Data Dispels Manufacturing Myths, Equipment Expansion Expected

With apologies to Mark Twain, reports of declines in U.S. manufacturing are greatly exaggerated.A recent study, The Facts About Modern Manufacturing, describes manufacturing's pivotal role in the U.S. economy and combats popular misconceptions. Compiled by the Manufacturing Institute, an affiliate of the National Association of Manufacturers (NAM, Washington, D.

By Staff January 1, 1998

With apologies to Mark Twain, reports of declines in U.S. manufacturing are greatly exaggerated.

A recent study, The Facts About Modern Manufacturing , describes manufacturing’s pivotal role in the U.S. economy and combats popular misconceptions. Compiled by the Manufacturing Institute, an affiliate of the National Association of Manufacturers (NAM, Washington, D.C.), the publication includes data from the U.S. Bureau of Labor Statistics, the National Science Foundation, and other agencies.

“Myths about the decline of American manufacturing have been a staple of economic prognosticators for nearly 20 years. This publication clearly shows that manufacturing’s share of gross domestic product has remained stable, between 20% and 23% of GDP, since the 1940s and that our industry is the model of success for the rest of the economy,” said Jerry Jasinowski, NAM’s president and the institute’s vice chairman.

The Facts About Modern Manufacturing also revealed: productivity growth in manufacturing is nearly three times greater than the rest of the U.S. economy; manufacturing accounts for nearly one third of the nation’s economic activity; each $1 million in manufacturing sales is responsible for 22 jobs, or about 18.3 million jobs nationwide in 1996; the sector also accounts for two thirds of U.S. export gains each year; and more than 70% of U.S. research and development occurs in manufacturing.

Similarly, U.S. manufacturing has also sparked increased investment in computers, from $1 billion in 1978 to $132.8 billion in 1996 (see graph). This has led to faster, larger capacity computers that have also dropped in price by 15.65% annually. These events have created a need for more training, and so about 31% of U.S. manufacturers have provided job skills training for workers, compared to a national average of only 17.4%.

In 1998, many U.S. manufacturers expect to spend more on new machinery and equipment. A recent survey of Cahners Economics’ 400-member business panel discovered that more than 93% plan to spend as much or more on new machinery and equipment in 1998 compared to the year before (see table). Meanwhile, 84% of the panel members plan to spend as much or more on new or expanded buildings.

MACHINE EXPANSION OUTPACES BUILDINGS
Expected 1998 spending versus 1997 spending by percent of respondents

New/expanded buildings
Source: Cahners Economics’ (Newton, Mass.)
Business Confidence Index report for Oct. 27 1997.
More 25.5%
Less 14.3%
Same 58.8%
Not sure 1.4%
New machinery/equipment
More 45.8%
Less 6.5%
Same 47.3%
Not sure 0.4%