Entrepreneurial Nation

1. American manufacturing remains globally competitive through innovation and productivity

America's aggregate output remains competitive with China's, even though the sector constitutes only 10 percent of our economy compared to nearly 40 percent of theirs.

Productivity advantage. The United States maintains its manufacturing edge through superior labor productivity - American workers produce over six times more value annually than workers in China or India. This productivity stems from technological innovation, advanced processes, and a highly skilled workforce.

Output growth. Despite perceptions of decline, U.S. manufacturing output has more than doubled over the past 30 years - outpacing other developed nations. Key sectors driving this growth include aerospace, electronics, and advanced materials.

Innovation ecosystem. America's culture of entrepreneurship, world-class research universities, and collaborative industry clusters foster continuous innovation. This enables U.S. manufacturers to compete on quality and cutting-edge products rather than just cost.

2. High-road manufacturing creates value through customization and collaboration

The best American manufacturers are always one step ahead, thinking creatively about how to improve the design and functionality of a product to provide consumers with new value.

Customization focus. Leading U.S. manufacturers like Vitamix differentiate themselves through highly customized products tailored to specific customer needs. This customer-centric approach creates higher-value products that can command premium prices.

Collaborative culture. High-road manufacturers foster collaboration between workers, engineers, and management to drive continuous improvement. Companies like GE empower factory workers to suggest process improvements and innovations.

Investment in people. Successful manufacturers invest heavily in worker training and provide good wages and benefits. This cultivates a skilled, motivated workforce that can operate advanced equipment and contribute to innovation.

3. Clusters like Wichita's aerospace hub drive regional economic growth

Bottom-up clusters, like the ones seen in Wichita, take years, if not generations, to develop. Central governments can't simply throw money at a region and expect that it'll emerge as an industry cluster.

Organic development. Successful clusters like Wichita's aerospace hub emerge organically over time through a combination of local entrepreneurship, skilled workforce development, and industry collaboration.

Ecosystem advantages. Clusters provide benefits like:

• Shared talent pool of specialized workers
• Network of suppliers and support services
• Knowledge spillovers between companies
• Collaborative research with universities

Government support role. While clusters develop bottom-up, targeted government support can help them thrive:

• Workforce training programs
• Research grants to universities
• Export assistance
• Infrastructure investments

4. Silicon Valley leads in clean technology and entrepreneurial risk-taking

Vinod Khosla's central insight about the Valley is that failure is generally embraced and experimentation encouraged.

Culture of risk-taking. Silicon Valley's tolerance for failure and celebration of bold ideas enables breakthrough innovations. This mindset is crucial for tackling major challenges like clean energy.

Collaborative networks. The Valley's dense networks of entrepreneurs, engineers, and investors facilitate rapid knowledge sharing and company formation. This speeds the commercialization of new technologies.

Triple bottom line. Many clean tech companies pursue a "triple bottom line" balancing:

• Environmental impact
• Profitability
• Social responsibility

This holistic approach attracts talent and aligns with consumer values.

5. Exporting is crucial for manufacturing growth and job creation

Currently, only 1 percent of American businesses export.

Vast market opportunity. With 95% of consumers outside the U.S., exporting offers massive growth potential for manufacturers. Even small increases in exports can significantly boost revenues and job creation.

Government export support. Programs like the U.S. Commercial Service help manufacturers:

• Identify foreign buyers
• Navigate regulations
• Secure financing
• Advocate against trade barriers

Cultural shift needed. Many U.S. manufacturers remain focused solely on the domestic market. Changing this mindset requires education on export opportunities and success stories.

6. Onshoring trend brings manufacturing jobs back to America

GE's success may be a harbinger for the three million manufacturing jobs that Boston Consulting projects will be created in the United States in the next decade.

Changing economics. Rising wages abroad, increasing transportation costs, and the value of co-locating design and production are making U.S. manufacturing more attractive.

Quality and innovation benefits. Companies like GE find that domestic production enables:

• Faster product development cycles
• Better quality control
• Protection of intellectual property

Government incentives. Strategic tax credits, workforce training programs, and streamlined regulations can further accelerate the onshoring trend.

7. Addressing the skills gap is vital for manufacturing's future

There are more than two million job openings in this country that businesses are unable to fill because they can't find candidates with the right qualifications. Many of these job openings are in manufacturing.

Mismatch of skills. Despite high unemployment, manufacturers struggle to find workers with skills to operate advanced machinery and engage in high-tech production processes.

Education reform needed. Addressing the skills gap requires:

• Greater emphasis on vocational education
• Partnerships between manufacturers and community colleges
• Company investment in workforce training

Image problem. Manufacturing suffers from outdated perceptions as low-skill work. Educating students and parents on modern manufacturing careers is crucial.

8. Manufacturing is essential for national security and defense capabilities

Our national security depends upon our having a strong manufacturing base.

Domestic production critical. Relying on foreign suppliers for crucial defense equipment creates vulnerabilities. Maintaining domestic production capabilities is essential for national security.

Innovation spillovers. A strong commercial manufacturing base drives innovations that benefit defense:

• Advanced materials
• Electronics
• Aerospace technologies

Industrial mobilization. Preserving manufacturing capacity allows rapid scaling of production during crises or conflicts.

9. Policy reforms can strengthen American manufacturing competitiveness

Democrats and Republicans must find common ground to keep America a manufacturing leader.

Bipartisan opportunity. Supporting manufacturing aligns with both parties' goals of job creation, economic growth, and national security.

Key policy priorities:

• Fair trade enforcement
• Tax incentives for domestic investment
• Increased funding for manufacturing extension services
• Workforce development programs
• Strategic infrastructure investments

Long-term vision needed. While avoiding heavy-handed intervention, government can play a crucial role in creating an environment where U.S. manufacturing thrives in the global economy.

Last updated: July 28, 2024