Why advanced manufacturing matters

Posted by Michelle Drew Rodriguez

Today’s manufacturing is increasingly driven by advanced technology and innovation–in some places, the most advanced, where the digital and physical worlds have fully converged. Manufacturing is a central part of our lives and more essential than ever to economic competitiveness and national prosperity. But today, we face an increasingly competitive global environment where America’s technology and innovation leadership faces fresh and persistent challenges.

Advance manufacturing industry facts

Figure 1: Advance manufacturing industry facts

In the United States, advanced industries represent 17 percent of GDP. They are a catalyst for innovations that increase productivity and profit margins across the entire economy. They’re a source of high-skill, high-paying jobs—since 1975, average wages in US advanced industries have increased five times as much as in industry overall. And for every job created in technology-intensive manufacturing, 16 additional jobs are created. Today, advanced industries employ and support 40 million workers. These industries elevate an entire nation’s standard of living and generate the high-tech exports that drive a nation’s ability to compete globally.

High-tech manufacturing fuels innovation. Twenty-first century manufacturing competitiveness has brought the digital and physical worlds into full convergence and today advanced hardware meshes seamlessly with advanced software, sensors, big data, and analytics. The result? Not only smarter products and processes, but also more closely connected customers, suppliers, and manufacturers. In the United States, advanced industries employ 80 percent of the engineers, generate about 85 percent of new patents, perform 90 percent of private-sector R&D, and account for 60 percent of all exports.

The United States has many advantages in advanced manufacturing. Our educational system prizes creativity. Our talent, research infrastructure, and venture capital resources remain among the world’s strongest. And overall US R&D spending remains impressive.

But the United States also has a lingering talent shortage and a widening skills gap. Our uncertain regulatory environment and weak ability to enforce intellectual property standards elsewhere around the globe can be a damper on innovative American companies. Meanwhile, US R&D intensity–research spending as a percentage of GDP–has been stagnant for years and government R&D spending hasn’t kept up with GDP growth. The result is that competing nations are narrowing the innovation gap that has long separated them from the United States and companies are taking note.

Why does advanced manufacturing matter? Because it’s still the heart of today’s economy and the foundation for tomorrow’s. Because it fosters companies that create high-paying jobs, strengthens the middle class, and has a significant multiplier effect. But its promise won’t play out on autopilot. Like other nations, the United States must be mindful of its R&D investments, training, talent, and all the other aspects that are needed in a high-functioning innovation ecosystem.

Manufacturing holds the keys to our future. In the weeks to come, we’re going to dive deeper into advanced manufacturing–the ecosystem it drives, the opportunities it creates, and the special talent it requires. Stay tuned.

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