It is too little and too late to keep writing “manufacturing matters.” Everything else in the economy is secondary to manufacturing, mining and farming. Only these activities build wealth.
In contrast, service activities consume wealth. Each time money changes hands in the consumer, service and government segments, a significant portion of wealth drains out of the system. That’s why our trade deficit is nearly 3 percent of gross domestic product. By boosting the wealth-creating segments of our economy, we can add more into the system than gets drained out. Otherwise, the rest of the world will get tired of taking green pieces of paper in exchange for goods, the U.S. dollar will collapse, and the U.S. will become the low-wage country to which the Chinese send dirty, unappealing manual work to get done cheaply.
For decades, we have been shedding manufacturing jobs and the ecosystem that goes along with them. That’s unfortunate, because manufacturing is the cornerstone of our economy. Here’s why:
- Manufacturing accounts for 32 percent of U.S. employment. Every manufacturing job supports 3.6 additional jobs.
- Manufacturing leads to a larger middle class with a higher standard of living.
- At the close of its 2015 fiscal year, the federal government had $76.4 trillion in debts, liabilities and unfunded obligations. That equates to $237,284 for every person in theU.S. Manufacturing is the key to reducing that staggering figure.
- Manufacturing is critical to national defense. Already we are using many recycled and counterfeit components from offshore, and we can no longer source all materiel domestically.
- Manufacturing reduces the economy’s vulnerability to economic shocks.
- Manufacturing promotes innovation.
Manufacturing is critical to national defense
Offshoring’s impact on the U.S. economy and the environment has been significant. According to the Economic Policy Institute, the growing U.S. trade deficit with China alone cost 2.4 million manufacturing jobs between 2001 and 2013. Offshoring has also contributed to wage erosion for the jobs that are still here. And, it has negatively affected the environment through higher carbon emissions from developing countries and from longdistance transport of goods.
How can we support manufacturing in the U.S.? About 240,000 manufacturing jobs have been brought to the U.S. from offshore in the past six years, according to the Reshoring Initiative’s calculations. That job gain is the result of both reshoring and foreign direct investment. It represents 28 percent of the total increase in U.S. manufacturing jobs since the low of 11.4 million in February 2010. Some 12.3 million Americans are now employed in manufacturing. In fact, our research shows that as much new manufacturing work is coming to the U.S. as is leaving the country each year.
The challenge now is to balance the trade deficit and bring back another 3 million to 4 million manufacturing jobs from offshore. Meeting this challenge requires a continuation of the positive cost trends that are already bringing work back home, such as rising wages offshore and lower energy costs at home. But, we must also improve U.S. competitiveness. Americans need to learn from the Germans, Japanese and Chinese. We need to improve our skilled workforce. We need to work hard, consume less and save more. And, companies need to consider all costs when making sourcing decisions.
By reducing our trade deficit, reshoring has the potential to increase U.S. manufacturing output by 25 percent, curtail unemployment and the budget deficit, improve income equality, strengthen our defense, and enhance our workforce. Meeting that goal requires your help at your company, in your community and at the store!