Warning: U.S. manufacturing innovation is at risk

Aug. 7, 2003
Intense global competition and the rising cost of doing business in the U.S. is threatening manufacturers, and our nation's standard of living.

This according to a study by economist Joel Popkin, commissioned by the Council of Manufacturing Associations. "Manufacturing spawns more economic activity and related jobs than does any other economic sector," states Popkin, president of Joel Popkin and Co.

Popkin attributes America's high standard of living to manufacturing innovations, saying R&D stimulates investment in capital equipment and in workers, leading to new processes and products and spilling over to other economic sectors.

In fact, says Jerry Jasinowski, president of the National Association of Manufacturers, "Every dollar of specific manufacturing production creates an additional $0.67 in other manufactured products and $0.76 in products and services from nonmanufacturing sectors. Manufacturing contributes more than 60% of U.S. investment in research and technology, and manufacturing workers make 20% more than the average wage."

Unprecedented foreign competition, rising health-care costs, and excessive regulations are putting a squeeze on U.S. manufacturers, forcing them to cut back on R&D and capital investment, and lay off employees. But, the greatest threat, according to Popkin, is the loss of innovation. "It is increasingly important that policy makers hike spending on R&D, that we enact a permanent R&D tax credit, and that the government provide incentives to increase the supply of scientists and engineers," says Jasinowski.

The Popkin paper is at www.nam.org/future.

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