Printer Friendly

A U.S. manufacturing strategy for the 21st century: what policies yield national sector competitiveness?

The national debate over the fate of U.S. manufacturing is back, with some asking the question: Is manufacturing dead? However, the U.S. manufacturing sector has been making a surprising comeback and added jobs in 2010 and 2011 following 12 straight years of declines. Utilizing economic data, coupled with qualitative manufacturing industry information, offers a unique opportunity for the authors to present a pragmatic and strategic national manufacturing strategy based on the realities of a continually evolving R&D/high-technology-based U.S. manufacturing sector.

Business Economics (2012) 47, 126-147.

doi:10.1057/be.2012.4

Keywords: global manufacturing output, McKinsey Global Institute, U.S. manufacturing sector competitiveness, U.S. manufacturing sector decline, U.S. manufacturing strategy

The declining state of modern American manufacturing has been a recurring re·cur  
intr.v. re·curred, re·cur·ring, re·curs
1. To happen, come up, or show up again or repeatedly.

2. To return to one's attention or memory.

3. To return in thought or discourse.
 topic of media, government, industry, and academic debate since the rise of "industrial policy" [Johnson 1984] and the national conversation over the "de-industrialization of America" back in the early 1980s (Bluestone bluestone, common name for the blue, crystalline heptahydrate of cupric sulfate called chalcanthite, a minor ore of copper. It also refers to a fine-grained, light to dark colored blue-gray sandstone.  and Harrison 1982] and is now back in the news cycle. In a recent article published in the National Journal, Bruce Stokes Stokes , William 1804-1878.

British physician. Known especially for his studies of diseases of the chest and heart, he expanded on the observations of John Cheyne in describing the breathing irregularity now known as Cheyne-Stokes respiration.
 [2010] begins his inquiry into the status of U.S. manufacturing by asking this simple question: "Is manufacturing dead? Those who think so point to manufacturing's plummeting share of the national economy as a predictor of its eventual demise." Furthermore, in December of 2010, President Obama made his case for a reinvigorated re·in·vig·o·rate  
tr.v. re·in·vig·o·rat·ed, re·in·vig·o·rat·ing, re·in·vig·o·rates
To give new life or energy to.



re
 U.S. manufacturing sector [Jacoby 2011]: "We want to create and sell products all over the world that are stamped with three simple words: 'Made in America.' That's our goal." In February 2011, ABC News announced its "Made in America" series to be broadcast on "ABC World News with Diane Sawyer This article or section is written like an .
Please help [ rewrite this article] from a neutral point of view.
Mark blatant advertising for , using .
," that "look[s] back at the history of American manufacturing and the gradual shift away from assembly lines toward high-knowledge service industries [Blackburn and Noll 2011]." In a recent interview with CNNMoney, business tycoon Donald Trump Editing of this page by unregistered or newly registered users is currently disabled due to vandalism.  commented on the status of U.S. manufacturing: "You know, we don't manufacture anything anymore in this country. We do health care; we do lots of different services. But ... everything is made in China, for the most part [Jacoby 2011]."

But opinion leaders and journalists are not the only ones concerned with the state of U.S. manufacturing. In a 2010 national survey of 1,000 likely general election voters, commissioned by the Alliance for American Manufacturing [2010a} and focused on manufacturing and America's global economic standing, survey results revealed that 40 percent of respondents believe that "we have lost too many manufacturing jobs in this country." and 39 percent are convinced that "too many jobs are being shipped overseas." Moreover, the survey found that 94 percent of respondents believe that it is "most important" or "very important" that the U.S. Congress "create jobs;" and specifically, 85 percent want Congress to "create manufacturing jobs." Also, the manufacturing sector is ranked by survey respondents (as either first or second in priority) as the most important industry sector responsible for the "overall strength of the American economy" (57 percent) and for U.S. "national security" (40 percent). Of particular note, these survey respondents reject the notion that other industry sectors, such as high technology and services, can replace America's manufacturing sector by better than a 2:1 ratio (66 percent to 30 percent).

The concerns expressed by the U.S. electorate about the status of manufacturing employment are not without factual basis. The loss in U.S. manufacturing employment has been significant: since 2000, the U.S. Bureau of Labor Statistics Bureau of Labor Statistics (BLS)

A research agency of the U.S. Department of Labor; it compiles statistics on hours of work, average hourly earnings, employment and unemployment, consumer prices and many other variables.
 [2012] reports that more than 5.5 million jobs had been lost through 2011. This manufacturing displacement has resulted in painful employment transition for many Americans--especially during the prolonged pro·long  
tr.v. pro·longed, pro·long·ing, pro·longs
1. To lengthen in duration; protract.

2. To lengthen in extent.
 recession of the last few years. However, the manufacturing sector has been making a surprising comeback and actually added 109,000 jobs in 2010 following 12 straight years of declines, and manufacturing companies added another 225,000 jobs in 2011. While real GDP GDP (guanosine diphosphate): see guanine.  increased by only 1.7 percent in 2011, the manufacturing component of U.S. industrial production grew at more than two times that rate (4.0 percent) during the same period.

The fact that the manufacturing sector is now being given credit as the "shining star" of the U.S. economic recovery provides some evidence counter to the common assumption that America's manufacturing sector is in a perpetual state of decline. In fact, the rebound in U.S. manufacturing output and employment over the last two years might be reflecting the initial effects of several favorable fa·vor·a·ble  
adj.
1. Advantageous; helpful: favorable winds.

2. Encouraging; propitious: a favorable diagnosis.

3.
 long-term factors that are expected to revitalize re·vi·tal·ize  
tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es
To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy.
 the domestic manufacturing sector in the near future. According to according to
prep.
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

3.
 a recent report from the Boston Consulting Group [2011]:
  Within the next five years, the United States is expected to
  experience a manufacturing renaissance as the wage gap with China
  shrinks and certain U.S. states become some of the cheapest locations
  for manufacturing in the developed world. We expect net labor costs
  for manufacturing in China and the United States to converge by around
  2015. As a result of the changing economics, you're going to see a


Some analysts have proclaimed pro·claim  
tr.v. pro·claimed, pro·claim·ing, pro·claims
1. To announce officially and publicly; declare. See Synonyms at announce.

2.
 that China has now surpassed the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area.  in manufacturing output in dollars [Yeebo 2011], and the most recent international data from the United Nations [2011] confirm the fact that China's manufacturing output of U.S.$1.922 trillion in 2010 was slightly ahead of the U.S.$1.855 trillion of manufacturing output produced in the United States. Although China may have displaced displaced

see displacement.
 the United States as the world's largest manufacturing nation, the measured productivity of the average American manufacturing employee has increased significantly in recent years and exponentially ex·po·nen·tial  
adj.
1. Of or relating to an exponent.

2. Mathematics
a. Containing, involving, or expressed as an exponent.

b.
 surpasses that of his/her Chinese counterpart [Yeebo 2011]. Therefore, in terms of manufacturing output-per-worker, it is likely that the United States will remain among the world's most productive manufacturing economies for many decades to come. Nevertheless, while U.S manufacturing remains preeminent pre·em·i·nent or pre-em·i·nent  
adj.
Superior to or notable above all others; outstanding. See Synonyms at dominant, noted.



[Middle English, from Latin prae
 in the global economy, many critics believe the nation is overdue for a "national manufacturing strategy."

At "The National Summit" convened by the Detroit Economic Club in June of 2009, some of the nation's business, government, and academic leaders met to create a consensus set of policy recommendations for increasing America's competitiveness in the four disciplines of technology, energy, environment, and manufacturing [National Summit 2009]. The final initiative, "America's To-Do List," released in December 2009, consists of 10 strategic initiatives, and includes: "Develop a national manufacturing strategy that re-establishes an environment for U.S. businesses to thrive and compete on a global basis" [National Summit 2009]. Such a national manufacturing strategy consists of, for example, an integrated set of tax, trade, education, labor, and business regulation policies that is designed to help strengthen the U.S. manufacturing sector and maintain its global leadership. "The United States today is alone among industrial powers in not having a strategy or even a procedure for thinking through what must be done when it comes to manufacturing," says Thomas A. Kochan, an economist at the Massachusetts Institute of Technology [Uchitelle 2011]. Over the last few years, a variety of U.S. industry associations, including the National Association of Manufacturers; an academic institution (the Industrial College of the Armed Forces The Industrial College of the Armed Forces (ICAF) is a U.S. military educational institution tasked with preparing military officers and civilian government officials for leadership and executive positions in the field of national security. ); an industry-labor organization (the Alliance for American Manufacturing); as well as the Executive Office of the President, among others, have all proposed their own variants of a national manufacturing strategy. In 2010, the Democrat-controlled House of Representatives passed H.R. 4692. the "National Manufacturing Strategy Act," but this bill did not become law. This legislation included a primary charge that the President proposes a quadrennial quad·ren·ni·al  
adj.
1. Happening once in four years.

2. Lasting for four years.



quad·renni·al n.
 "National Manufacturing Strategy."

In this paper. we will first review the postwar history of the U.S. manufacturing sector, tracking trends in industry sector composition, the percent of GDP that manufacturing represents in the total U.S. economy, manufacturing sector employment and productivity improvements. the U.S. share of global manufacturing, and regulatory costs incurred. Second. we will collate col·late  
tr.v. col·lat·ed, col·lat·ing, col·lates
1. To examine and compare carefully in order to note points of disagreement.

2. To assemble in proper numerical or logical sequence.

3.
 and summarize sum·ma·rize  
intr. & tr.v. sum·ma·rized, sum·ma·riz·ing, sum·ma·riz·es
To make a summary or make a summary of.



sum
 the proposed major national manufacturing strategy proposals, identifying key public policy proposals common to the majority of these strategies. This will result in a generic model national manufacturing strategy. Third, we will evaluate this model national manufacturing strategy, using high-value added. technology-based criteria (backed by empirical evidence) developed by McKinsey & Company [McKinsey Global Institute 2010] to ascertain the generic proposal's degree of government intervention. In conclusion, we will offer our proposal for an efficacious ef·fi·ca·cious  
adj.
Producing or capable of producing a desired effect. See Synonyms at effective.



[From Latin effic
, reality-based national manufacturing strategy that will focus on maintaining U.S. global leadership in the 21st-century world economy.

1. Postwar Review of the U.S. Manufacturing Sector

In this section, we will review the U.S. manufacturing industry back to 1947, and specifically address the issue of whether, or to what extent, America's industrial sector has stagnated or declined and to what extent it has thrived and expanded. We start by analyzing real U.S. manufacturing output from 1947 to 2010 using GDP-by-Industry data from the Bureau of Economic Analysis [2011].

