Manufacturing Needs a Strategy  But Which One

Manufacturing Needs a Strategy -- But Which One?

Blueprints abound for reinvigorating U.S. manufacturing, but so far policymakers have shown 
little inclination to act on them.

For those not keeping track, more than a half-dozen "manufacturing strategies" have been unveiled over the past couple of years, including the Obama administration's "Framework for Revitalizing American Manufacturing" released in December 2009, and a bipartisan bill introduced in the House of Representatives that would create a public-private American Manufacturing Competitiveness Board.

Among those who have offered a vision for reinvigorating American manufacturing, there is full agreement that manufacturing matters. And -- considering the diversity of the strategists -- there is refreshingly little disagreement on the necessity of a coordinated public-private sector effort.

The question is, will policymakers -- and manufacturers themselves -- actually pay attention to, much less act on, any of these recommendations?

Lack of Vision and Leadership

Manufacturing strategies are not new. Few may remember, but the Bush administration developed a blueprint for strengthening the U.S. manufacturing sector. "Manufacturing in America," releasedManufacturing Needs a Strategy -- But Which One? by the Department of Commerce in January 2004, was a comprehensive strategy with 31 thoughtful recommendations that arose out of a series of roundtable discussions that took place throughout the country in 2003. For the most part, the strategy was ignored by lawmakers.

In the subsequent eight years, manufacturing as a percentage of GDP has continued to fall in the United States, and -- according to United Nations figures -- the country has given way to China as the world's top manufacturing economy. While this isn't a sport where rankings matter, U.S. manufacturing's continuing downward trend lines, and the lack of responsiveness over the past decade by politicians, suggest a monumental lack of vision and leadership. China's rise as a manufacturing powerhouse may have been inevitable, but America's decline was not.

The recent flood of new manufacturing strategies highlights the widespread concern that we are losing a grand opportunity to ensure a vibrant manufacturing base for generations to come.

Many of the recent strategies focus on oft-touted policy prescriptions. NAM's "Manufacturing Renaissance: Four Goals for Economic Growth," for example, challenges politicians to, among other things, develop a better tax climate, global trade policies that open international markets to U.S. goods and more effective cost-benefit analysis on federal regulations. At the same time, NAM sees a critical role for government in investing in STEM education and promoting national skills training and certification.

Harvard Business School's Gary Pisano and Willy Shih, in their report "Does America Really Need Manufacturing?", focus on the importance of "industrial commons" -- the clustering of R&D, engineering, suppliers and producers of advanced materials in specific geographic regions. Their strategy has two essential parts: Increasing funding for basic and applied research, on the part of both public and private sector institutions; and creating "fertile conditions for manufacturing at home" -- including tackling our complex tax and regulatory systems and supporting worker training.

Will Anyone Listen?

In "Why Does Manufacturing Matter? Which Manufacturing Matters?" the Brookings Institution takes a slightly different tack. In this February 2012 study, the authors, among them Susan Helper and Howard Wial, assert that key to our future is enacting policies that promote "high-road" manufacturing. They point to Germany's industrial strategy as a beacon for transformation. Like the German model, this would require federal facilitation of R&D networks, continuous vocational education and training, ease of access to credit for small and midsize companies and workforce protections that encourage labor-management coordination.

The New America Foundation unveiled its own strategy in April titled "Value Added: America's Manufacturing Future." Authors Michael Lind and Joshua Freedman note the dramatically changing nature of manufacturing in this country, and like Brookings, emphasize that our future lies in high-value products. Also like Brookings, they see Germany's applied research, financial assistance to small manufacturers and workforce training as a model for the U.S. government to emulate. At the same time, they share the NAM's emphasis on developing a long-term energy and infrastructure policy, fixing the tax and regulatory systems, training workers for a 21st century plant floor, and "promoting mutually beneficial rather than adversarial trade."

Finally, Rob Atkinson's Information Technology and Innovation Foundation organizes its just-released "traded sector" strategy around policy changes involving what it calls the "4Ts": technology, tax, trade and talent. Atkinson's strategy would hinge on dramatic shifts in the nation's policy priorities. For example, rather than proposing a greater emphasis on science, as others do, Atkinson says the nation should focus on engineering -- because "science is a public good that's freely traded," but "gains from engineering-based innovation are capturable...." An even larger evolution in thinking would be required to achieve his goal of moving to a production-based rather than consumption-based economy, which would entail shifting more of the tax load away from manufacturers and onto consumers.

Never before have so many organizations and policy experts harmonized so clearly on the need for a long-term manufacturing strategy. Time will tell if anyone in Washington is listening.

Stephen Gold is president and CEO of Manufacturers Alliance for Productivity and Innovation (MAPI), an executive education and business research organization in Arlington, Va. (www.mapi.net).

 

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