The Association for Manufacturing Technology
8 Sep, 2010By: Trade & Industry Development
By Douglas K. Woods
It seems that our elected officials in Washington finally understand what the rest of the country has known all along: that a solid, sustainable economic recovery is directly tied to the health of the U.S. manufacturing sector. Over the past two years, our manufacturers and their workers have struggled to survive one of the worst downturns in this country’s history. Only now, as these businesses continue to struggle, unemployment persists, and the economy continues to lag, do our public policy makers recognize just how important a role manufacturing plays in America’s future growth and prosperity.
It is clear that the credit and confidence obstacles are shifting attention away from where it should be - on innovation and creating the highly skilled, well-paying jobs that naturally follow. The United States currently lags behind our trading partners in new fields that we should be dominating. That is because we operate in a business and regulatory environment that thwarts our progress. If we don’t redirect our government policy and resources to focus on innovation and R&D, there will be more missed opportunities for American technological leadership and our citizens will ultimately suffer. A June 2010 report on manufacturing global competitiveness from Deloitte and the U.S. Council on Competitiveness ranks the United States as fourth in world behind China, India and Korea, and falling to fifth in five years surpassed by Brazil if the federal government doesn’t act to level the global playing field.
There is reason to be cautiously optimistic, as AMT members report continued and solid improvement in the business environment. The Purchasing Managers’ Index (PMI), a leading industry indicator, bottomed out in December 2008 and has been above 50 for the past 9 months. A PMI greater than 50 suggests an expanding manufacturing sector. Additionally, the PMI has grown faster in the last four months than in the first four months after it broke 50. Another key indicator, the capacity utilization rate (the percent of industrial output currently in use) is less positive than the PMI but is showing a “slow change” for manufacturing technology with recovery to full health by May 2011, while signaling a “growing” trend for customer markets.
Finally, AMT’s U.S. Manufacturing Technology Consumption Report shows steady improvement in consumption over the last year. The latest report indicates that consumption is up 50 percent over last year, with the defense, aerospace, energy, medical and auto sectors rebounding the quickest. Still, one must consider that consumption had fallen off more than 60 percent during the worst of the slowdown. While this data shows that we are indeed recovering, there is still a long way to go.
Here is some perspective. During the boom of the 1950s, manufacturing represented more than a quarter of the country’s economy and about a third of employment. Today, manufacturing is only about 12 percent of the economy and less than 10 percent of employment. Considering that U.S. companies operate at a 17 percent cost disadvantage versus their foreign competitors, it is amazing that U.S. manufacturing continues to grow in absolute terms and remains a wellspring of innovation. These companies are truly the heart and soul of our nation.
We must do more to ensure our foundation of economic growth and national security survives and prospers. AMT members still report that limited access to credit, high taxes and burdensome regulations are hindering their ability to compete. Many of these obstacles come at the hands of our own federal government! Manufacturing needs the focused attention of our elected officials if high-value jobs are to be created, if our trade deficit is to be reduced, and if we hope to generate the tax receipts to outweigh our spending. Now it is time to turn rhetoric into initiatives and action.
AMT believes that a national Manufacturing Mandate is necessary to cement this recovery and create a strong foundation for sustained economic growth. We are calling for a federal policy of collaboration between government, industry and academia that: incentivizes innovation and R&D in new products and manufacturing technologies; assures the availability of capital; increases global competitiveness; minimizes structural cost burdens; enhances collaboration between government, academia, and industry; and builds a better educated and trained "smartforce."
I am confident that it is possible for our government, industry and academic communities to work together, utilizing an infrastructure already in place, to revitalize our manufacturing sector and promote real economic growth. AMT is poised to work with the federal government to help implement a national manufacturing strategy – a Manufacturing Mandate that will establish America as the worldwide leader in next-generation manufacturing technologies and the world-class products and services they provide.
Congress and the Obama administration have taken some good first steps. Late last year, the administration released its “Manufacturing Framework for Revitalizing American Manufacturing.” Since then, the president has focused on increasing exports; supporting R&D and a skilled workforce; and improving credit access as ways to boost manufacturing. Congress has also pledged to act to rebuild manufacturing, but with little time left before the November elections, it is unlikely any significant legislation can be enacted this year. AMT members are not waiting to find out what happens, because ultimately we have a major influence on our own destiny.
In mid-September (Sept. 13-18) an important industry event sponsored by AMT – the 28th edition of IMTS – The International Manufacturing Technology Show – will take place at Chicago’s McCormick Place. IMTS is important because manufacturing is important, and it is unquestionably the largest manufacturing event in the Western Hemisphere. We hope IMTS will inspire manufacturers to put money to work through wise investment in technology.
AMT expects IMTS 2010 to be a real rallying cry for the manufacturing technology industry and all of manufacturing. That is why we are joining forces with the National Association of Manufacturers at IMTS to promote the importance of American manufacturing. NAM President John Engler and I will share our perspectives on moving manufacturing to the forefront of the public agenda as we stress the importance of innovation to our global competitiveness and showcase the manufacturing technologies of the future that will put Americans back to work and produce the world-class goods we need for a quality life. As we begin to see signs of recovery, it is the right time to invest in ourselves and our future and that is what we’re hearing from our exhibitors and the thousands of manufacturing professionals registering to attend the show.
With commitment and hard work we believe that U.S. manufacturing’s brightest days are still to come, and AMT, our members and our industry partners will play a vital role. That’s good news for the whole world.
For a copy of AMT’s Manufacturing Mandate, visit www.AMTonline.org