Size of the U.S. manufacturing sector

Figure 1 displays manufacturing value-added in inflation-adjusted 2010 dollars from 1947 to 2010, along with a trend line that reflects the growth rate of U.S. real manufacturing output of about 2 percent annually since 1947. U.S. manufacturing has been highly cyclical cyclical

Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements.
, and output has fallen sharply during recessionary periods. especially during the two recessions in 1980 and 1981 82 and during the last two recessions in 2001 and 2007 09. However, the manufacturing sector has always recovered from contractionary periods, and the most recent recovery from the 2007-09 recession is no different. Although not shown on the graph, the manufacturing sector is actually leading the current U.S. economic recovery, both in employment gains and output gains. The key point here is that the U.S. manufacturing sector has continued to expand over time on an absolute basis; and except for business cycle downturns, it has trended upward consistently in the postwar period. For example, the U.S.$1.775 trillion constant-dollar peak value of manufacturing in 2006 and 2007--before the recession--was double the size of the manufacturing sector in 1963.

To put the size of the U.S. manufacturing sector in perspective, the approximately U.S.S1.72 trillion of manufacturing output in 2010 would have placed America's manufacturing sector, if it were a separate country, as the world's ninth largest economy, just behind eighth-ranked Italy and larger than the entire national economics of India, Canada, Russia, or Spain [United Nations 2011]. Therefore, the relative size of the U.S. manufacturing sector cannot be discounted in terms of its influence and importance for the United States and world economies overall, and there has really been no overall or systematic long-run decline in U.S. manufacturing in an absolute sense.

In fact, the United States has led the world in manufacturing output for more than 100 years. Based on the most recent data available from the United Nations, the United States produced just slightly less manufacturing output in 2010 than first-place China (measured in current U.S. dollars), almost twice as much as third-place Japan, three times as much as fourth-place Germany, and roughly 10 times as much output as Mexico or Russia [United Nations 2011]. To further appreciate how much manufacturing output is produced in the United States, consider that the United States produced almost as much total manufacturing output in 2010 as the manufacturing sectors of Germany, Italy, Brazil, South Korea, France, and the United Kingdom combined.

U.S. share of world manufacturing output

It should also be noted that in addition to being the world's largest manufacturer for more than a century, the United States has also produced a relatively stable share of world manufacturing output over the last 30 years. For example, the United States produced about 18.24 percent of world manufacturing output in 2010, compared with its 21 percent share of world output in 1980. And until 2008, the United States produced more than 20 percent of world manufacturing output in every year. Only in the period 2008-10 has the U.S. share of world manufacturing dipped below 20 percent [United Nations 2011].

Although China produced slightly more manufacturing output than the United States in 2010, it is estimated that China employs more than

100 million workers in its manufacturing [Bureau of Labor Statistics 2009], compared with only 11.5 million workers in U.S. manufacturing, and thus on an output-per-worker basis, the United States is still far ahead of China. It will be many decades or longer before China comes close to matching the U.S. manufacturing sector on an output-per-worker basis.

Manufacturing employment and worker productivity

The strongest evidence of a decline in the U.S. manufacturing sector, and the one area that has captured most of the media attention and thereby influenced public opinion, is the reality of manufacturing job losses over the last three decades. Figure 2 graphically displays the historical relationship between annual U.S. manufacturing output in 2010 dollars and the average annual number of manufacturing payroll employees in the United States from 1947 to 2010.

In the 32-year period between 1947 and 1979, there was a clear and positive upward trend in both manufacturing output and employment. During this period, manufacturing employment expanded by about 1 percent per year on average, which increased total manufacturing employment by five million more workers during this period to the historical record-high level of 19.5 million by 1979. Importantly for our discussion here, real manufacturing output in the United States increased at an annual rate of 3.2 percent during this period, or three times faster than employment, which meant manufacturing output on a per-worker basis approximately doubled during this period, from about U.S.$35,000 per worker (in 2010 dollars) in 1947 to more than U.S.S70,000 per worker by 1979--an annual rate of about 2.5 percent--as shown in Figure 3.

Productivity for U.S. manufacturing workers then accelerated to a 3.3 percent average annual growth after 1980, and by 2010 the manufacturing output per worker doubled again, from about U.S.S70,000 in 1981 to almost U.S.$149,000 by 2010. This ongoing increase in worker productivity, owing to owing to
prep.
Because of; on account of: I couldn't attend, owing to illness.

owing to prepdebido a, por causa de 
 technological advances like robotics robotics, science and technology of general purpose, programmable machine systems. Contrary to the popular fiction image of robots as ambulatory machines of human appearance capable of performing almost any task, most robotic systems are anchored to fixed positions  and other forms of automated assembly, like the computer numerical control Computer numerical control

The method of controlling machines by the application of digital electronic computers and circuitry. Machine movements that are controlled by cams, gears, levers, or screws in conventional machines are directed by computers and
 innovations introduced in the late 1970s, has allowed the United States to continue to expand manufacturing output year after year (except for recessions) but with fewer and fewer manufacturing workers since 1980.

By 2010, the accelerating manufacturing productivity gains combined with the recession were responsible for the number of manufacturing workers falling to only 11.5 million, the lowest manufacturing employment level since 1941, and 8 million workers below the 1979 peak of 19.5 million. Despite the decline in manufacturing employment levels over the last 30 years, the United States has been able to produce increasingly higher levels of output in almost every year and maintain its status as the world's largest manufacturer through 2009. However, it is the decline in manufacturing employment that leads to the perception that American manufacturing is in a perpetual state of decline, without taking into account that both the manufacturing sector's output and productivity continue to show strong signs of growth and expansion.

Manufacturing output as a share of gross domestic product (GDP)

An important issue related to the dramatic increases in manufacturing-worker productivity is the decrease in the manufacturing sector's value as a share of GDP. From a postwar high of 28.3 percent in 1953, manufacturing's share of U.S. GDP has gradually decreased over time, falling to an historic low of 11.2 percent in 2009 before increasing to 11.7 percent in 2010. The 0.5 percent increase in manufacturing's share of GDP in 2010 was the largest annual increase since a 0.6 percent increase back in 1976. At the same time, the share of private services-producing industries increased from 47.3 percent of GDP in 1953 to 68.5 percent in 2010. Over the same period. manufacturing jobs as a percent of total U.S. payroll employment fell from 32 percent to less than 9 percent. whereas service sector jobs increased from 61 percent to 86.3 percent of total payroll employment. Manufacturing's decreasing shares of total output and total employment have also supported the public's perception that America's manufacturing sector is in a state of decline. However. there are two key points to be made here about the declining share of manufacturing in the total U.S. economy.

First, the downward trend in manufacturing's share of GDP and employment, and upward trend in the service sector's share of GDP and employment, is not unique to the United States but is a global phenomenon. Based on international data from the United Nations [2011], global manufacturing output as a share of world GDP fell from about 27 percent in 1970 to 16.25 percent in 2010, while in the United States it fell from 24.3 percent to 12.9 percent (Note that the United Nations [2011] data on manufacturing are slightly different from the Bureau of Economic Analysis [2011] data). Therefore, we can conclude that at the same time that some manufacturing output for low-cost, low-value-added production has shifted from the United States to China and elsewhere, it is also the case that manufacturing's shale shale, sedimentary rock formed by the consolidation of mud or clay, having the property of splitting into thin layers parallel to its bedding planes. Shale tends to be fissile, i.e., it tends to split along planar surfaces between the layers of stratified rock.  of global output is declining. When we hear complaints that "nothing is made here anymore," it is not always the case that another country is now manufacturing output that used to be produced in the United States. However, it is also increasingly the case that the United States and most other countries are no longer producing as much manufacturing output relative to the overall size of the national and global economies. This global shift could be reflecting the transition from a traditional manufacturing-intensive Machine Age economic model to more of a services-intensive Information Age economic model. Thus, even if the United States was a closed economy with no low-cost imported manufactured goods manufactured goods nplmanufacturas fpl; bienes mpl manufacturados

manufactured goods nplproduits manufacturés 
, it is very likely that manufacturing's share of national income and employment would have followed a downward trend as the U.S. economy evolved into a modern services-based economy.

Second, the significant and ongoing efficiency and productivity gains in the manufacturing sector of the U.S. economy over time have contributed to a declining manufacturing output/GDP ratio by lowering the real prices of manufactured products relative to other products and services. According to Chicago Federal Reserve economist William Strauss [2010], the productivity growth of the manufacturing sector of 3.3 percent annually between 1980 and 2009 considerably exceeded the 2 percent growth in productivity for the economy as a whole As a result of disproportionately dis·pro·por·tion·ate  
adj.
Out of proportion, as in size, shape, or amount.



dispro·por
 greater productivity gains in the manufacturing sector relative to the service sector, the prices of manufactured goods relative to services became increasingly more affordable for consumers and contributed to the manufacturing sector's declining share of total output. According to Strauss [2010]:
  As one example, inflation (as measured by the Consumer Price Index)
  averaged 3.7 percent between 1980 and 2009, while at the same time the
  rise in prices for new vehicles averaged 1.7 percent. So while the
  number (and quality) of manufactured goods had been rising over time,
  their relative value compared with the output of other sectors did not
  keep pace. This allowed manufactured goods to be less costly to


This pattern of increased productivity leading to lower prices, employment, and a declining shale of GDP, is analogous to the trend that has been taking place in the agriculture sector of the U.S. economy for over 200 years. In the early 1800s, more than 80 percent of both U.S. employment and output were directly tied to a relatively inefficient (by today's standards), labor-intensive agriculture sector. Food products were very expensive and consumed a large part of a typical household's income. Over time, advances in technology revolutionized farming, resulting in the same trends we observe today in manufacturing: huge increases in farm worker productivity, reduced farm employment both in absolute numbers and as a share of total employment, significantly lower prices, and a reduced share of food expenditures in both household income and GDP.

Accompanying those trends has been a continually increasing size of U.S. agricultural output over time in an absolute sense, as technological advances allow us to produce more farm output over time with fewer workers year after year. In the same way that it would be unreasonable and inaccurate to talk about the "decline or demise" of farming in the United States by focusing only on the declines in farm employment and agricultural output as a share of GDP, without acknowledging the increasing overall size of agricultural output, it is also incomplete to think of the U.S. manufacturing as being in a state of decline.

U.S. manufacturing sector output and employment in 2010 and 2011

It is important to note that the manufacturing sector made significant gains in both employment and output in both 2010 and 2011, as noted above. For example, following 12 straight years of employment declines, U.S. manufacturing employment increased by 109,000 jobs in 2010--the first annual increase in manufacturing employment since 1997--and increased by another 225,000 jobs in 2011. The last time that U.S. manufacturing companies added jobs for two consecutive years was in 1996-1997.

According to the manufacturing component of the Federal Reserve System's [2011] monthly measure of industrial production, the U.S. manufacturing sector grew by 4 percent in 2011, or more than two times the 1.7 percent rate of real GDP growth rate for the economy overall last year. Many other measures of national and regional manufacturing output--Institute for Supply Management manufacturing, Empire State Manufacturing Index, Richmond Federal Reserve Manufacturing Index, motor vehicle sales, new orders for manufactured durable goods durable goods

Goods, such as appliances and automobiles, that have a useful life over a number of periods. Firms that produce durable goods are often subject to wide fluctuations in sales and profits. Also called consumer durables.
, outbound loaded export containers, and record-high after-tax manufacturing profits in 2011--all indicate a strong recovery for U.S. manufacturing that gained momentum throughout 2011.

