments in research, skills development, infrastructure, and technology transfer and technical assistance. Every day we do nothing we risk falling further behind.
Manufacturing plays a critical role in the U.S. economy for five key reasons:
- It will be extremely difficult for the United States to balance its trade account without a healthy manufacturing sector.
- Manufacturing is a key driver of overall job growth and an important source of middle-class jobs for individuals at many skill levels.
- Manufacturing is vital to U.S. national security.
- Manufacturing is the principal source of R&D and innovation activity.
- The manufacturing and services sectors are inseparable and complementary.
Many who argue against a national manufacturing strategy do so because they claim that U.S. manufacturing is quite healthy and that any job losses are due to superior productivity performance; or they assert that manufacturing is in decline everywhere, such that relative decline in U.S. manufacturing is not a particularly noteworthy concern. This section rebuts both those mistaken perspectives, arguing that:
- Output growth in U.S. manufacturing sectors is overstated and, when measured properly, job loss in U.S. manufacturing is a reflection also of output decline, not just of productivity increases.
- U.S. manufacturing decline is neither “inevitable” nor “normal” as demonstrated by the fact that manufacturing is growing in many nations, including developed nations.
Beyond the importance of a robust manufacturing sector to economic health, there are three primary reasons why the United States needs a national manufacturing strategy:
- Other countries have strategies to support their manufa