U.S. Manufacturing Innovation Leadership at Risk
Feb 1, 2006
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Downward trends in U.S. manufacturing innovation pose a serious threat to America's long-term economic growth and living standards, according to a new report released by the Council of Manufacturing Associations (CMA) and The Manufacturing Institute of the National Association of Manufacturers (NAM).

"The manufacturing economy generates a large share of American prosperity," said NAM President John Engler. "America's continuing leadership in innovation and the production of high-value manufactured goods is essential to our nation's long-term economic growth, productivity gains and standard of living. By itself, U.S. manufacturing would be the eighth largest economy in the world, and our nation's manufacturing output is at an all-time high. But America's economic leadership will be at risk if current trends continue. The NAM is advancing pro-growth policies to promote innovation, investment and productivity and ensure a healthy manufacturing economy in the future."

"Our nation can not afford to lose its manufacturing innovation edge and the wealth that it generates throughout our economy," said Jerry Jasinowski, president of The Manufacturing Institute (the research and education arm of the NAM).

"One bright ray of light is U.S. manufacturing's tremendous productivity gains," Jasinowski continued. "U.S. manufacturing productivity has surged 24 percent since the last recession--70 percent faster than the average productivity growth following the last five recessions. Strong productivity growth helps America compete in the global economy and is the key to higher wages and better living standards for U.S. workers. Higher productivity growth also allows for lower interest rates as the economy grows faster without generating inflation."

The report's author, economist Joel Popkin, stated: "Though the U.S. accounts for 40 percent of all R&D spending in the industrial world, we can not become complacent about this leadership position. The rapid growth in overseas manufacturing is creating new global centers with the critical mass necessary to build their own innovation machines," Popkin continued. "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."

"Developing human capital for a high performance workforce must be a top national priority if America is to remain the world's leader in innovation and productivity," Jasinowski went on to say. "The broadening shortage of skilled workers threatens our nation's ability to compete in today's fast-paced and increasingly demanding global economy and will only worsen as the baby boomers retire."

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