Far from being an industry in decline, U.S. manufacturing has shown strength and resiliency as it emerges from the Great Recession at the forefront of the U.S. economic recovery. It is now recognized again as one of America's most vital and vibrant industries, with an increasingly bright future. Numerous media reports have documented what is being called a "manufacturing renaissance."

Part of the current and future strength of American manufacturing could be explained by the global shift in manufacturing that has leveraged the relative cost advantages of manufacturing low-value goods in developing countries like China, while advanced economies like the United States have increasingly specialized in producing higher-end, higher-skilled manufacturing in areas like aerospace, pharmaceuticals and medicine, industrial machinery, medical and scientific equipment and supplies, computers, software and semiconductors, and oil and natural-gas equipment.

The next question is how to formulate and implement a strategic, national manufacturing strategy that will promote America's high-value added manufacturing and help the United States maintain its century-old position of global leadership in the 21st-century world economy.

2. National Manufacturing Strategies

Over the last three years, a variety of entities--business associations, multistakeholder coalitions, public policy think tanks, and academic and government--have developed 11 different comprehensive U.S. manufacturing strategy proposals for public discussion. These 11 entities, followed by the year of issue and the title of the proposal are the following (1):

* Alliance for American Manufacturing. 2010b. "National Manufacturing Strategy: Our Plan."

* American Iron and Steel Institute. 2011. "Public Policy Agenda."

* The Association for Manufacturing Technology Association for Manufacturing Technology, formerly the National Machine Tool Builders Association (NMTB), creates machine tool design standards.

The NMTB laid down standards for machine tool design, among other things: the taper used on CNC (Computer Numerically Controlled)
. 2009. "The Manufacturing Mandate: Unleashing a Dynamic Innovation Economy."

* Council on Competitiveness. 2011. "Ignite 1.0: Voice of American CEOs on Manufacturing Competitiveness."

* Executive Office of the President. 2009. "A Framework for Revitalizing re·vi·tal·ize  
tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es
To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy.
 American Manufacturing."

* The Industrial College of the Armed Forces. 2010. "Industry Study: Manufacturing Industry."

* The Information Technology & Innovation Foundation. 2011. "The Charter for Revitalizing Manufacturing."

* The National Association of Manufacturers. 2011. "Manufacturing Strategy: For Jobs and a Competitive America."

* National Council for Advanced Manufacturing. 2009. "Integrated Vision for U.S. Manufacturing."

* New America Foundation The New America Foundation is a non-profit public policy institute and think tank located in Washington, D.C. that promotes innovative political solutions transcending conventional party lines -- what they call radical centrist politics. . 2010. "America Needs a Manufacturing Strategy."

* President's Council of Advisors on Science and Technology. 2011. "Report to the President on Ensuring American Leadership in Advanced Manufacturing."

To effectively evaluate these 11 manufacturing strategy proposals, Table 1 is an affinity diagram The affinity diagram is a business tool and is one of the “seven management and planning tools” and is a tool used to organize ideas and data.

The tool is commonly used within project management and allows large numbers of ideas to be sorted into groups for review and
, an analytic device useful in identifying patterns and establishing related groups that exist in qualitative data sets [Shafer and others 2005]. In Table 1, we have horizontally listed the 11 entities proposing national manufacturing strategies; vertically, we have identified 21 specific policies categorized cat·e·go·rize  
tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es
To put into a category or categories; classify.



cat
 by nine separate policy categories. Because an "affinity" among the policies must be identified, we focused on nine policy categories (2) that have been recommended by two or more entities in their proposed manufacturing strategy proposals. These are:

1. Energy/Environmental Policy. Develop new clean energy initiatives, as well as green technologies, through, for example, the expansion of permanent federal clean energy manufacturing credits, industrial energy efficiency grants, and loan guarantees for new energy infrastructure projects. Also, a comprehensive national energy policy should be embraced that encourages energy efficiency and conservation and balances investment in a diverse portfolio of traditional energy sources, such as coal, natural gas, nuclear, and oil, as well as alternative energy sources, such as biomass, solar, and wind. Lastly, policies that protect the environment should be promoted--including the enactment of climate change legislation, the active encouragement of additional investment and innovation, and a clear recognition of the global scope of many environmental issues.

2. General Business Enhancement Policies. Encourage the collaboration and coordination among government, business, and academic leaders to better coordinate and create public policies that enable appropriate development and evaluation of results through the lens of global competitiveness. To assure the availability of capital to manufacturers, revise Small Business Administration/government lending requirements to consider current economic conditions, to provide incentives to banks to make and maintain capital loans, and to establish a manufacturing investment financial facility to leverage private capital. Also, improve and energize en·er·gize  
v. en·er·gized, en·er·giz·ing, en·er·giz·es

v.tr.
1. To give energy to; activate or invigorate: "His childhood
 export promotional assistance to small and medium-sized companies through expanded export promotion programs and export credit assistance for both small and large firms. Lastly, support effective health care reform that contains and reduces costs to manufacturers.
Table 1. National Manufacturing Strategies by Entities and Policies

Manufacturing          Manufacturing
                       Strategies

Policies

                       Alliance for   American   Association
                       American       iron and   for
                       Manufacturing  Steel      Manufacturing
                       (2010b)        Institute  Technology
                                      (2011)     (2009)

Energy Policy:

Encourage clean/new    X              X
energy initiatives

Institute a                           X
comprehensive
national energy
program

General Business
Enhancement Policies:

Improve business!                                X
government
coordination of

Manufacturing public
policy

Increase access to     X                         X
capital

Offer adequate
financial
(nontax)/nonfinancial
incentives and
promotion assistance

Reduce health care
casts Human Capital
Policy:

Encourage STEM         X                         X
Education/skilled
trades
training

VISA/green card                                  X
reform
For foreign-born STEM
employees

Infrastructure
Policy:

Enact multiyear       X              X
surface
transportation
legislation

Finance long-term      X
infrastructure
improvements

Industrial Policy:

Maintain defense                                 X
critical
production in the
U.S.

Manufacturing base
Innovation Policy;

Adequately fund        X                         X
public
investment in basic
and
applied research

Support regional       X                         X
clusters
of
innovation/learning

Regulatory/Legal
Policy:

Establish a                           X          X
pro-growth
regulatory
environment

Institute tort reform                            X

Tax Policy:

Institute              X
corporate-lax
reform

Make permanent and     X                         X
Improve the research
And experimentation
tax credit

Trade Policy:

Enforce international  X              X
trade
laws

Modernize the U.S.                               X
export
control system

Strengthen                                       X
intellectual
property protection

Manufacturing
Policies

                       Charter for    Council on       Industrial
                       Revitalizing   Competitiveness  College
                       American       (2011)           of the
                       Manufacturing                   Armed
                       (2011)                          Forces
                                                       (2010).

Energy Policy:
Encourage clean/new                   X
energy initiatives

Institute a                           X
comprehensive
national energy
program

General Business
Enhancement Policies:

Improve business!                     X                X
government
coordination of

Manufacturing public
policy
Increase access to
capital

Offer adequate
financial
(nontax)/nonfinancial
incentives and
promotion assistance

Reduce health care                                     X
casts Human Capital
Policy:

Encourage STEM                        X                X
Education/skilled
trades
training

VISA/green card                       X
reform
For foreign-born STEM
employees

Infrastructure
Policy:

Enact multiyear                      X
surface
transportation
legislation

Finance long-term                     X                X
infrastructure
improvements

Industrial Policy:

Maintain defense                                       X
critical
production in the
U.S.

Manufacturing base
Innovation Policy;

Adequately fund                                        X
public
investment in basic
and
applied research

Support regional
clusters
of
innovation/learning

Regulatory/Legal
Policy:

Establish a                           X                X
pro-growth
regulatory
environment

Institute tort reform
Tax Policy:

Institute                             X
corporate-lax
reform

Make permanent and                    X                X

Improve the research

And experimentation
tax credit

Trade Policy:

Enforce international                 X
trade
laws

Modernize the U.S.                    X                X
export
control system

Strengthen                                             X
intellectual
property protection

Manufacturing
Policies

                       National       National       New
                       Association    Council for    America
                       of
                       Manufacturers  Advanced       Foundation
                       (2011)         Manufacturing  (2010)
                                      (2009)

Energy Policy:
Encourage clean/new    X              X              X
energy initiatives

Institute a            X
comprehensive
national energy
program

General Business
Enhancement Policies:
Improve business!
government
coordination of

Manufacturing public
policy

Increase access to                    X
capital

Offer adequate         X              X
financial
(nontax)/nonfinancial
incentives and
promotion assistance

Reduce health care     X              X
casts Human Capital
Policy:

Encourage STEM         X              X              X
Education/skilled
trades
training

VISA/green card        X
reform

For foreign-born STEM
employees

Infrastructure
Policy:

Enact multiyear       X
surface
transportation
legislation

Finance long-term      X                             X
infrastructure
improvements

Industrial Policy:

Maintain defense
critical
production in the
U.S.

Manufacturing base
Innovation Policy;

Adequately fund        X              X
public
investment in basic
and
applied research

Support regional                      X
clusters
of
innovation/learning

Regulatory/Legal
Policy:

Establish a            X
pro-growth
regulatory
environment

Institute tort reform  X
Tax Policy:

Institute              X              X              X
corporate-lax
reform

Make permanent and
Improve the research
And experimentation
tax credit

Trade Policy:

Enforce international  X                             X
trade
laws

Modernize the U.S.     X
export
control system

Strengthen             X              X
intellectual
property protection

Manufacturing
Policies

                       Office of  President's
                       the        Council of
                       President  Advisors
                       (2009)     on Science
                                  and
                                  Technology
Energy Policy:                    (2011)

Encourage clean/new    X
energy initiatives

Institute a            X
comprehensive
national energy
program

General Business
Enhancement Policies:

Improve business!                 X
government
coordination of

Manufacturing public
policy

Increase access to     X          X
capital

Offer adequate         X
financial
(nontax)/nonfinancial
incentives and
promotion assistance

Reduce health care     X
casts Human Capital
Policy:

Encourage STEM         X          X
Education/skilled
trades
training

VISA/green card                   X
reform

For foreign-born STEM
employees

Infrastructure
Policy:

Enact multiyear       X
surface
transportation
legislation

Finance long-term      X
infrastructure
improvements

Industrial Policy:
Maintain defense
critical
production in the
U.S.

