The Importance of Manufacturing Southern New England Economic Summit and Outlook May 30, 2003
Dec 27, 2015
The Importance of Manufacturing OVERVIEW
Manufacturing Outlook
Campaign for Growth and Manufacturing Renewal
GDP Forecast
Gross domestic product
0
0.5
1
1.5
2
2.5
3
3.5
4
2003.1 2003.2 2003.3 2003.4 2002 2003 2004
Per
cen
t C
han
ge
(saa
r)
Quarters Annual
Personal Consumption Forecast
Personal consumption expenditures
0
0.5
1
1.5
2
2.5
3
3.5
2003.1 2003.2 2003.3 2003.4 2002 2003 2004
Pe
rce
nt
Ch
an
ge
(sa
ar)
Quarters Annual
Business Investment Forecast
Business Investment
-6
-4
-2
0
2
4
6
8
10
12
2003.1 2003.2 2003.3 2003.4 2002 2003 2004
Pe
rce
nt
Ch
an
ge
(sa
ar) Overall
Quarters Annual
International Trade Forecast
International Trade
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
2003.1 2003.2 2003.3 2003.4 2002 2003 2004
Pe
ren
t C
ha
ng
e (
saa
r)
Exports
Imports
Quarters Annual
Changing Face of Manufacturing – Largest Sectors in 1950
0%
2%
4%
6%
8%
10%
12%
14%
Food PrimaryMetals
MotorVehicles
Share of Manufacturing
GDP
1950
2001
Changing Face of Manufacturing– Largest Sectors in 2001
0%
2%
4%
6%
8%
10%
12%
Chemicals Industrialmachinery
Electronics
Share of Manufacturing
GDP
1950
2001
0%
2%
4%
6%
8%
10%
12%
Chemicals Industrialmachinery
Electronics
Share of Manufacturing
GDP
1950
2001
Manufacturing: Largest Contribution to U.S. Economic Growth 1992-2000
ManufacturingManufacturing21%21%
Software*Software*
Finance/insuranceFinance/insurance/real estate/real estate Retail tradeRetail trade
ServicesServices
Wholesale tradeWholesale trade
Transportation/public utilities Transportation/public utilities
Rest of economyRest of economy
Productivity Growth: Higher and Faster
Manufacturing Productivity Has Grown 50 Percent Faster Than Overall Productivity Growth
Manufacturing Share of Real GDP & EmploymentGDP Has Remained ConstantWhile Share of Employment Has Declined
Manufacturing Pays More: 22 Percent Higher Wages
$10,000$10,000
$20,000$20,000
$30,000$30,000
$40,000$40,000
$50,000$50,000
$60,000$60,000
ManufacturingManufacturing Rest of WorkforceRest of Workforce
Ave
rage
An
nu
al C
omp
ensa
tion
Ave
rage
An
nu
al C
omp
ensa
tion
Wages
Benefits
Wholesale/retail
Services
Agriculture
Trans, finance, minerals, Trans, finance, minerals, construction, etc.. construction, etc..
Manufacturing Multiplier: Supports 9 Million Jobs in Other Sectors
00
22
44
66
88
1010
1212
1414
1616
Manufacturing JobsManufacturing Jobs Other Sectors’Other Sectors’
Jobs
(in
mil
lion
s)Jo
bs (
in m
illi
ons)
Manufacturing Becomes More Trade-EngagedManufacturing Becomes More Trade-Engaged LeadsLeads the Rest of the Economythe Rest of the Economy
00
55
1010
1515
2020
2525
3030
3535
19871987 ‘‘8989 ’’9191 ‘‘9393 ’’9595 ‘‘9797 ‘‘9999
ManufacturingManufacturing
Overall economyOverall economy
Non-manufacturingNon-manufacturing
Tra
de a
s a
% o
f gr
oss
outp
ut
Tra
de a
s a
% o
f gr
oss
outp
ut
Short Term Challenges: 2001 was a Manufacturing Recession
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
Manufacturing Overall GDP Non-manufacturing
Percent Change in GDP,
2001
Manufacturing Job Losses – 33 Consecutive
Months
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03
Employmennt Change Since January 2000
(millions)
Rest of Economy
Manufacturing Job Losses - 33 Consecutive
Months
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03
Employmennt Change Since January 2000
(millions)
Manufacturing
Rest of Economy
Manufacturing Jobs Lost Since 2000
# 19 Connecticut 27,800 jobs 10.5% of all manufacturing jobs
# 21 Massachusetts 45,200 jobs 10.3% of all manufacturing jobs
# 7 Rhode Island 9,300 jobs 12.2% of all manufacturing jobs
~ ~ ~
#1 Washington State 55,700 jobs 15.7% of all manufacturing jobs
#2 Maine 12,600 jobs 14.6% of all manufacturing jobs
Manufacturing: Underperforming Past Recoveries
100
101
102
103
104
105
106
107
108
109
110
-12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12
Months from from Cyclical Trough
Index of Mfg Output
(100=Cyclical Trough)
Previous Six Mfg Recoveries
Manufacturing: Underperforming Past Recoveries
SOURCE: NAM calculations from Federal Reserve DataSOURCE: NAM calculations from Federal Reserve Data
100
102
104
106
108
110
112
-12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 14
Months from from Cyclical Trough
Index of Mfg Output
(100=Cyclical Trough)
Previous Six Mfg Recoveries
2002
Why Such a Sluggish Recovery?
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Stock Market ConsumerConfidence*
BusinessInvestment
GoodsExports
1st Year Recovery
(% change)
Previous 6 Recoveries
2002
*prior 3 recoveries
What We Need:
NAM’s Strategy for Growth and Manufacturing
Renewal:
“ a plan of action for the federal government to complement private sector actions to effectively sustain U.S. manufacturing leadership at the top of global competitiveness.”
Legislative Issues for Manufacturing: NAM Pro-growth Priorities
• Reduce Tax Burden
• Expand International Trade
• Curb Health Care Mandates
• Stabilize Energy Pricing
»Raise Awareness about manufacturing’s strengths
»Draw Attention to Challenges»Identify New Solutions for
Structural Problems »Enact Solutions
The Bad News…Manufacturing Faces a Crisis
• Little understanding of our importance
• Negative images repels desirable candidates
• Education and training systems are not tuned in to our needs
• WE ARE BEHIND THE CURVE
Manufacturing’s Image Is Bad
• “Dark, dirty, dangerous, dead-end, demeaning”
• Assembly Line “Torturous and tedious”
“Ant in an ant colony”
• Low pay, lay-offs, polluters and scandal
• Old Economy,” declining, unimportant, gone off-shore
The Good News…We can have a major impact
We can increase the number and quality of recruits if manufacturers…
• Implement a sustained campaign to improve our image
• Fill the career information void
• Make high schools, community colleges and universities focus on our needs and skill sets
First Report of the Manufacturing
Campaign President: announce that manufacturingis a high priority and pursue the right policies
Congress: establish National ManufacturingDay and enact the right policies
Educators: Take students to modern plantsand provide accurate career information
Manufacturers: open doors to students and teachers
June 10--Second Report
Securing America's Future:
The Case for a Strong Manufacturing Base
• Innovation process powering the economy
• Formula for higher standard of living
• Troublesome signs
October: Third report
The high cost of doing business in the US:
»Regulatory costs»Taxes»Health care and pensions»Legal system»Energy
U.S. Department of Commerce: Field Hearings on Manufacturing Competitiveness• Over 20 field hearings around the country
• New Hampshire on May 29 on IT and telecomm
• Future hearing in Conn. on aerospace and machinery
• Interim report in July
• Final report in September