Skip to main content
  1. News
  2. Business & Finance
  3. Industry

The Real Future of U.S. Manufacturing

See also

About 40,000 U.S. manufacturing plants had been closed between 2001 and 2008 and that had resulted loss millions of good paying jobs in U.S.A. Out of this, between 2001 and 2007, U.S lost 2.3 million jobs due to huge trade deficit with China alone. It is has been beleaguered by many obstacles. The reputation of the industry has been marred by poor wages, lack of proper working conditions, and quality control issues. The condition is becoming more grave because the global manufacturing companies have a better opportunity to capture a share of the growth in developing economies. The retardation is continuing since 2008 with further slowdown in manufacturing segment and has triggered legitimate concern for U.S. It is worthwhile to mention that when this segment was at peak during 1970s, it accounted for around 20 million jobs—which is now barely at 11 million. In spite of all these, U.S. still ranks first in the world in manufacturing value added, and it was the third-largest exporter of manufactured goods to the world in 2009.

Some key facts we should know about manufacturing sector in the United States, are:

The manufacturers’ contribution to U.S economy rose to $1.87 trillion (11.9% of GDP) in 2012 from $1.73 trillion in 2011. For every $1.00 spent in manufacturing, adds another $1.48 to the economy as per Bureau of Economic Analysis. It is the highest multiplier effect among all economic sectors.

The Bureau of Labor Statistics (2013) suggests that manufacturing sector supports an estimated 17.2 million jobs in the United States, which amounts to about 60% of all U.S export. About 9% of U.S workforce which is a figure around more than 12 million Americans is employed here and it is about one in six private-sector jobs.

In 2012 as per Bureau of Economic Analysis, the average earning of manufacturing worker in the United States including all benefits was $77,505 per annum which was far above the all industry average of $62,063. The real truth behind the fact is, it pays pretty good wages even to less-educated and less-efficient workers.

American manufacturers perform two-thirds of all private-sector R&D in the nation and contribute most innovative ideas than any other sector. That means that U.S. advanced manufacturing industries are the major site of U.S. private-sector R&D and it is the critical hotbed of future innovation and trade competitiveness.

As per Bureau of Economic Analysis, taken alone, manufacturing in the United States would be the 10th largest economy in the world.

The Challenges
The United States has many problems in the manufacturing sector. However, they can be summarized under four broad head which are mentioned below:

Globalization,
The Revolution In Information Technology,
The Nation’s Chronic Deficits &
Its Pattern Of Energy Consumption.

In a report in 2011, The National Association of Manufacturers‟ (NAM) Manufacturing Institute has indicated that 82% of manufacturers have a moderate or serious shortage of skilled production workers. And over 600,000 jobs or 5% of all manufacturing jobs are lying vacant as no qualified talent is available. Furthermore, 2.7 million employees are over 55 years of age who are likely to leave the workforce within a couple of years.

There is no doubt that manufacturing jobs have been lost in the U.S. over the past decades because some were displaced by technology, some lost to the offshoring—shifting to other lower cost, lower wage countries like China, many economists are expecting a resurgence or a manufacturing turnaround in the U.S—some due to reduced energy costs, some due to more favorable costs but more of it due to the virtues of an educated workforce and application of advanced technology.

About Author:
Working as Editor in Chief for Financeninvestments.com. Writing on Financial Topics is my passion. You can find me on Google plus, Seeking Alpha Instablogs or join our Facebook Community. FNI is a great Community for financial bloggers and writers. Get everything you wanted to know about your finance and investment related matters such as mutual funds, banking, retirement, economics and much more.

Advertisement