Still Made In America

, Nirmala Punnusami, Leave a comment

There are the “Jeremiahs,” the prophets of doom, who assert that the manufacturing industry in the United States of America is declining, but panelists Bill Lane, Lloyd Wood, Robert Scott, and Dan Ikenson argued at the Cato Institute on Tuesday, September 25, 2007, that the manufacturing industry is, indeed, “thriving,” as “the revenues, profits, profit rates, return on investments , and exports and imports are all on the rise.”

It was Daniel Ikenson who, in his informative paper “Thriving in a Global Economy: The Truth About United States Manufacturing and Trade,” pointed out that “reports of the death of U.S. manufacturing have been greatly exaggerated,” as “the U.S. remains the world’s most prolific manufacturer producing two and a half times more output than the vaunted Chinese factories in 2006.”

According to former presidential candidate Pat Buchanan, “last year, China’s economy grew by 10%, and by 140% over the last ten years, tripling the growth in the United States. Not only are we shipping factories, technology, equipment, and jobs to China, we are exporting our future to China.”

However, Daniel Ikenson was able to explain to the listening audience that “as the world’s largest manufacturer, the United States would have difficulty growing at the same pace as a rapidly expanding developing country’s manufacturing sector, where base year outputs are much smaller. Smaller economies experience higher rates of growth for each incremental increase in output relative to larger economies because their bases are smaller.

In an effort to show the decline of the manufacturing industry in the U.S., skeptics have pointed to the loss of over three million manufacturing jobs as evidence of impending doom. It is true, according to Ikenson, that the number of workers employed in U.S. manufacturing industries declined by about three million between 2000 and 2003. It is also true that the real growth in manufacturing has been anemic since the manufacturing recession earlier in the decade, and it is even correct to say that the manufacturing sector’s contribution to GDP is shrinking. But, according to Ikenson from the Cato Institute, what is not true is that these facts alone are sufficient to show that the manufacturing industry is declining, as the sector as a whole has shown “robust and sustained output.”

It is beyond a doubt that employment in the manufacturing sector has now stabilized, as between 2003 and 2006 there has been a loss of only about 300,000 workers. In other words, there has been a tremendous recovery in the manufacturing sector. One needs to consider too, that with greater rates of labor productivity, fewer workers are needed on the production line. Some politicians and policy makers are also of the belief that the manufacturing sector is dying, and evidence of the amount of trade- related bills that have been introduced in Congress to address “unfair foreign competition and illegal trade is evidence of this.”

There are those who point out that the U.S. manufacturing industry output growth has been mild relative to the growth experienced in other countries. Some have given the example of China where rate of economic growth has been in double digits.

There are those who argue, too, that over the last few decades, the contribution of manufacturing to total economic output has been declining. This is true for all developed countries. This however is not a sign of the weakness of the manufacturing sector, but a testament to the relative size and the growing importance of the service sector which is now expanding more than manufacturing.

Finally, when one makes an assessment of all the facts relating to the manufacturing sector it is logical to conclude that the manufacturing sector “is in robust health, as it has now produced more output than at any other time in the history of the industry.”

Nirmala Punnusami is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.