Fact and Fiction of American Manufacturing

As of late, the manufacturing sector has seen more signs of recovery. These include surging exports, new hiring, and the “re-shoring”, or return of employment opportunities that had been moved overseas. An American manufacturing revitalization must be on the cusp, and as the industry picks up so do the stories surrounding it.

While manufacturing is returning, so are certain commonplace myths. Many of these myths are unfounded, however, or based off wrong information, including these common four misconceptions about the American manufacturing sector.

The first myth is that all manufacturing companies have the same requirements, such as access to markets and raw materials like titanium, along with low-cost labor, and an encouraging business environment. This is, in fact, a myth as manufacturing is quite diverse. Industry conditions vary quite a bit. In order for a local market to become globally innovative, much research and development is necessary.

The second myth is that the decline of American manufacturing was due to off-shoring of jobs and trade. Actually, between the years of 2000 and 2010, the disappearance of manufacturing jobs is in large part due to the outpacing of output growth as compared to productivity growth, resulting in a twenty percent decline. Additionally, falling demand along with other factors accounted for the loss of over 700,000 jobs.

Another myth is that assembly line work is required for manufacturing employment. Manufacturers investing in machinery have the goal of increasing productivity, in turn requiring less manual laborers. Thus, there is shift in the mix of job types and service-type jobs are created in this scenario. Consider the growth in marketing, engineering, IT services, trucking, etc. Manufacturing is directly linked to 4.7 million jobs in the service-sector.

The final myth is that historical peak levels in manufacturing employment can be someday returned. The 1950s saw twenty-five percent of employment in manufacturing. The United State’s growth and economic evolution seems to have fallen. However, one must realize that the sorts of jobs have changed. Rather than working a production line, better positions are opened such as high-skilled programming of robots or market opportunities.

Only time will tell how manufacturing will grow and change in the U.S. Whether the current growth is sustainable or not can only be measured in the years to come.