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Research and Reality Back the Value Manufacturing Brings to the U.S. Economy
Manufacturing matters. From small towns to the United States as a whole, the economic ripple effects of manufacturing are staggering.
According to a recent report by the Manufacturers Alliance for Productivity and Innovation (MAPI) and the Aspen Institute’s Manufacturing and Society in the 21st Century program, manufacturing is still the greatest wealth-creating tool in the United States.
Consider the fact that manufacturing stimulates economic growth through a higher multiplier effect than any other sector. Specifically, the report concludes that every dollar of final sales for manufactured products generates $1.48 in economic activity in other parts of society.
“U.S. manufacturing is poised for resurgence,” said Gardner Carrick, an economist and vice president of strategic initiatives for The Manufacturing Institute. “A number of companies are bringing jobs back to the U.S., like Apple, Caterpillar and GE, for example — some of the biggest companies in the world. These things are an indicator of the growing strength of the industry.”
Even more evidence of the impact U.S. manufacturing has on the country’s economy, according to the report, is that manufacturing has consistently experienced higher labor productivity rates than the nonfarm business sector during the past 25 years. In fact, the rate doubled in the 1990s and was approximately 50 percent higher between 2000 and 2010.
Consider, too, that U.S. manufacturing represents 50 percent of all exports and 75 percent of research and development, Carrick said.
“You can see the effects of strong and weak manufacturing, like Flint, MI, for example, during a pullback in the auto sector, or the explosive growth in the Greenville and Spartanburg area of South Carolina,” Carrick said. “Still, more work is necessary to boost manufacturing’s visibility, including changes in tax, energy and trade policies.”
One policymaker with a pro-manufacturing agenda is Sen. Joe Donnelly, D-IN. Donnelly is co-sponsor of the AMERICA Works Act, which is designed to reduce the skills gap between employers and employees by building a strong workforce nationwide and helping the United States be more competitive in the global economy.
“Manufacturing is critical to our country. It goes beyond providing jobs for our citizens and paying good wages to families so they can have a good life by sending their kids to good schools and being able to retire,” Donnelly said. “I’m fighting to keep manufacturing here … to bring it home from overseas.”
Originally introduced in 2010, the bill was reintroduced this year. Specifically, it modifies existing federal training programs so that they place a priority on programs and certifications that are recognized and demanded by the manufacturing industry. To address this issue, while not increasing federal spending, the AMERICA Works Act would modify the Workforce Investment Act, Perkins Career and Technical Education and Trade Adjustment Assistance to prioritize the credentials that employers need now.
“The AMERICA Works Act is an example of the common sense, straightforward work Congress can be doing to improve our nation’s economy,” Donnelly said. “I have heard time after time from Hoosier business owners, educators and workers about the pressing need to close the skills gap and get more people to work. The improvements made in this bill would be a benefit for both workers and employers, as workers would know that the time they spend training is more likely to lead to employment in a well-paying job.”
Schuette Metals keeps close tabs on the impact manufacturing has on its local region. John Peterson, Schuette Metals’ president and owner, knows all too well that manufacturing companies, such as his metal fabrication facility in Rothschild, WI, contribute significantly to the economic fabric of the community. For that reason, Peterson develops and recruits skilled talent throughout the region.
“We’re trying to grow from a business standpoint. But if we don’t have talented, skilled employees, it doesn’t do us any good,” Peterson said. “Unfortunately, as we look at the population in our area, we’re seeing fewer people coming up through the ranks of manufacturing because a lot of students are being instructed to go on to a four-year college. We think that’s destructive to our area.”
Peterson said 50 percent of students in his area who go to a four-year college eventually leave for out-of-state jobs. Of the students who attend an area technical college, 98 percent stay in the state.
According to government statistics, for every manufacturing job gained, the economic impact is seven times the employee’s wages. Peterson calculated the benefits of adding 15 percent more welder and machinist jobs in the county served by Schuette Metals as a $50 million boost to the local economy.
“Manufacturing hasn’t done a good job of being its own advocate,” he said. “We need to show schools and the general public what’s inside our walls. We’re kind of stealthy. We need to work together to show the community what manufacturing contributes.”
