Mark Twain’s comment upon reading his own obituary applies perfectly to American manufacturing in 2008: “The reports of my death have been greatly exaggerated,” he said.

John Engler, President/CEO of National Association of Manufacturing

In fact, though a few sectors are struggling, overall American manufacturing is healthier than ever. According to the Bureau of Economic Analysis, the output of American manufacturing has more than doubled in the past 25 years, to a total of $1.5 trillion. Not only do we now make more goods than any time in our history, the value of the U.S. manufacturing sector alone makes it the eighth-largest economy in the world. A country that accounts for only­ five percent of the world’s population produces almost 25 percent of its manufactured goods. Contrary to common wisdom, that share hasn’t changed in decades.

And we’re sending many of those goods abroad: U.S. manufacturers account for over 60 percent of our exports, or more than $50 billion a month. While it’s true that our manufactured imports are rising, it’s also true that our exports are rising even faster. Indeed, in this time of turmoil in the housing market and weak consumer demand, rising exports are helping keep our economy growing.

Underpinning this continued strength is the astonishing growth in productivity among American manufacturers. Between 1987 and 2005, it increased by 94 percent, compared to just 38 percent in the rest of business. That’s a critical contribution, for as Federal Reserve Chairman Ben Bernanke has observed, productivity growth is “perhaps the single most important determinant of average living standards.”

This huge productivity gain is one reason why manufacturing was able to lead the U.S. economy out of the most recent recession, by accounting for 15 percent of real GDP growth between 2001 and 2005 – more than any other sector.

Considering manufacturing’s multiplier effect on such dependent industries as ­ finance, wholesaling, accounting and telecommunications, it shouldn’t be surprising that the sector continues to play its traditional role as the driver of the nation’s economy.

CHANGE BRINGS OPPORTUNITY

Some traditions have changed, however. Manufacturing does occupy a smaller part of the GDP now – down from 25 percent in the 1950s to 12 percent today. That’s due in part to competition from imports and also the fact that, in light of productivity gains, manufacturing prices have dropped while the cost of such sectors as business services, health care and education have skyrocketed. It’s also a fact that today’s manufacturers need fewer workers. The sector still directly employs over 14 million workers, but over three million jobs were lost during the manufacturing downturn of 2000-2003.

Taken together, all these statistics paint a complex picture, one of transformation and adaptation. Yes, products that can be manufactured cheaply by workers with low skills are now made abroad, and that’s unlikely to change. However, that very fact opens massive opportunities for American manufacturers to focus on higher-value goods where our superior technology and know-how give us a distinct advantage.

Today, we’re entering what some call the second industrial revolution. While opportunities have declined in low-skill sectors such as leather goods, tobacco products, textiles and apparel, employment has grown healthily in industries that demand high skills, such as machinery, electronic equipment, aerospace, pharmaceuticals, instruments and plastics. Though fewer workers are needed due to the advanced state of automation in these sectors, those who do find jobs receive wages that are commensurately higher. Today, an average American manufacturing worker earns $69,000 per year or 21 percent more than workers in other businesses. And one of the biggest challenges facing manufacturers in the U.S. is a shortage of workers with the skills needed to work in modern manufacturing.

MEETING THE CHALLENGE

Make no mistake: manufacturing opportunities still abound, even in the Upper Midwest where many of our greatest names in industrial manufacturing have fallen on hard times largely because of historical forces beyond their control. At the same time, however, legions of creative minds are taking manufacturing in new directions creating the products and systems of the future. Our saving grace remains our creative genius that has kept the U.S. in the forefront of world manufacturing despite our difficulties. The Upper Midwest, with its long tradition of manufacturing excellence is well positioned to take advantage of emerging industries coming online today.

Economists and executives alike agree that this is the path that will ensure America’s continuing dominance in manufacturing: The production of high-value goods that take advantage of our technological edge and long-proven tradition of innovation is where the future lies. I invite you to visit our web site at www.nam.org to learn more about what is going on in modern manufacturing and take advantage of the variety of helpful information we offer.

I commend Manufacturing Success for its recent launch and its important mission to serve as a collaborative communication resource for all of us involved in the manufacturing economy. The National Association of Manufacturers looks forward to working together to encourage development of the manufacturing industries of the future.

Contact: Chip Tangen, 651-292-4691, ctangen@nam.org | www.nam.org