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Success In Manufacturing Depends on Innovation: A Brookings Institute Forum Of Experts Report

02/22/2012

Manufacturing matters to the United States because it provides high-wage jobs, commercial innovation (the nation's largest source), a key to trade deficit reduction, and a disproportionately large contribution to environmental sustainability.

Innovation and production in manufacturing matters now more than ever, a report compiled for the Brookings Institute Metropolitan Policy Forum in Washington D.C. reported.


Manufacturing firms that adopt innovative production methods have the best chance to prosper and will be key to the county's trade deficit reduction, the report concludes.

Industries that have the greatest potential for success are found in the fields of computers and electronics, chemicals and pharmaceuticals, transportation equipment and aerospace, motor vehicles and automotive parts, and machinery manufacturing, the report said.

Success in the manufacturing field will require companies to be more innovative to spark productivity. "American manufacturing will not realize its potential automatically. While U.S. manufacturing performs well compared to the rest of the U.S. economy, it performs poorly compared to manufacturing in other high-wage countries. American manufacturing needs strengthening in key areas of research and development, training of workers, and improved access to finance." In addition, the nation must adopt public policies that support manufacturing, the experts contend.

During the last two years there have been some positive signs for manufacturing, the report found. "The number of manufacturing jobs increased by 2.6 percent from December 2009 through September 2011; these gains were concentrated in durable goods manufacturing, which is generally the higher-wage, more productive part of manufacturing."

"However, the recent manufacturing job gains pale in comparison to the losses since 2000. At the rate of manufacturing job growth that the nation has seen since December 2009, it would take until 2037 for the nation to regain all the manufacturing jobs it lost between January 2000 and December 2009," the report estimated.

Researchers found "In the past two to three years a number of companies have chosen to bring some previously offshored work back to the United States, leading many to wonder whether the pace of offshoring is slowing or even beginning to reverse."

Reasons cited for companies bringing factories and jobs back to the states include; rising oil prices, unhappiness with longer shipping times, rising wages in foreign cities, intellectual property leakage, and a desire to create innovation hubs.

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