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Why Does Manufacturing Matter?

Posted 5:12 PM by

Recently, the Brookings Institute issued a report titled "Why Does Manufacturing Matter? Which Manufacturing Matters?”, which supports the need for manufacturing in the United States. Over the past decade, it has been repeatedly reported that manufacturing is leaving the United States and is not coming back as the U.S. economy is transitioning into a "knowledge economy.” While the service and technology (knowledge) sectors of the U.S. economy have grown significantly and will continue to play an important role in the overall economy, the Brookings report argues that the manufacturing is also a vital sector in the U.S. economy for the following reasons:

  • Manufacturing provides good, high-paying jobs for workers, especially to workers who would otherwise earn some of the lowest wages in the U.S.
  • Manufacturing is the nation's largest source of commercial innovation and is vital to innovation in the service sector
  • Manufacturing is the key to reducing the U.S. trade deficit
  • Manufacturing by far makes the largest contribution to environmental sustainability

The report notes that there are specific areas that need to be addressed for U.S. manufacturing to thrive again:

  • The research and development aspect of the manufacturing industry needs to be strengthened
  • Lifelong training programs need to be established for workers at all levels so that there is a continued pipeline of available workers
  • Manufacturing companies need improved access to financing
  • Better communication between workers and companies

The report goes on to suggest potential public policy solutions, such as the adoption of a "high-road" production culture whereby skilled workers are incentivized to make innovative products.

Research institutes are not the only ones taking notes. Washington is starting to place a great emphasis on manufacturing as well (see "President Stresses Importance of Manufacturing in the U.S. Economy" or "Manufacturing in the New Age").

About the Author

Justin Hayes is a director in Katz, Sapper & Miller’s Audit and Assurance Services Group as well as being a member of the Not-for-Profit and Governmental Services Groups. Justin works with clients to help them avoid risk and maximize efficiencies by keeping an eye on their bottom line and helping ensure accurate financial reporting. Connect with him on LinkedIn.

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