Nations around the world are engaged in a battle for manufacturing dominance, and the United States, almost in spite of itself, is still a major player in the race. The U.S. manufacturing sector ranks number two in the world, slightly behind China, in output. But what we have lost in the last few decades is so large, and we continue to move in the wrong direction. U.S. industries are losing market share and manufacturing employment is down a third from ten years ago. Many U.S. companies are putting plants abroad, or sourcing their products abroad, for reasons unrelated to foreign market access. As we lose manufacturing plants, we also lose the seed corn of manufacturing — research and development — which is clearly tied at the hip to manufacturing production. Innovation cannot happen in a manufacturing vacuum.
This cannot go on. But what do we do?
Several months ago, a group of Americans committed to reviving manufacturing in this country, and having expertise in a wide range of areas relevant to that goal, met for a day-long meeting, The Second Annual Conference on the Renaissance of American Manufacturing: Jobs, Trade and the Presidential Election, in Washington, D.C. The Conference focused on what needs to be done to revive U.S. manufacturing and why this objective must be a central issue in the 2012 Presidential Election. Speakers ranged from Gene Sperling, Assistant to President Obama for Economic Policy, to Grant Aldonas, former Undersecretary of Commerce for International Trade under George W. Bush, speaking for the Romney Campaign. Corporate and labor leaders included Gordon Brinser, President of SolarWorld; Brian Toohey, President of the Semiconductor Industry Association; and Thea Lee, Deputy Chief at Staff at the AFL-CIO. Policy gurus included writer Clyde Prestowitz, Rob Atkinson, President of the Information Technology and Innovation Foundation, Ralph Gomery, former Senior Vice President at IBM, Leo Hindery from the New America Foundation, and Alan Tonelson of the United States Business and Industry Council. Present and former elected officials included Senators Rob Portman (R-OH), Jeff Merkley (D-OR), and Jeff Sessions (R-AL), and former Governor of Maryland, Bob Ehrlich.
Such a diverse group of participants has no one solution for reviving manufacturing in the United States. But a number of key ideas emerged, which are described below. These need to be followed-up on immediately by policy makers, and by candidates at the Presidential, Congressional, and State levels.
Two-Part Strategy: As a matter of process, we need to embrace a two-part strategy: (1) specifying what we need to enhance based on that we are already doing (i.e., trade enforcement, R&D tax benefits) and (2) taking on major new strategic elements (e.g., trade action against currency undervaluation, creation of a Secretary of Manufacturing, a large Economic Development fund at the Federal level).
Capitalizing on Recent Growth Areas: We need to take advantage of events that are already occurring, capitalizing on three areas of robust economic development in the United States: the communications boom, the tremendous increase in natural gas production, and the health care boom. We should think of health care in Buy American terms-in other words we should buy from domestic manufacturers–given the heavy subsidies from the U.S. Government to this industry. (more…)