Manufacturing base
Innovation Policy;

Adequately fund        X          X
public
investment in basic
and
applied research

Support regional       X
clusters
of
innovation/learning

Regulatory/Legal
Policy:

Establish a            X
pro-growth
regulatory
environment

Institute tort reform
Tax Policy:

Institute              X          X
corporate-lax
reform

Make permanent and     X          X
Improve the research
And experimentation
tax credit

Trade Policy:

Enforce international  X
trade laws

Modernize the U.S.     X
export
control system

Strengthen             X
intellectual
property protection


3. Human Capital. Policy. Focus educational efforts on developing science, technology, engineering, and mathematics (STEM) skills by rewarding companies with financial incentives and providing students with grants and scholarships. Educational curricula should include creating flexible education tracks that foster STEM literacy through community colleges, vocational trade schools, and work training programs. Also, revise visa/green card processes that hinder attracting and retaining top foreign STEM talent, including incorporating immigration immigration, entrance of a person (an alien) into a new country for the purpose of establishing permanent residence. Motives for immigration, like those for migration generally, are often economic, although religious or political factors may be very important.  "best practices" from other countries.

4. Infrastructure Policy. Enact a multiyear surface transportation infrastructure program financed exclusively by fuel-related taxes. Also, create a National Infrastructure Bank to finance improvements to high-value, long-term infrastructure projects, such as nuclear facilities and the nation's electricity grid system.

5. Industrial Policy. Sustain unique and essential Defense Industrial Base (DIB (1) (Directory Information Base) Also called "white pages," a database of names in an X.500 system.

(2) (Device Independent B
) capabilities through federal government and private industry collaboration. Moreover, to ensure that DIB capabilities are maintained, it is crucial to develop strategic manufacturing partnerships with America's allies.

6. Innovation Policy. Maintain the federal government emphasis on direct funding of basic and applied research, and expand national innovation resources to the private sector. Also, the federal government should support regional clusters, or networks, of manufacturing innovation, learning, and production.

7. Regulatory and Legal Policy. Create a regulatory environment that promotes economic growth, develop a benchmarking process to analyze the impact of regulations from a global competitiveness perspective, and diminish the cost and complexity of regulatory compliance. Also, implement a commonsense com·mon·sense  
adj.
Having or exhibiting native good judgment: "commonsense scholarship on the foibles and oversights of a genius" Times Literary Supplement.
, fair, approach to tort law A body of rights, obligations, and remedies that is applied by courts in civil proceedings to provide relief for persons who have suffered harm from the wrongful acts of others.  reform, as annual tort tort, in law, the violation of some duty clearly set by law, not by a specific agreement between two parties, as in breach of contract. When such a duty is breached, the injured party has the right to institute suit for compensatory damages.  costs account for almost 2 percent of U.S. GDP.

8. Tax Policy. Develop globally competitive corporate tax rates, and lower the corporate income and payroll tax Payroll Tax

Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee. In most countries, including the U.S., both state and federal authorities collect some form of payroll tax.
 burden on manufacturers investing and locating jobs in the United States. Also, avoid any new tax increases on U.S. manufacturers. Lastly, enhance and make permanent the "research and experimentation tax credit" to encourage manufacturers to invest in long-term research and development (R&D) activities.

9. Trade Policy, Ensure that U.S. trade rights under existing trade agreements are strictly enforced, and ensure that other countries comply with World Trade Organization (WTO See World Trade Organization. ) rules and regulations. Directly penalize pe·nal·ize  
tr.v. pe·nal·ized, pe·nal·iz·ing, pe·nal·iz·es
1. To subject to a penalty, especially for infringement of a law or official regulation. See Synonyms at punish.

2.
 nations that manipulate their exchange rates and implement nontariff barriers to gain an unfair trade advantage for their "national champions." Also, create a modern, comprehensive U.S. export control system to encourage manufacturing exports without weakening national security. Lastly, recognize intellectual property (IP) as one of America's competitive strengths that must be defended at all levels, domestically and globally.

The preceding evaluation of the nine major manufacturing strategy proposals from the 11 entities offering strategies reveals an initial "generic" manufacturing strategy of those policies considered to be important to maintaining, developing, and expanding the U.S. manufacturing sector. We now turn our attention to evaluating this implied national manufacturing strategy.

3. Global Competitiveness and Economic Growth: The McKinsey Global Institute Analytic Framework

The McKinsey Global Institute (MGI MGI Mouse Genome Informatics
MGI Modular Gateway Interface
MGI McKinsey Global Institute
MGI Military Geographic Information
MGI Marine Geological Institute
MGI Policy on the Management of Government Information (Canada) 
) recently developed an industry/sector-based, analytic approach to evaluating national competitiveness (focused on the underlying drivers of competitiveness) to assist national governments to make the most effective policymaking pol·i·cy·mak·ing or pol·i·cy-mak·ing  
n.
High-level development of policy, especially official government policy.

adj.
Of, relating to, or involving the making of high-level policy:
 decisions to support globally competitive industries and sustained economic growth [McKinsey & Company 2010].

The MGI research builds upon the seminal work A seminal work is a work from which other works grow. The term usually refers to an intellectual or artistic achievement whose ideas and techniques have been adopted or responded to in later works by other people, either in the same field or in the general culture.  of Harvard Business School Harvard Business School, officially named the Harvard Business School: George F. Baker Foundation, and also known as HBS, is one of the graduate schools of Harvard University.  economist Michael Porter This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article.  [1990a], who conducted an international study of 10 nations (and utilized 100 case studies) to develop an analytic framework (his "Diamond of National Competitive Advantage") that combines theories from international economics with those from competitive strategy that would explain why a specific nation succeeds in particular industries but not in others. In his "Diamond" framework, Porter [1990b] views the role of government in the competitive development of an industry as important but indirect, mainly through influencing ("transmitting and amplifying") the four major determinants of competitive advantage. factor conditions; demand conditions; related and supporting industries; and firm strategy, structure, and rivalry. In this indirect role, Porter [1990h. pp. 87-89] identifies eight basic policy approaches that governments should embrace to play an important supporting role supporting role nsecond rôle m

supporting role nruolo non protagonista 
 for the international competitiveness of national firms:

* Focus on advanced, specialized factor creation.

* Avoid intervening in factor and currency markets.

* Enforce strict product, safety, and environmental standards.

* Sharply limit direct cooperation among industry rivals.

* Promote goals that lead to sustained investment.

* Deregulate deregulate

To reduce or eliminate control. One of the major forces in the financial markets in the 1970s and 1980s was the federal government's decision to deregulate interest rates.
 competition.

* Enforce strong domestic antitrust Antitrust

The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade.
 policies.

* Reject managed trade.

By competitiveness, MGI researchers mean "a capacity to sustain growth through either increasing productivity or expanding employment" [McKinsey & Company 2010, p. 10]. (3) In contrast to the academic and policy research that has employed an economy-wide lens (such as the Solow growth model of the 1960s and 1970s, New Growth models of the 1980s and 1990s; and Schumpeterian growth models emphasizing innovation and creative destruction) to explain the issue of competitiveness. MGI has used sector-level research in more than 20 countries and 28 industrial sectors, employing microeconomic mi·cro·ec·o·nom·ics  
n. (used with a sing. verb)
The study of the operations of the components of a national economy, such as individual firms, households, and consumers.
 intelligence to build a picture of macroeconomic mac·ro·ec·o·nom·ics  
n. (used with a sing. verb)
The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors.
 outcomes [McKinsey & Company 2010, p. 10]. (4) This applied economic policy research has primarily focused on understanding how different sectors have contributed to overall economic growth. Moreover, it seeks understanding through detailed case studies of how sectors differ in the ways that various external and policy factors influence their competitiveness and growth [McKinsey & Company 2010, p. 10]. This microeconomic-to-macroeconomic approach is believed by MGI researchers to be critical to answering the question of enhancing competitiveness.

In developing their analytic framework, MGI researchers studied the competitiveness of six industries (retail, software and information technology services, tourism, steel, automotive, and semiconductors) across eight or more countries in each case, including both emerging and high-income economies [McKinsey & Company 2010, p. 10]. Moreover, MGI researchers drew on national account data and McKinsey's global industry expertise to measure differences in sector growth performance across countries and assessed what factors have been critical for explaining the competitiveness in each industry (such as skills and scale in semiconductor products; access to low-cost raw materials and energy, and efficient operations in steel) [McKinsey & Company 2010, p. 10]. They then studied how different government policies have influenced the competitiveness levers and growth performance of different countries [McKinsey & Company 2010, p. 10]. Lessons that emerged from their case studies are applicable to other sectors, both existing and emerging, and countries across different income levels [McKinsey & Company 2010, p. 11].

In the MGI framework, six sectors were identified that share characteristics and respond to similar policy approaches to enhancing competitiveness: (1) infrastructure services; (2) local services; (3) business services; (4) R&D-intensive manufacturing; (5) manufacturing; and (6) resource-intensive industries [McKinsey & Company 2010, p. 12]. These six sectors, shown in Figure 4, provide a useful analytic framework for understanding what determines competitiveness in different kinds of industries and what tangible actions governments and businesses can take to improve global competitiveness.

As shown in Figure 5, the spectrum of public policy intervention ranges from a "hands-off' approach limited to creating the necessary market institutions to being a central operator in a sector. This spectrum is reflected in four categories that demonstrate an increasing intensity of public policy intervention [McKinsey & Company 2010, p. 13]. They are:

1. Setting the Ground Rules and Direction. Governments can limit sector policies to setting the regulatory environment, including labor and capital markets and general business regulation, and setting broad national priorities and roadmaps.

2. Building Enablers. Without interfering with markets, governments can support the private sector by expanding hard and soft infrastructure, educating and training a skilled workforce, and supporting R&D.

3. Tilting the Playing Field. Governments can choose to create favorable conditions for local production, typically through trade protection from global competition; through the provision of financial incentives for local operations; or by shaping local demand growth through public purchasing or regulation.

4. Playing the Role of Principal Actor. At the interventionist end of the policy spectrum, governments may play a direct role by establishing state-owned or subsidized sub·si·dize  
tr.v. sub·si·dized, sub·si·diz·ing, sub·si·diz·es
1. To assist or support with a subsidy.

2. To secure the assistance of by granting a subsidy.
 companies, funding existing businesses to ensure their survival, and imposing restructuring on certain industries.

The two sectors relevant to our analysis--R&D-intensive manufacturing and other manufacturing--have a specific array of policy tools available to assist in creating competitive manufacturing industries manufacturing industries nplindustrias fpl manufactureras

manufacturing industries nplindustries fpl de transformation

 [McKinsey & Company 2010, pp. 15-16, 21-22]

* R&D-Intensive Manufacturing: In general, government efforts to influence competitiveness and performance directly--that is, to set the direction of technological development--have largely failed because of the rapidly changing nature of these industries. In general, the chance of successful public interventions in these sectors is low, and it is expensive. Moreover, collective government support across countries can lead to global overcapacity o·ver·ca·pac·i·ty  
n.
Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. 
 and low returns to investors (as observed in the semiconductor industry). Public policies that make a location attractive fall into the category of "building enablers," and include training a technologically skilled workforce; supporting R&D activities through universities or other research funds; and creating domestic demand for emerging new solutions (such as, feed-in tariffs for wind or solar power).

