Some experts from a 2021 study by McKinsey state why manufacturing in the USA is essential for our health, national security and a strong economy. Global supply chains got a big shock in 2020 and we are still suffering through some of these effects in 2023. In the United States, manufacturing accounts for $2.3 Trillion of GDP, employs 12 Million people. While it represents only 11% of total GDP it drives 20% of US capital investment, 60% of exports and 70% of business R&D. Manufactured goods are essential to health and food supplies. Without manufacturing there are no syringes, and without tractors there is not enough food harvested. Yet manufacturing is often underappreciated compared to other industries and professions. Unfortunately, over the past 3 decades global manufacturing has shifted as a huge number of low-cost factories in countries such as China came on-line. Below graphs show what we lost and how other countries won business. Fact is that we lost 5.8 Million manufacturing jobs between 1999 to 2009. Building a more competitive US manufacturing sector
There is re-thinking going on regarding where to build goods. Relative to Europe, US produces only 71% of its manufactured goods vs. 83% for the Europeans. Closing that gap would add $400 billion to US GDP. American workers are also competitive to their counterparts. The US has only slightly higher Unit labor costs compared to China. Unit labor costs is not your hourly rate – it is the total cost it takes to produce a given good. While your Chinese counterpart might have less of an hourly wage, we produce more output per worker. Supporting manufacturing has been a bipartisan issue, however, when it comes to driving change and supporting the industry the approach often differs. The study highlights several areas where companies and policymakers should put focus and resources.
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