Three New Reports Examine Manufacturing Evolution As Restructuring Continues

Plagued by job loss and fierce global competition over recent years, several new reports indicate the manufacturing sector is beginning to see a revival as the industry continues to undergo long-term restructuring. Brief summaries of each report are provided below:

Manufacturing’s Performance and Prospects

Manufacturing has lost approximately three million jobs since 1998 due to structural changes in productivity and overseas competition, according to a report by Mark Zandi of Economy.com. Commissioned by the National Governors Association, Manufacturing’s Performance and Prospects examines the state of manufacturing in the U.S., the impact of productivity and global competition on manufacturing jobs, and the prospects for growth. According to Zandi, the worst of the downturn is over as several industries such as computer hardware and software, transportation, and distribution that were previously struggling are now expanding and demand for manufactured products is rising.

While the free fall in manufacturing is over, the report indicates, it will continue to be a weight on the broader economy’s growth prospects. Zandi forecasts that global competition will remain intense; however, rapid advances in manufacturing will ensure that productivity remains robust.

Manufacturing’s Performance and Prospects is available at: http://www.nga.org/nga/legislativeUpdate/1,1169,C_ISSUE_BRIEF%5ED_6614,00.html

Restructuring in the Manufacturing Workforce: New York State and the Nation

Although the losses in manufacturing jobs have been heavy and seemingly always in the forefront of the news, The Federal Reserve Bank of New York reports that manufacturing employment has in fact been declining over many years. On the contrary, jobs are growing in almost all parts of the country, the report indicates, even the places where job loss has been the most severe. The composition of the workforce is changing dramatically, shifting to the need for high-skilled workers.

Restructuring in the Manufacturing Workforce: New York State and the Nation analyzes the restructuring of the manufacturing workforce over the past two decades by investigating how the occupational distribution of workers has changed and identifies important regional differences in the nature and degree of restructuring. The overall trend reported is that the decline in manufacturing jobs has generally been accompanied by a shift in the remaining workforce composition toward high-skilled occupations. New York’s manufacturing workforce in particular has undergone only a mild degree of restructuring, compared to the Northeast, which has seen the most dramatic changes, the authors note.

Restructuring in the Manufacturing Workforce: New York State and the Nation, is available from the Federal Reserve Bank of New York at: http://www.ny.frb.org/research/regional_economy/upstatenews.html

High Technology Manufacturing and U.S. Competitiveness

With the goal of providing a framework for understanding when and why U.S. policymakers should worry about certain trends in manufacturing, the White House Office of Science & Technology Policy commissioned a report presenting data and analysis focusing on the information technology sector in general, and more specifically on computer hardware and semiconductor manufacturing.

High Technology Manufacturing and U.S. Competitiveness was presented to the President’s Council of Advisors on Science and Technology (PCAST) subcommittee on the heels of a concern that the large share of high-tech manufacturing formerly performed in the U.S. now being sent overseas may have potentially harmful consequences to the economy. Specifically, the PCAST subcommittee was interested in what actions the government should undertake and how to distinguish among serious and less serious concerns regarding the loss of the U.S. traditional and high-tech manufacturing base.

Among some of the conclusions made within the report is that there is no empirical evidence that the U.S. is in danger of losing its overall manufacturing capabilities to foreign competition, and declines in U.S. manufacturing can be directly attributed to increased manufacturing productivity. Also noted is that funding for industrial research and development (R&D) has remained fairly steady over the past three decades and has increased recently despite a decrease in federal funding for industrial R&D.

High Technology Manufacturing and U.S. Competitiveness is available at: http://www.rand.org/publications/TR/TR136/TR136.pdf