Workforce Development

Welcoming a New Program on Manufacturing to the Institute

October 18, 2011

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JOIN US. The Institute will launch our program on Manufacturing and Society in the 21st Century on October 28 with a lunchtime discussion about the influence of US trade policy on manufacturing, available live on our site at

Believe it or not, manufacturing jobs are not just something we subcontract to China. In fact, during the current economic crisis, manufacturing is helping to jumpstart the recovery—and it is likely to continue to do so as growth in finance, construction, and government services remains weak. Meanwhile, US exports are also on the rise. And, despite the conventional wisdom—that manufacturing has gone the way of agriculture in this country—the truth is: Manufacturing is now growing at twice the pace of the overall economy. In other words, it’s time to take a fresh look at an American institution.

We’re happy to join the Aspen Institute as its newest program, Manufacturing and Society in the 21st Century. US manufacturing has long been a source of jobs, innovation, and global competitiveness—and a hallmark of community stability and national security. So what can be done to preserve and strengthen this critical sector of the economy? The Manufacturing and Society in the 21st Century program will bring business, government, and opinion leaders together to look for solutions to the important problems and opportunities affecting the future of manufacturing in a global economy.

Our October 28th launch will include a lunchtime discussion on whether US trade policy is helping or hurting manufacturing, with guests Ambassador Susan Schwab, former US trade representative, and Dr. Jared Bernstein, former chief economic advisor to Vice President Joe Biden. The dialogue will be moderated by the director of the Manufacturing and Society in the 21st Century program, Tom Duesterberg.

Many see US manufacturing declining in importance as a part of a vibrant, growing, and sustainable economy. This perception, however, masks a more encouraging and complex reality. To be sure, in recent decades manufacturing has—like early 20th-century agriculture—declined as a proportion of the US economy, from around 38 percent just after World War II to about 12 percent today, and employment in the sector has dropped by more than one-third since 1980. Yet, total output in manufacturing has continued to grow at about the same pace as the overall economy, and the US share of global production has declined only slightly—even in the wake of intense competition from emerging industrial giants like China, India, and Brazil. If manufacturing must be compared to agriculture, then it should be as a vibrant industry that has survived by relentlessly creating improvements in productivity (hence fewer jobs) and constant innovation (nearly two-thirds of research and development in the United States is done by manufacturers).

Global competition has also played a major role in this recent high-performance trajectory. Firms have seriously increased productivity: Output per American worker is higher than in Germany or Japan and nearly ten times the level of China. Why? Because US firms simply have to in order to remain competitive. Additionally (and less well-understood), the prices of manufactured goods have been in a deflationary cycle since the 1990s due to global competition. Deflation contributed to manufacturing becoming a smaller proportion of the US economy—as the price of industrial growth went down 3 percent at the same time that the overall price level rose 33 percent between 1995 and 2008. That might sound like bad news, but think about the prices of computers or automobiles today. Deflation benefits consumers, affording them a higher standard of living.

Productivity, innovation, and global competition have all allowed manufacturing to thrive in a cutthroat international marketplace, making the industry a crucial component to the continued health of the US economy. Still, US-goods producers have lost market share both at home and abroad as sophisticated nations like China, South Korea, and Germany ramp up their own new technologies and manufacturing processes. That’s why it is more important than ever to examine the issues around US manufacturing—and protect it. Some think that global competition is unfairly skewed against the United States through subsidized industries, currency manipulation, or a lack of global-trade rules enforcement. Others think that the United States is failing to keep up with the Europeans, the Chinese, and others in establishing new free-trade agreements.

On October 28, we will explore these questions as well as ways to improve chances for US manufacturing growth through a more balanced world-trade environment.

Please contact Tom Duesterberg or Sue Sumler for further information about this program and others planned in the future, or visit the Manufacturing & Society Program homepage.