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OM in the News: Getting the U.S. Manufacturing Strategy Right

June 13, 2015
Manufacturing's technological revolution may not add jobs but will drive growth in the broader economy

Manufacturing’s technological revolution may not add jobs but will drive growth in the broader economy

For years, Washington has made increasing manufacturing employment a priority, hoping to engineer a return to the time when high-school graduates could use factory jobs as a route to the middle class. “Sadly, that isn’t going to happen,” writes the Brooking Institution’s Martin Baily, in The Wall Street Journal (June 3, 2015). Of the 5.7 million manufacturing jobs that disappeared in the 2000s, only 870,000 have returned and the claim that millions more are coming back is a myth.

But manufacturing will be crucial to the U.S. economy in the future not for its ability to create jobs but for its potential to drive innovation and productivity growth, and for its role in international trade and competitiveness. That means if the U.S. is serious about promoting a recovery in manufacturing, it will stop measuring success by the number of people employed in the sector and start supporting the technological advancements that are making factories more productive, competitive and innovative. This technological revolution may result in fewer factory jobs for low-skilled workers, but it promises to benefit society by driving growth not only in manufacturing but in the broader U.S. economy, as well. Already under way, the shift is being powered by three key technology developments.

The first is the Internet of things, in which embedded sensors transmit information from machine to machine, allowing them to work together and identify maintenance problems before a breakdown occurs. The second is advanced manufacturing, which includes 3-D printing, new materials and the “digital thread,” where companies use very accurate digital models to guide all stages of product development, speeding the time to market and improving quality. Finally, there is distributed innovation, in which crowdsourcing is used to find radical solutions to technical challenges much more quickly and cheaply than with traditional in-house R&D.

Classroom discussion questions:

1. Which is more important–number of jobs or technology?

2. Describe the Internet of things with several examples.

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