* Other Manufacturing: There is no "one-size-fits-all" policy for manufacturing. A wide variety of approaches have helped establish local manufacturing industries in different regions. A government's capacity to boost growth depends on whether it targets policy at activities (and location--depending on the subsegment or even step in the "value chain") with real potential for comparative advantage, as well as how it executes those policies. The public policies employed have varied widely, ranging from protecting local production from global competition (through trade barriers or local market regulations), to providing public incentives for exports (through favorable financing to local companies or incentives to foreign investors), or providing financial assistance to ailing local companies.

In Table 2, we have evaluated the 21 national manufacturing policies (recommended in two or more national manufacturing strategy proposals) by employing the "MGI National Sector/ Industry Competitiveness Framework." Based on the "degree of government intervention" variable, the four-category framework reveals the following analytic insights:

* Playing the Role of Principal Actor: There is no support among any of the 11 national manufacturing strategy proposals for establishing state-owned or subsidized companies, funding existing businesses to ensure their survival, or imposing restructuring on certain industries. This extreme level of interventionism in·ter·ven·tion·ism  
n.
The policy or practice of intervening, especially:
a. The policy of intervening in the affairs of another sovereign state.

b.
 on the part of the state has no adherents in industry, government, labor, universities, or nonprofit A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive.

Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law.
 organizations.

* Tilting the Playing Field: This industry-specific category, reflecting a relatively high level of national government intervention, has attracted substantial support concerning initiatives focused on energy policy. Energy policy initiatives include direct subsidies for the expansion of clean energy manufacturing, tax credits, industrial energy efficiency grants, and loan guarantees for new energy infrastructure projects that are not yet economically viable. Other forms of financial incentives and assistance, such as helping small-and medium-sized manufacturers to access capital to help weather the current recession and "jump-start" expansion when the economy rebounds, also garnered significant support among the national manufacturing strategy proposals.

* Building Enablers: National manufacturing policies closely tracked what MGI found to be what national governments traditionally support, without actively becoming involved in choosing industry winners-and-losers: expanding physical infrastructure, including surface transportation and other long-team projects; educating and training a skilled science, engineering, and technology-proficient workforce; and supporting basic and applied R&D.

* Setting the Ground Rules and Direction: This category, involving minimal intervention by national government, involves establishing the baseline legal and public policy environment for business to operate in. The majority of manufacturing policy proposals is found here, ranging from improving business/government coordination of manufacturing public policy to maintaining critical domestic defense-related manufacturing to instituting tort reform. These recommended policies allow for market forces to generate manufacturing sector economic results.
Table 2. The MGI National Sector/Industry Competitiveness Framework:
National Manufacturing Polices

Low Degree of Government Intervention High

Manufacturing          Setting Ground   Building  Tilting  Government
Policies               Rules/Direction  Enablers  the      as
                                                  Playing  Principal
                                                  Field    Actor

Energy Policy:

Encourage clean/new                               X
energy initiatives

Institute a                                       X
comprehensive
national energy
program

Environmental
Policy:

Institute an           X
effective national
environmental policy

General Business
Enhancement
Policies:

Improve                X
business/government
coordination of
manufacturing public
policy

Increase access to                                X
capital

Offer adequate                                    X
financial
(nontax)/nonfinancial
incentives and
promotion assistance

Reduce health care     X
costs

Human Capital
Policy:

Encourage STEM                          X
education/skilled
trades training

VISA/green card        X
reform for
foreign-born STEM
employees

Infrastructure
Policy:

Enact multiyear                         X
surface
transportation
legislation

Finance long-term                       X
infrastructure
improvements

Industrial Policy:

Maintain defense       X
critical production
in the U.S.
manufacturing base

Innovation Policy:

Adequately fund                         X
public investment in
basic arid applied
research

Support regional       X
clusters of
innovation/learning

Regulatory/ Legal
Policy:

Establish a            X
pro-growth regulatory
environment for U.S.
manufacturers

Institute tort         X
reform

Tax Policy:

Institute corporate    X
tax reform

Make permanent and     x
improve the research
and experimentation

tax credit

Trade Policy:

Enforce international  X
trade laws

Modernize the U.S.     X
export control
system

Strengthen             X
intellectual property
protection


In conclusion, the 11 U.S. manufacturing strategy proposals (and 21 manufacturing policies) loosely reflect what the MGI researchers found in "R&D Intensive Manufacturing" ("Building Enablers" and "Tilting the Playing Field"), but the majority of the manufacturing policies recommended are focused in "Setting the Ground Rules and Direction"--the least government interventionist policies. This is perhaps reflective of the stage of development of the U.S. manufacturing sector, which is now capital intensive and technology focused, needing to respond quickly to global, competitive market forces--and thus requiring the least amount of government bureaucratic bu·reau·crat  
n.
1. An official of a bureaucracy.

2. An official who is rigidly devoted to the details of administrative procedure.



bu
 involvement.

4. A 21st-Century U.S. Manufacturing Strategy

Summary of the current state of U.S. manufacturing

As discussed above, the U.S. manufacturing sector today is leading the current U.S. economic recovery in terms of employment gains, output gains, and record-high after-tax profits in 2010 and 2011. Moreover. in addition to maintaining its ranking as one of the world's largest manufacturers, the United States has also produced a relatively stable share of world manufacturing output over the last 30 years--about 18.24 percent of world manufacturing output in 201 0. compared with 21 percent in 1980.

Despite the significant and steady decline in U.S. manufacturing employment levels over the last 30 years, the United States has been able to produce increasingly higher levels of output in almost every year, and maintain its status as one of the world's largest manufacturers. This pattern of increased U.S. productivity in manufacturing--leading to lower prices, declining employment, and a declining share of GDP--is perhaps analogous to the same trend that has been taking place in the agriculture sector of the U.S. economy for over 200 years.

Lastly, this downward trend in manufacturing's share of GDP and employment, as well as the upward trend in the service sector's share of GDP and employment, is not unique to the United States: it is a global phenomenon.

Yet the recent 2010 2011 rebound in U.S. manufacturing is likely to he constrained con·strain  
tr.v. con·strained, con·strain·ing, con·strains
1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force.

2.
 by national manufacturing policies (or lack thereof) that are contributing to a "drag' on this sector's continued expansion. As we found in our analysis, (5) of 11 recent U.S. manufacturing strategy proposals (and 21 manufacturing proposals), the overwhelming majority (17) of the manufacturing policies recommended by business associations, multistakeholder coalitions, and academic and government institutions that are actively involved in the development of such policies focus on "Setting the Ground Rules and Direction" and "Building Enablers"--the lower-level government interventionist policies in the MGI framework. Of these 17 manufacturing policies, 13 are classified as "Setting the Ground Rules and Direction." the least interventionist policies in the MGI framework. While Andrew N. Liveris Andrew Liveris is a Greek-Australian-American executive from Australia and is the Chairman, CEO and President of The Dow Chemical Company based in the United States. Early life and family , President and Chief Executive Officer of Dow Chemical and cochairman of the Advanced Manufacturing Partnership, is on the record as saying he would even "pick winners"--that is, select some manufacturers for continuing (public) support [Uchitelle 2011], this is not a position for we found much industry and stakeholder stakeholder n. a person having in his/her possession (holding) money or property in which he/she has no interest, right or title, awaiting the outcome of a dispute between two or more claimants to the money or property.  support (except for "green technology"), nor did they favor picking subsector winners. These proposed policies represent industry thinking on the present-day reality of a high-value-added, U.S. manufacturing sector--of an R&D-based, knowledge-based national economy that requires timely commercialization and global market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market
penetration - the act of entering into or through something; "the penetration of upper management by women"
.

Our proposed manufacturing strategy

We believe that the empirical economic data, coupled with the qualitative industry information provided from these varied sources, offer a unique opportunity for us to present the following national manufacturing strategy, whose specific recommendations are summarized in Figure 6. As reflected in the application of the MGI framework to our 11 U.S. manufacturing strategy proposals, this national manufacturing strategy is based on the realities of a R&D/high-technology-based (that is, "advanced manufacturing" (6)) U.S. manufacturing sector and the results of our analysis.

* DIB Policy. National defense is an often neglected (yet essential) component of most manufacturing strategy discussions. The U.S. manufacturing base must not be allowed to erode Erode (ĕrōd`), city (1991 urban agglomeration pop. 361,755), Tamil Nadu state, S India, on the Kaveri River. The city is located in a cotton-growing region, and its industries include cotton ginning and the manufacture of transport equipment.  beyond the point of meeting minimal national defense requirements. (7) Aspects of human capital policy (such as promoting STEM education initiatives) and innovation policy (such as federal funding of basic and applied research) support the dual-use civilian marketplace and DIB. Defense-related products, however, also include single-use items that respond to nonmarket needs related to national security and require a long-term review and interagency analysis of symmetric No difference in opposing modes. It typically refers to speed. For example, in symmetric operations, it takes the same time to compress and encrypt data as it does to decompress and decrypt it. Contrast with asymmetric.

(mathematics) symmetric - 1.
 and nonsymmetric threats to the United States and its global interests. The increased use of strategic industrial partnerships with NATO NATO: see North Atlantic Treaty Organization.
NATO
 in full North Atlantic Treaty Organization

International military alliance created to defend western Europe against a possible Soviet invasion.
 (North American North American

named after North America.


North American blastomycosis
see North American blastomycosis.

North American cattle tick
see boophilusannulatus.
 Treaty Organization) member nations and other close allies will go a long way to addressing economies of scale production, procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases.  benefits, equipment standard harmonization har·mo·nize  
v. har·mo·nized, har·mo·niz·ing, har·mo·niz·es

v.tr.
1. To bring or come into agreement or harmony. See Synonyms at agree.

2. Music To provide harmony for (a melody).
, and certainty of meeting military equipment demands in the short term.

* Energy and Environmental Policy. The U.S. manufacturing sector needs certainty in its long-term energy availability, and a comprehensive national energy policy needs to be established that emphasizes cost efficiency (such as cost per kWh or per Btu), domestic source reliability, and environmentally friendly Environmentally friendly, also referred to as nature friendly, is a term used to refer to goods and services considered to inflict minimal harm on the environment.[1]  impacts. These characteristics reflect the need to focus government policy support on three relatively clean and relatively inexpensive non-renewable (but domestically plentiful) fuel sources: low-emission coal, natural and shale gas
Shale gas may also refer to gas produced from oil shale


Shale gas is natural gas produced from shale. Because shales ordinarily have insufficient permeability to allow significant fluid flow to a well bore, most shales are not sources of natural
 and nuclear power. Although solar, wind, and biomass offer potential for future renewable sources of energy, these fuel sources are inherently only a minor source of energy, even if their respective costs-per-kWh were to decline to competitive levels with nonrenewable fuel sources (without direct government subsidies). While encouraging the use of energy-efficient and environmentally friendly technologies through tax credits and other incentives, a unilateral unilateral /uni·lat·er·al/ (-lat´er-al) affecting only one side.

u·ni·lat·er·al
adj.
On, having, or confined to only one side.
 U.S. policy approach to reducing green-house gases is tantamount tan·ta·mount  
adj.
Equivalent in effect or value: a request tantamount to a demand.



