Manufacturing Needs Direction

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According to a recent Brookings Institution report, government leaders and policymakers should reward truly innovative companies if they want to increase the number of high-paying jobs in manufacturing and its contribution to the nation's overall economy.

Focusing on manufacturing's importance to America's economy, Brookings researchers compared the United States to other higher-wage countries in terms of job retention, wages, and employee development in various industries. In a dozen European nations and Australia, the average manufacturing worker earns more per hour (60 percent more in Norway) than an American counterpart. For the most part, these countries also do a much better job at retaining skilled IT workers. They produce a trade surplus in goods and are experiencing growth in patent applications and renewable energy sources.

China has become a solar and wind energy powerhouse, largely because American companies offshored battery production and solar technology to East Asia. Japan, China, and South Korea are now well ahead of the United States in terms of innovation in these areas. In this case, America lost not only jobs, but also the technological advantage. Those three nations have a distinct competitive edge in the development of battery-powered vehicles -- something that wasn't heavily considered when the offshoring first occurred. It's probably not a coincidence that China now spends more money on the production of solar photovoltaic cells and lithium-ion batteries than any other nation. And with that spending comes innovation and patents -- a wonderful measure of a nation's creativity and output.

The report says:

Offshoring reveals that the loss of industrial production capability often leads to later loss of R&D capability. The reason is that making products exposes engineers to both the problems and the capabilities of existing technology, generating ideas both for improved processes and for applications of a given technology to new markets. Losing this exposure makes it harder to come up with innovative ideas.

Finally, America should look to Germany as a role model for government funding of R&D. The German government funds scientific research at a rate 20 times higher than America's. Manufacturing workers there also receive continuous vocational training through their working life, and they have more input in decision-making processes.

The Brookings report closes with a suggestion that public policy require companies, workers, unions, and governments to share the responsibility for developing and maintaining high-paying, environmentally sustainable, and export-intensive jobs.

We know manufacturing is important. We know technology jobs are high-paying. What we don't know is whether our government leaders and policymakers are willing to make changes like those suggested in this report. Where do you see our regulatory climate five years from now?

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