The Clinton Herald, Clinton, Iowa

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December 12, 2012

6 things to know about the future of manufacturing

The news that several manufacturing giants are planning to bring some of their production back to the United States has dominated the headlines in recent months. Perhaps that's because Americans see it as a bellwether of economic recovery, or perhaps it simply reflects their collective yearning for America's past industrial dominance. Either way, the interest in these moves demonstrates the unique hold that manufacturing has on the public imagination.

But precisely because it captures our imagination, a powerful belief system has grown up around manufacturing that limits the policy debate as well as the range of strategic options Americans are willing to consider. This will need to change if U.S. business leaders and policymakers are going to make the most of emerging opportunities. Meanwhile, the global manufacturing sector continues to diversify and evolve in surprising ways -- as the return of some manufacturing production to the United States indicates. Understanding this evolution is the key to the future.

Indeed, we see the potential for a new era of manufacturing growth, fueled by innovation as well as new sources of demand. But we also see an era that is fraught with new challenges that call for strategies and policies based on actual knowledge of manufacturing -- not blind faith in conventional wisdom. Here are six things you need to know about the future of manufacturing.

1. Manufacturing is dynamic

The role of manufacturing in any economy isn't static. By providing the tools to raise agricultural productivity, build critical infrastructure and lift populations out of rural poverty, manufacturing remains the clear path to economic development. But once countries climb from developing to middle-income status (around $10,000 in GDP per capita), their economies become more diverse. At later stages of development, more consumers can afford to spend money on services, making that sector the fastest-growing sector in the economy.

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