[From obsolete tantamount, an equivalent, from Anglo-Norman
 to global competitive capitulation CAPITULATION, war. The treaty which determines the conditions under which a fortified place is abandoned to the commanding officer of the army which besieges it.
     2.
 on the part of the U.S. manufacturing sector and economy.

* Human Capital Policy. In the long term, a policy focus on building science and mathematics skills in the K-12 grades is imperative to America's future global manufacturing competitiveness. (8) Domestically, offering access to financial assistance to attract high-caliber American students to both undergraduate and graduate STEM education will be catalytic cat·a·lyt·ic  
adj.
Of, involving, or acting as a catalyst: "Deregulation's catalytic power . . . is still reshaping the banking, communications, and transportation industries" Ellyn E.
 to building a technologically literate and globally competitive labor force. Increased utilization of government-industry cooperative education
Please note that Co-operative education can also refer to education about Co-operative societies. For this usage, please refer to Co-operative studies.


The examples and perspective in this article or section may not represent a worldwide view
 will provide real-world experiences that expose these students to the market realities of applied research and product commercialization. Reforming employer-sponsored permanent visa and green card procedures to attract engineering and science-trained immigrants that remedy actual labor shortages in science and technology specialties should be carefully pursued although not at the expense of higher-wage American citizens who generally meet employment criteria. (9)

* Infrastructure Policy. The improvement of the nation's infrastructure should be a legislative priority involving both government and industry, with federal taxes "lock-boxed" in dedicated surface transportation funds, as well as tax incentives offered for private investment in transportation projects. Moreover, the nation's electricity grid system is an integral part of powering the manufacturing sector, and a modernization modernization

Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family,
 of this infrastructure is overdue. These infrastructure policy efforts require coordination between the federal and state governments and should actively incorporate state and regional manufacturing infrastructure demands.

* Innovation Policy. Historically, the federal government has been the prime source of funding for U.S. basic research (and in 2008, the preliminary estimate is that only 5 percent of basic research funding Research funding is a term generally covering any funding for scientific research, in the areas of both "hard" science and technology and social science. The term often connotes funding obtained through a competitive process, in which potential research projects are evaluated and  emanates from the business sector), as basic research involves high uncertainty regarding near-term commercialization of new discoveries and the unlikelihood of appropriating IP rights of new discoveries [National Science Board 2010]. (10) The bulk of national basic research (and to a lesser extent applied research) needs to remain sustained (and incrementally increased) through federal appropriations to support leading-edge U.S. firms' commercialization of advanced materials Advanced Materials is a leading peer-reviewed materials science journal published every two weeks. Advanced Materials includes Communications, Reviews, and Feature Articles from the cutting edge of materials science, including topics in chemistry, physics, , biotechnology and pharmaceuticals, defense-related equipment, health care products, information technology, and nanotechnology-infused goods. (11) This is a public investment that will pay off in the long term for the U.S. manufacturing sector. Although there is consistent industry support for a permanent research and experimentation (R&E) tax credit, the basic issue of where and how a tax credit is most effective in inducing expanded applied research (in the context of a firm's technology strategy) has yet to be properly empirically investigated. This should be done before making it permanent [Hemphill 2009]. (12)

* Regulatory and Legal Policy. Through a global competitiveness perspective, increase the participation of industry in the formal federal rule-making-process to reduce the complexity of regulatory compliance, emphasize cost/benefit analysis, and restrict the executive branch impulse to "legislate To enact laws or pass resolutions by the lawmaking process, in contrast to law that is derived from principles espoused by courts in decisions.  by regulation," specifically as it pertains to environmental and workplace regulation. In the 112th Congress, both the House (HR. 10) and the Senate (S. 299) are considering the "Regulations from the Executive in Need of Scrutiny (REINS) Act." With business regulatory compliance costs estimated at U.S.$1.75 trillion annually in 2008 [Crain and Crain 2010], the REINS Act requires both houses of Congress to affirmatively approve, and the president to sign, any "economically significant regulation," defined as an administrative rule with a projected impact to the U.S. economy exceeding U.S.$100 million, before it becomes law. However, to be effective, (13) its authority should be limited by specific qualifying criteria, including "super" economically significant regulations--for example, those administrative rules projected to exceed U.S.$250 million in projected economic impact--and/or that economically impact critical manufacturing industries, such as advanced materials, biotechnology and pharmaceuticals, defense-related, health care, information technology, and nanotechnology. Tort reform, to address America's world-leading 1.07 percent (U.S.$152.7 billion) of GDP allocated to commercial tort costs in 2009 [Towel s Watson 2010], is imperative for establishing clear legal standards for product liability, including statutes of limitation, frivolous Of minimal importance; legally worthless.

A frivolous suit is one without any legal merit. In some cases, such an action might be brought in bad faith for the purpose of harrassing the defendant.
 claim sanctions, and reasonable limits on punitive damages Monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses and that is intended to punish the wrongdoer. .

* Tax Policy. According to a recent study undertaken by PriceWaterhouseCooper for the Business Roundtable Business Roundtable (BRT), an association consisting of the chief executive officers of major U.S. corporations that was founded in 1972 through the merger of the three preexisting business organizations.  [2011], the United States has the sixth highest taxes on business in the world (behind, respectively, Japan, Morocco, Italy, Indonesia, Germany). The study reported that U.S.-headquartered companies pay 27.7 percent of their income in taxes, compared with the world average of 19.5 percent, the other 28 advanced OECD OECD: see Organization for Economic Cooperation and Development.  countries' average of 22.6 percent, and 18 major European countries' average of 21.9 percent. (14) Reducing U.S. corporate income tax and payroll taxes and the cost of repatriating earnings will reduce the tax burden on U.S. manufacturers that locate capital investment and jobs in the United States. This will go a long way to reduce incentives to move U.S. manufacturing investment overseas for tax purposes. These major tax reforms will also accelerate the movement of overseas manufacturing facilities back to the United States, as the cost of labor rises in economically developing manufacturing-based countries, such as China [Coy 2011].

* Trade Polley. Manufactured goods and products make up 60 percent of U.S. exports of goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax.  [National Association of Manufacturers 2010]. To accomplish the national goal of doubling exports by 2015 (National Export Initiative), vigorous enforcement of U.S. rights under existing trade agreements and WTO rules and regulations are necessary. "Leveling the playing field" by retaliating against trade violations is not a form of protectionism protectionism

Policy of protecting domestic industries against foreign competition by means of tariffs, subsidies, import quotas, or other handicaps placed on imports.
 when strategically applied. However, explicit review mechanisms must be developed so these administrative remedies are not unduly extended beyond their intended time period (resulting in a loss to domestic consumer and business welfare). Both executive and legislative efforts need to be undertaken to develop new trade promotion and "fast track" authority to support bilateral trade agreements. There should also he a. comprehensive and competitive export control process for "dual use" technology-based products. Furthermore, stronger appropriation (and enforcement) of U.S. intellectual property rights, estimated to be worth U.S.S5.0 trillion in 2005, and making up 60 percent of total U.S. exports in 2007 [Millien 2010] is necessary. This will need to come from existing weak and inadequate enforcement provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights
TRIPS redirects here. For the new microprocessor design, see TRIPS architecture.


The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS
 (TRIPS Agreement), (15) particularly in advanced materials, biotechnology, informatics/ entertainment media, and nanotechnologies. Such enforcement will be a major trade policy challenge if U.S. technology-based manufacturing and global competitiveness is to be maintained and strengthened.

The Boston Consulting Group [2011] is forecasting a "manufacturing renaissance" in the United States occurring over the next five years, located primarily in increasingly wage-competitive Southern states. The proposed "21st Century U.S. Manufacturing Strategy" outlined in this document and summarized in Figure 6 will hopefully help to create a national business environment that will be conducive con·du·cive  
adj.
Tending to cause or bring about; contributive: working conditions not conducive to productivity. See Synonyms at favorable.
 to a broader American R&D-based manufacturing base and higher-paying jobs, accompanied by a multiplier effect of each new manufacturing job that has been estimated to create five additional jobs in the U.S. economy [Uchitelle 2011].

We close with a quote from Andrew Grove
For the English fashion designer, see Andrew Groves.


Dr. Andrew Stephen Grove (born 1936-09-02) is a Hungarian-American businessman. He participated in the founding of Intel and was key to the company's success.
 [2010, p. 53], former chairman of Intel, who argues:
  ... our pursuit of our individual businesses, which often involves
  transferring manufacturing and a great deal of engineering out of the
  country, has hindered our ability to bring innovations to scale at
  home. Without scaling, we don't just lose jobs--we lose our hold on
  new technologies. Losing the ability to scale will ultimately damage
  our capacity to innovate. ... The first task is to rebuild our


APPENDIX

Description of the entities proposing manufacturing strategies

The Alliance I'm-American Manufacturing (AMA) (http://www.americanmanufacturing.org/about-us) is a nonpartisan non·par·ti·san  
adj.
Based on, influenced by, affiliated with, or supporting the interests or policies of no single political party: a nonpartisan commission; nonpartisan opinions.
, nonprofit partnership forged to strengthen manufacturing in the United States. AMA brings together a select group of America's leading manufacturers and the United Steelworkers United Steelworkers (USW)

historic labour union representing workers in steel, aluminum, and other metallurgical industries for much of the 20th century. In the U.S.
.

The American Iron and Steel Institute (AISI AISI American Iron and Steel Institute
AISI African Information Society Initiative
AISI Alberta Initiative for School Improvement (Canada)
AISI As I See It
AISI American International Supply, Inc (Oakland, CA) 
) (http://www.steel.org/en/Aboutpercent20AISI) serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the preferred material of choice. AISI is composed of 24 member companies, including integrated and electric furnace electric furnace: see furnace.
electric furnace

Chamber heated with electricity to very high temperatures, for melting and alloying metals and refractories. Modern electric furnaces generally are either arc furnaces or induction furnaces.
 steelmakers, and 140 associate and affiliated members who are suppliers to or customers of the steel industry.

Founded in 1902, the Association for Manufacturing Technology (AMT See vPro. ) (http://www.amtonline.org/AboutAMT/) represents and promotes the interests of American providers of manufacturing machinery and equipment. AMT's goal is to promote technological advancements and improvements in the design, manufacture, and sale of members' and act as an industry advocate on trade matters to governments and trade organizations throughout the world.

The Council on Competitiveness (http://www.compete.org/about-us/) was founded in 1986. The Council on Competitiveness is a nonpartisan and nongovernmental organization nongovernmental organization (NGO)

Organization that is not part of any government. A key distinction is between not-for-profit groups and for-profit corporations; the vast majority of NGOs are not-for-profit.
 made up of business CEOs, university presidents, and labor leaders who convene CONVENE, civil law. This is a technical term, signifying to bring an action.  to generate innovative public policy solutions that address America's long-term competitiveness challenge.

