Economists Urge US to Invest in Manufacturing

Steve Minter of IndustryWeek wrote yesterday about the reasons why the US needs to invest in manufacturing. One economist pointed out that "our ability to field competitive domestic manufacturing industries is deteriorating and too few understand the implications for the U.S. economy."

So what are those implications? Well, it has become clear over the passing yearst hat the rest of the world has stepped up to the plate and raised its game for manufacturing superiority. It can be argued that we are simply evolving toward more high-tech industries and therefore our traditional manufacturing is declining. Gregory Tassey, economist for the National Institute for Standards and Technology (NIST), points out that "the high-income economy must be the high-tech economy" and that manufacturing is a necessary element as it supports 70% of industry R&D spending.

He continues to say that many mainstream economists have failed to appreciate the complexity of the manufacturing sector and the need for multi-tiered supply chains and clusters of facilities that facilitate the communication and collaboration needed for product development, testing and rapid entry into commercial production.

To support a technology-based manufacturing sector, Tassey recommends tax incentives that would boost the average R&D intesity for domestic manufacturers to 6%, twice what the Obama administration is proposing. It is important that we maintain a strong domestic manufacturing front and that its supported throughout the entire technology lifecycle. With other countries such as China and Japan just barely trailing the US in patent applicaiton rates, we need to make sure we are investing in our future through manufacturing.

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