U.S. Innovation Lead At Risk

Feb. 3, 2006
Five warning signs are apparent, report asserts.

One day after President George W. Bush, in his State of the Union speech to the U.S. Congress, announced creation of an American Competitiveness Initiative to encourage innovation, the Manufacturing Institute and the Council of Manufacturing Associations released a report asserting U.S. leadership in manufacturing innovation is at risk.

The report, prepared by Joel Popkin and Company, an economic consulting firm, contends "five clear warning signs" point to problems ahead.

Those signs, the report says, are a slower-than-average U.S. recovery from recession, under-utilized manufacturing capacity, a smaller U.S. share of global manufactured goods trade, a shortage of skilled workers and low growth in R&D spending.

"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," Joel Popkin, the report's co-author, said in a statement released along with the report on Feb. 1. "The rapid growth in overseas manufacturing is creating new global centers with the critical mass necessary to build their own innovation machines," he added.

"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," said Jerry J. Jasinowski, president of the Manufacturing Institute, the research and education arm of the Washington, D.C.-based National Association of Manufacturers (NAM). "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."

The report makes several policy recommendations, many long-advocated by NAM and other manufacturing trade associations, to strengthen U.S. innovation and improve productivity. Among them: renewing the federal R&D tax credit that expired at the end of 2005, improving math and science education, encouraging workers to pursue lifetime training, and improving the speed and efficiency of U.S. transportation and communications.

"We need a bold action agenda to develop human capital, revitalize fundamental research and encourage productivity-enhancing investments in order to maintain a critical mass of production and a viable innovation process in this country," said Jasinowski.

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