The Industrial College of the Armed Forces (http://www.ndu.edu/icaflaboutl) is a senior service school providing graduate-level education to senior members of the U.S. armed forces, government civilians, and foreign nationals. Its objective is to prepare attendees for leadership and success in developing national security strategy and policy, with a focus on evaluating, marshalling, and managing national resources.

The Information Technology & Innovation Foundation (http://www.itif.org/) is a Washington, D.C.-based think tank focused on designing innovation policies and documenting how advances in technology are creating new economic opportunities to boost economic growth and to improve quality of life in the United States and around the world.

The National Association of Manufacturers (NAM) (http://www.nam.org/About-US/About-the-NAM/) is the largest manufacturing association in the United States, representing manufacturers in every industrial sector and in all 50 states. The NAM is a leading advocate for a policy agenda that helps manufacturers create jobs and growth. The NAM--11,000 manufacturing companies and nearly 12 million workers--promotes government policies that will reduce the cost of production and tear down barriers to exports.

The National Council for Advanced Manufacturing (http://www.nacfam.org/Home/AboutUs/tabid/58/Default.aspx) is a nonpartisan, nonlobbying action/think tank that brokers collaboration among its stakeholders Stakeholders

All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government.
 from manufacturers (small, medium, large), education, research entities, government, trade and professional associations, and individuals to develop policy recommendations to accelerate manufacturing innovation and build a more globally competitive U.S. manufacturing sector.

Launched in 1999, the New America Foundation (http://newamerica.net/about) is a nonprofit, nonpartisan, public policy institute that invests in new thinkers and new ideas to address the next generation of challenges facing the United States. It emphasizes work that is responsive to the changing conditions of the information age economy--particularly shortened job tenures, longer life spans, mobile capital, financial imbalances, and rising inequality.

To provide the President of the United States with support to govern effectively, the Executive Office of the President (EOP EOP Educational Opportunity Program (California State University)
EOP Executive Office of the President
EOP Equity Office Properties Trust (ticker)
EOP Emergency Operations Plan
EOP Earth Orientation Parameters
) (http://www.whitehouse.gov/administration/eop) was created in 1939 by President Franklin D. Roosevelt. The EOP has responsibility for tasks ranging from communicating the President's message to the American people to promoting U.S. trade interests abroad.

Established in 2009, the President's Council of Advisors on Science and Technology (http://www.whitehouse.gov/administrationleoplostp/pcast) is located in the Office of Science and Technology Policy Congress established the White House Office of Science and Technology Policy (OSTP) in 1976 with a broad mandate to advise the President and others within the Executive Office of the President on the effects of science and technology on domestic and international affairs. , Executive Office of the President. The Council is an advisory group of the nation's leading scientists and engineers that makes policy recommendations to the President.

REFERENCES

Alliance for American Manufacturing, 2010a. AAM 2010 National Survey of Likely Voters on Manufacturing and America's Global Economic Standing, June 24, http:/www.americanmanufacturing.orgipress-releasesinew-poll-decline-manufacturing-jobs-top-voter-concern (accessed March 8, 2011).

Alliance for American Manufacturing, 2010b. National Manufacturing Strategy, July, http://www.americanmanufacturing.org/files/AAMpercent20plani.pdf (accessed March 8, 2011).

American Iron and Steel Institute, 2011. 2011 Public Policy Agenda, February 3, http://www.steel.org/en/Publicpercent20PolicylAgendalpp_agenda_2011.ashx (accessed March 15, 2011).

Association for Manufacturing Technology, 2009. The Manufacturing Mandate: Unleashing a Dynamic Innovation Economy, http://www.amtonline.orglarticle_display.cfm?Article_id=161.4868cion ci·on  
n.
Variant of scion.
_id=100 (accessed March 12, 2011).

Baily, Martin Neil, and Robert M. Solow. 2001. "International Productivity Comparisons Built from the Firm Level." Journal of Economic Perspectives, 15(3): 151-72.

Blackburn, Bradley, and Eric Noll. 2011. Made in America: A Brief History of U.S. Manufacturing, February 17, http://abcnews.go.com/Business/made-america-middleclass-built-manufacturin-job/story?id=1291618 (accessed March 24, 2011).

Bluestone, Barry, and Bennett Harrison. 1982. The Deindustrialization deindustrialization

A shift in an economy from producing goods to producing services. Such a shift is most likely to occur in mature economies such as that of the United States.
 of America. Basic Books.

Boston Consulting Group, 2011. Made in the U.S.A., Again: Manufacturing is Expected to Return 10 America as China's Rising Labor Costs Erase Most Savings from Offshoring
Offshore may refer to oil and natural gas production at sea; see oil platform.


Offshoring describes the relocation of business processes from one country to another.
, Press Release. May 5, http://www.bcg.comlinedia/PressReleaseDetails.aspx?id=tem:12-75973 (accessed May 13, 2011).

Bryson_ Les, and Peter Feldman. 2010. "R&D Tax Credit Can Turn R&D Investment into Cash." R&D Magazine (February 10): http://www.rdmag.com/Featured-Articles/2010/02/Policy-And-Industry-RD-Tax-Credit-Can-Turn-R&D-Investrnent-Into-Cash/ (accessed March 23, 2010).

Buiter, Willem, Ebrahim Rahbari, Juergen Michels, and Giada Giani. 2011. "The Debt of Nations." The Bank watch (January 7). Citigroup Global Markets, Inc.

Bureau of Economic Analysis, 2011. Gross-Domestic-Product-by-Industry Accounts, 1947-2010, April 26, http://www.bea.govlindustrylindex.htm (accessed May 1, 2011).

Bureau of Labor Statistics, 2009. China's Manufacturing Employment and Compensation Costs: 2002-06, April, http://www.b1s.gov/opub/mlr/2009/04/art3full.pdf (accessed June 12, 2011).

Business Roundtable. 2011. "Global Effective Tax Rates," April 14.

Council on Competitiveness, 2011. Ignite 1.0: Voice of American CEOs on Manufacturing Competitiveness, January, http://www.compete.orglpublicationsldetail/1648/ignite-1.0/ (accessed March 12, 2011).

Coy, Peter. 2011. "A Renaissance in U.S. Manufacturing." Bloomberg Businessweek, 4228: 11-13.

Crain, Nicole V., and Mark W. Crain. 2010. The Impact of Regulatory Costs on Small Firms. U.S. Small Business Administration, Office of Advocacy, September.

Executive Office of the President, 2009. A Framework for Revitalizing American Manufacturing, December, http://www.whitehouse.gov/sites/defaultlfilesimicrosites/2009216-manufacturing-framework.pdf (accessed April 1, 2011 ).

Federal Reserve System, 2011. Industrial Production and Capacity Utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens.  G.17, November 15, http://www.federalreserve.gov/RELEASES/g17/ (accessed December 15, 2011).

Grove. Andy. 2010. "How to Make an American Job. Bloomberg Businessweek, 4186: 48-53.

Hemphill, Thomas A. 2009. "The US Research and Experimentation Tax Credit: The Case for an Effective R&D Investment Incentive." Innovation: Management, Policy & Practice, 11(3): 341-56.

Hira, Ron, and Anil Hira. 2008. The True Cost of Shipping Jobs Overseas and What Can Be Done about It. American Management Association (AMACOM AMACOM American Management Association  Division).

Jacoby, Jeff. 2011. "Made in the USA." The Boston Globe, (October 6): http://www.boston.com/bostonglobeleditorialopinion/oped/articles/201l/02/06/made_in_the_USA (accessed March 23, 2011).

Johnson, Chalmers, ed. 1984. The Industrial Policy Debate. ICS (1) (Internet Connection Sharing) A Windows feature that enables two or more computers to share one Internet connection. First introduced in Windows 98 Second Edition, sharing is accomplished with network address translation (NAT), which is the common method.  Press.

McKinsey & Company, 2010. How to Compete and Grow: A Sector Guide to Policy. McKinsey Global Institute, March, http://www.mckinsey.com/mgi/reports/freepass_pdfs/competitiveness/FutReport_Competitiveness.pdf (accessed May 2, 2011).

Millien, Raymond. 2010. The U.S. $173.4 Global Intellectual Property Marketplace?, Intellectual Property Attorney Blog, December16, http://dcipattorney.com/2010/12/the-us173-4b-global-intellectual-property-marketplace/ (accessed June 22, 2011).

National Association of Manufacturers, 2010. Mame-lacturers Blueprint to Double Exports in Fire Years. http://www.nam.org/-/media,17211-746B89BF1436DA9C3832874FE7BCE/Blueprint_to_Double_Exportsin_Five_Years.pdf (accessed July 1, 2011).

National Association of Manufacturers, 2011. Manufacturing Strategy: For Jobs and a Competitive America, January, http://www.nam.org/lmedia/99977BFADA78B4DA1B812C4DD3F3CC94Eashx?utmsource=nam&utmmedium=alias&utmcampaign=manufacturingstrategy (accessed March 15, 2011).

National Council for Advanced Manufacturing, 2009. Integrated Vision for U.S. Manufacturing, October, http://www.nacfam.org/Portals/0/Events/B1oomVisionUSMfg101609.pdf (accessed March 25, 2011).

National Science Board, 2010. Science and Engineering Indicators 2010. National Science Foundation.

New America Foundation, 2010. America Needs a Manufacturing Strategy', February 3, http://newamerica.net/publications/policy/america_needs_a_manufacturing_strategy (accessed March 18, 2011).

Organization for Economic Cooperation & Development, 2010. Program for International Student Assessment. Organization for Economic Cooperation & Development.

Porter, Michael. 1990a. The Competitive Advantage of Nations. The Free Press.

Porter, Michael. 1990b. "The Competitive Advantage of Nations." Harvard Business Review Harvard Business Review is a general management magazine published since 1922 by Harvard Business School Publishing, owned by the Harvard Business School. A monthly research-based magazine written for business practitioners, it claims a high ranking business readership and , 68(2): 73-93.

President's Council of Advisors on Science and Technology, 2011. Report to the President on Ensuring American Leadership in Advanced Manufacturing. Office of Science and Technology Policy, Executive Office of the President, June.

Shafer, Scott M.H., Jeff Smith, and Jane C. Linder. 2005. "The Power of Business Models." Business Horizons. 48(3): 199-207.

Stokes, Bruce. 2010. "Act 11 for American Manufacturing? National Journal, December 9, http://nationaljournal.com/njonline/no_20100508_1960.php/american-manufacturing-s-new-future-is-emerging-but-it-may-need-help-20101209?page=1 (accessed March 7, 2011).

Strauss, William. 2010. Is U.S. Manufacturing Disappearing? The Federal Reserve Bank of Chicago Coordinates:

The Federal Reserve Bank of Chicago is one of twelve regional Reserve Banks that, along with the Board of Governors in Washington, D.C.
, August 19, http://midwest.chicagofedblogs.orgiarchives/2010/08/billstrauss_mf.html (accessed May 1, 2011).

