Manufacturing competitiveness, innovation: National and personal

Think Again: Science, technology, engineering, and math professions earn 26% more than average; manufacturing contributes more innovation to the economy and accounts for 60% of exports, with 9% of the employment.

05/03/2013


McKinsey Global Institute graphic, from James Manyika, director, shows how manufacturing adds other supporting positions to the workforce, providing greater overall benefits than other types of jobs. Courtesy: Washington Post LiveEarnings are 26% more on average for those studying science, technology, engineering, and math (STEM) subjects, according to Eric Spiegel, president and CEO, Siemens Corp. “The best way to close the skills gap is for schools, government, and industry to work together to close the training gap.” Advanced manufacturing is where the world is going. This can create opportunities for millions of Americans, Spiegal noted at an April 23 online conference hosted by Washington Post Live and sponsored by Siemens, American Small Manufacturers Coalition, and Northern Virginia Technology Council.

James Manyika, director of McKinsey Global Institute, recently named to President Obama’s Global Development Council, said manufacturing is responsible for 9% of employment, but it drives more than 60% of exports.

Prices today for manufactured products are nothing compared to the past, Manyika noted, as global competition has intensified. U.S. is still on top in amount of manufactured goods. China, India, and Russia are gaining, driving demand locally. Many of these nations are reaping benefits from manufacturing-related innovations of their own, Manyika suggested.

U.S. innovations are huge, especially in materials development, production, and analytics. Many related innovations help small manufacturers to compete even more, Manyika said. Demand for products helps determine where companies are located. Other factors, Manyika said, include labor skills and costs, infrastructure and non-labor inputs, such as energy, natural resources, and innovation, along with business and policy environment.

Ron Bloom, senior advisor, Lazard, and former assistant to the president for manufacturing policy, said he “has been worried about manufacturing a long time. For a long time we believed decline of manufacturing was both inevitable and good, part of a natural evolution.” Because of that, over the last 30 years, politicians didn't worry. There’s been a rethinking of the power of manufacturing in recent years as people realized the real economy had been under-rated and the financial economy had been over-rated.

The politics, Bloom said, have coincided with anxiety with America’s place in the world. The U.S. economy is three times larger than that of our largest competitors. China has a perception of being larger since “they make everything,” people think, although the U.S. still makes more, Bloom said. “What we’re good at is innovation,” explaining that inventing and making are not separate. If we let U.S. manufacturing go, then innovation goes with it, Bloom suggested.

Manufacturing draws businesses

The political and economic terrains have shifted. Energy prices have fallen. With less labor needed now for production, the price of labor means less in the competitiveness equation, Bloom noted. One manufacturing job is more valuable than other jobs because of a multiplying effect to other areas of the economy. If you build an automobile manufacturing plant, a Wal-Mart will follow, but not the other way around, he observed. Government’s role is about providing supportive infrastructure and ensuring we have appropriate trading partners, Bloom said.

Mark T. Hoske is content manager, Control Engineering, CFE MediaNow intelligence is embedded into the manufacturing process, Bloom said, which is why we need to ensure that intellectual property is protected and innovation stays healthy. There are huge opportunities, as we think again about what manufacturing can do for us, Bloom suggested. There’s an interconnectivity between people who think about stuff and people who make stuff, and regional ecosystems of talent, with webs of suppliers to help, he noted.

- Mark T. Hoske is content manager, CFE Media, Control Engineering and Plant Engineering, mhoske(at)cfemedia.com

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See related story linked at the bottom of this article: “Manufacturing in America targets next U.S. industrial evolution" 

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