Manufacturing: Still the Sick Man in US Economy

The Popkin Report on Manufacturing was released by NAM and a small-business group. Among other findings:

• Manufacturing output since the last recession lags that of earlier economic recoveries; its 15 percent growth is only half the pace averaged in recoveries of the past half-century.

• Manufacturing capacity remains underutilized, slowing investment in new plants and equipment. Since the last recession, total plant and equipment investment has risen at half the pace averaged in recoveries of the past half-century. Manufacturing capacity has grown at less than 1 percent annually, compared with 5 percent in the 1990s.

• The U.S. share of global trade in manufactured products has diminished, falling from 13 percent in the 1990s to 10 percent in 2004. The U.S. now runs a trade deficit in advanced technology products, and the U.S. share of global trade in some of the highest value-added export industries such as machinery and equipment is falling.

• U.S. manufacturing offers rewarding and desirable careers for highly skilled workers. Yet the widespread perception that manufacturing employment is unstable and lacks job opportunities discourages new worker entry. While manufacturing continues to pay better than other industries, the sector is experiencing a broadening shortage of skilled workers.

• America's long-standing leadership in R&D is being challenged. While the U.S. continues to spend more than any other country on R&D investment, U.S. growth in R&D has averaged only about 1 percent per year in real terms since 2000.

"If the innovation process goes offshore, America will lose much of its capacity to generate wealth and a decline in long-term economic growth is assured," said the report's author, economist Joel Popkin.

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