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 creati