The Industrial College of the Armed Forces, 2010. Industry Study: Final Report Manufacturing Industry, Spring, http://www.ndu.edu/icaf/programs/academic/industry/reports/2010/pdf/icaf-is-report-manufacturing-2010.pdf (accessed March 21, 2011).

The Information Technology & Innovation Foundation, 2011. "A Charter for Revitalizing American Manufacturing," December 15.

The National Summit, 2009. The National Summit Unveils America's "To-Do" List, December 14, Press Release.

Towers Watson, 2010. "U.S. Tort Cost Trends (2010 Update)," December.

Uchitelle, Louis. 2011. "Is Manufacturing Falling Off the Radar." The New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of
 Times, (September 10): http://wwvv.nytimes.com/2011/09/11businessfis-manufacturing-falling-off-theus-radar-screen.html?pagewanted=all (accessed January 5, 2012).

United Nations, 2011. National Accounts Main Aggregates Database, http://unstats.un.org/unsd/snaama/dnlList.asp (accessed January 12, 2012).

U.S. Department of Labor (Bureau of Labor Statistics), 2012. Employment, Hours, and Earnings from the Current Employment Statistics Survey, http://data.bls.gov/cgi-bin/dsry (accessed January 12, 2012).

Wadhwa, Vivek, Anna Lee Saxenian, Ben Kissing, and Gary Gereffi. 2007. America's New Immigrants. School of Engineering, Duke University and School of Information, University of California-Berkeley, January 4.

Webber, Michael. 2009. "Erosion of the Defense Industrial Base," in Manufacturing a Better Future for America, edited by R. McCormack. The Alliance for American Manufacturing, 245-80.

Yeebo, Yepoka. 2011. "China Edges Ahead of U.S. in Manufacturing, Report Says." Huff huff - To compress data using a Huffman code. Various programs that use such methods have been called "HUFF" or some variant thereof.

Opposite: puff. Compare crunch, compress.
 Post Business, (March 14): http://www.huffingtonpost.com/2011/03/14/china-us-manufacturing_n_835470.html (accessed March 25, 2011).

Yudken, Joel. 2010. Manufacturing Insecurity Insecurity
Inseparability (See FRIENDSHIP.)

Insolence (See ARROGANCE.)

Hamlet

introspective, vacillating Prince of Denmark. [Br. Lit.: Hamlet]

Linus

cartoon character who is lost without his security blanket.
: America's Manufacturing Crisis and the Erosion of the U.S. Defense Industrial Base. AFL-CIO.

(1.) A brief description or each entity is included in the Appendix.

(2.) The number sequencing should not imply a prioritization among these policies.

(3.) By sector growth, we mean increases in sector value added Value Added

The enhancement a company gives its product or service before offering the product to customers.

Notes:
This can either increase the products price or value.
 the contribution or a sector to overall GDP growth. The economy-wide growth impact across sectors is a function or both individual sector growth contributions and the changes in shares of above-and below-average productivity sectors [McKinsey & Company 2010. p. 10].

(4.) Further analytic insight into the MG1 microeconomic approach to evaluating and enhancing national competitiveness, please see Badly and Solow [2001].

(5.) Our analysis is equally applicable to foreign direct investment in the U.S. manufacturing sector. For example, the policies and strategies that could help create a more competitive domestic manufacturing environment should equally help both U.S. based multinational companies (MNCs) as well as foreign-headquartered MNCs. To the extent that foreign-based firms investing in U.S.-based manufacturing facilities would benefit from foreign workers foreign workers

Those who work in a foreign country without initially intending to settle there and without the benefits of citizenship in the host country. Some are recruited to supplement the workforce of a host country for a limited term or to provide skills on a
 from their own (or other) Countries, we have recommended reforming employer-sponsored permanent and green card procedures in the human capital policy section. Further. factors like infrastructure policy, and regulatory and legal policy, to the extent that they benefit manufacturers, would equally benefit domestic firms as well as foreign firms manufacturing in the United States.

(6.) The President's Council of Advisors on Science and Technology [2011, p. 9] defines "advanced manufacturing'. as: "... a family of activities that (a) depend on the use and coordination of information, automation, computation. software, sensing. and networking, and/or (b) make use of cutting edge materials and emerging capabilities enabled by the physical and biological sciences, for example nanotechnology, chemistry, and biology. This involves both new ways to manufacture existing products, and especially the manufacture of new products emerging from advanced technologies."

(7.) This situation may already have arrived, as armor plate steel, defense-specific integrated circuits Integrated circuits

Miniature electronic circuits produced within and upon a single semiconductor crystal, usually silicon. Integrated circuits range in complexity from simple logic circuits and amplifiers, about 1/20 in. (1.
, and night vision goggles goggles,
n the protective eyewear worn by dental personnel and patients during dental procedures.


goggles

see periocular leukotrichia.
 are among the items the U.S. Department of Defense must now acquire in part from overseas suppliers [Yudken 2010]. Moreover, Webber [2009] found that between 2001 and 2008 13 of 16 manufacturing subsectors that are the supporting foundation of U.S. military. power suffered erosion as measured by a decrease in employment, economic activity,

and the number of factories.

(8.) Ia recent study (Program for International Student Assessment) undertaken by the Organization for Economic Cooperation & Development (OECD) [2010], 15-year-old Americans ranked 25th (487 on a scale of 1,000) in mathematical proficiency pro·fi·cien·cy  
n. pl. pro·fi·cien·cies
The state or quality of being proficient; competence.

Noun 1. proficiency - the quality of having great facility and competence
 and 17th in science proficiency (502 on a scale of 1,000) among 34 OECD-member countries surveyed.

(9.) According to a study by Duke University and the University of California-Berkeley, immigrants founded or cofounded 25.3 percent of all U.S. engineering and technology start-up firms between 1995 and 2005 [Wadhwa and others 2007].

(10.) The federal government is the prime source of U.S. basic research funding. In 2008, preliminary data indicated that it accounted for 57.0 percent (U.S.$39.38 billion) of the nation's total expenditures. In applied research, the federal government accounted for 32.3 percent (U.S.$28.65 billion) of the nation's total expenditures; and in (experimental) development, the federal government accounted for 14.9 percent (U.S.$35.67 billion) [National Science Board 2010]. In 2008, the federal government was responsible for funding 26.1 percent of all R&D expenditures (U.S.$103.7 billion) in the United States (preliminary data) [National Science Board 2010].

(11.) As Hira and Hira [2008, p. 117] note: "It is the prevailing management approach to locate R&D as close to manufacturing production as possible. As manufacturing moves overseas it is inevitable that both engineering work and R&D will follow." Consequently, scaling up new technologies domestically helps ensure that the manufacturing base and R&D activities remain in the United States.

(12.) In 2006, approximately 11,000 U.S. companies claimed an estimated U.S.$7.3 billion in R&E tax credits [National Science Board 2010]. There are likely many more companies eligible for the R&E tax credit, but their managements do not understand what activities qualify and how much money is actually in play [Bryson and Feldman 2010]. The business sector was estimated to have funded U.S.$227.3 billion in R&D funding in 2006 [National Science Board 2010], which means that the R&E credit only affected 3.2 percent of all business expenditure for R&D activities--resulting in a negligible economic impact on the nation's total R&D activities.

(13.) Under authority granted to the Congress under the Congressional Review Act of 1996, major administrative rules take effect unless Congress passes and the President signs a joint-resolution disapproving dis·ap·prove  
v. dis·ap·proved, dis·ap·prov·ing, dis·ap·proves

v.tr.
1. To have an unfavorable opinion of; condemn.

2. To refuse to approve; reject.

v.intr.
 them. In the ensuing en·sue  
intr.v. en·sued, en·su·ing, en·sues
1. To follow as a consequence or result. See Synonyms at follow.

2. To take place subsequently.
 15 years, this congressional authority has been successfully exercised only once (an Office of Safety and Health Administration (OSHA) regulation addressing ergonomics ergonomics, the engineering science concerned with the physical and psychological relationship between machines and the people who use them. The ergonomicist takes an empirical approach to the study of human-machine interactions.  in the workplace). Furthermore, this OSHA regulation was disapproved in June 2001, when there were both a Republican President and Republican-controlled Congress, and was the only rule that was disapproved (among tens of thousands implemented) during a six-year period of Republican control of both the executive and legislative branches.

(14.) Among OECD countries, Japan has the highest corporate tax rate at 39.5 percent, whereas the United States is second with 39.2 percent [Buiter and others 2011].

(15.) Under the TRIPS Agreement. all intellectual property disputes arising under the TRIPS Agreement are now required to be settled through the mandatory WTO dispute settlement process before unilateral sanctions are imposed.

* Thomas A. Hemphill is an associate professor of Strategy, Innovation. and Public Policy in the School of Management. University of Michigan-Clint. His research interests are in the topic areas of innovation management and policy. corporate governance Corporate Governance

The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law.
, business and public policy, and international business and political economy. Hemphill received his Ph.D. in Business Administration from The George Washington University.

Mark J. Perry is a professor of Economics and Finance in the School of Management at the Flint campus of the University of Michigan (body, education) University of Michigan - A large cosmopolitan university in the Midwest USA. Over 50000 students are enrolled at the University of Michigan's three campuses. The students come from 50 states and over 100 foreign countries. , where he has taught undergraduate and graduate courses in Economics and Finance since 1996. Starting in the fall of 2009. Perry has also held a joint appointment as a visiting scholar A visiting scholar, in the world of academia, is a scholar from an institution who visits a receiving university that hosts him where he or she is projected to teach (visiting professor), lecture (visiting lecturer), or perform research (visiting researcher  at The American Enterprise Institute in Washington, D.C.. where he has been a regular contributor to the Enterprise Blog and American.com. He is also the creator and editor of the economics blog. Carpe Diem carpe diem (kär`pĕ dē`ĕm), a descriptive term for literature that urges readers to live for the moment [from the Latin phrase "seize the day," used by Horace]. . He holds an M.A. in Economics from George Mason University, an M.B.A. from the University of Minnesota (body, education) University of Minnesota - The home of Gopher.

http://umn.edu/.

Address: Minneapolis, Minnesota, USA.
. and a Ph.D. in Economics from George Mason University.
COPYRIGHT 2012 The National Association for Business Economists
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2012 Gale, Cengage Learning. All rights reserved.

 Reader Opinion

Title:

Comment:



 

Article Details
Printer friendly Cite/link Email Feedback
Comment:A U.S. manufacturing strategy for the 21st century: what policies yield national sector competitiveness?
Author:Hemphill, Thomas A.; Perry, Mark J.
Publication:Business Economics
Geographic Code:9CHIN
Date:Apr 1, 2012
Words:12265
Previous Article:The long wave revisited.
Next Article:Interpreting the performance of business economists during the great recession.
Topics:

Terms of use | Copyright © 2014 Farlex, Inc. | Feedback | For webmasters