The American Manufacturing Renaissance Becomes a Reality

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The American Manufacturing Renaissance Becomes a Reality

According to a recent study by the Reshoring Initiative, the U.S. economy added 60,000 manufacturing jobs in 2014, versus 12,000 in 2003. These jobs were a result of reshoring, in which American companies bring jobs back to the U.S., or foreign direct investment, in which foreign companies move production to the U.S. In contrast, American firms off-shored only 50,000 jobs last year, compared to about 150,000 in 2003.1

Why is this significant? While small, 2014’s net increase of about 10,000 jobs was the first net gain in at least twenty years. The new trend in manufacturing in the U.S. is to source domestically.

However, offshoring and reshoring are far from the most important factors driving U.S. manufacturing and manufacturing employment. Far more important is the role of technology, which has enabled manufacturers to produce far more with a fraction of the workforce.

Consider the facts: The U.S. manufacturing workforce peaked at 19.5 million workers in 1979. At the same time, manufacturing output in constant 2014 dollars was about $1.1 trillion. By 2010, the United States produced $2 trillion in goods with only 11.5 million workers. In short, output nearly doubled, while employment fell by 42 percent.

So, while we frequently hear claims that the U.S. manufacturing sector is dying or is in a state of decline, manufacturing output in the U.S. has continued to increase over time, and reached the highest level of output ever recorded in 2014.

How big is that output?

Based on United Nations data, currently available through 2013, the U.S. produces almost as much manufacturing output as Germany, South Korea, France, Russia, Brazil, and the UK combined. Think of that international manufacturing comparison the next time you hear that “America just doesn’t produce anything anymore.”2

Meanwhile, the number of manufacturing employees steadily declined to a low in 2010, before rebounding slightly through last year.

The amazing ability of the U.S. manufacturing sector to produce increasing amounts of output with fewer and fewer workers should be recognized as a sign of economic strength and vitality, not economic weakness...

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