Manufacturing, despite all that, remains crucial to our economy

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Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation, Adjunct Professor(ret.), Ross School of Business, University of Michigan.

Let me recap the ways one might, at a glance, think of the manufacturing sector as having become an afterthought in sustaining America’s future as a prosperous nation, a place where quality of life is high, and a place that is the world’s destination of choice.

First, manufacturing for decades has not, and never again will, directly employ Americans in anywhere near the numbers it used to, and those it does employ will increasingly need more skills. Second, the rest of the world will always be able make things as well as us, and cheaper. That ought to be enough to seal the idea that manufacturing has become deadwood? Wrong. The first point is true, but surprisingly irrelevant. The second point is simply false.

Keeping high-tech manufacturing in this country when possible even if the direct workforce shrinks drastically, because otherwise the technology will tend to flee offshore, along with the factories. Innovation has always been America’s strong suit in the global economy. Meanwhile, the R&D surrounding even a shrunken manufacturing sector is itself an important source of employment—as are the host of vendors serving manufacturers. Our great educational establishment is the world’s model, but on the vital science and technology side needs to be near a prosperous industrial, commercial, health-care, and pharmaceutical infrastructure in order to remain great.

As to the second point in the opening paragraph, it clearly is true (see the iPhone, textile products, a host of manufacturing lines) that in many cases American locales simply cannot compete with foreign production costs. But, as all those Japanese auto plants in the U.S. attest, geography and transport costs are a serious part of the picture for many high-ticket items. And the American workforce remains, for now, the most productive in the world, and in many sectors the most skilled.

Even as we engage these problems, workers in the developing world are demanding—and receiving—more of a living wage. Every time that happens it’s is a good thing for progress and maybe even democratization around the world, and it sends a bit of competitiveness back to America.

The icon of America’s success will no longer be the smokestack, but manufacturing will always be a key part of a flourishing America.

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