Manufacturing trends in the United States Extracts from McKinsey - - PowerPoint PPT Presentation

Manufacturing trends in the United States

Extracts from McKinsey Global Institute research Jan 2017

CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission

• f McKinsey & Company is strictly prohibited

McKinsey & Company | 1 SOURCE: McKinsey Global Institute analysis

Recent trends: One-third of jobs lost last decade, followed by a modest rebound

US manufacturing employment Million 11 10 13 12 1975 2020 1960 1965 1970 1980 1985 1990 20 18 17 16 14 19 15 2010 1995 2000 2005 2015 +0.8 17

• 5.7

28 27 25 22 21 18 16 15 13 11 9 9

x Manufacturing share of total nonfarm employment

McKinsey & Company | 2 SOURCE: McKinsey Global Institute analysis

120 100 70 110 90 60 40 50 80 100 2017 08 98 01 1995 04 10

US manufacturing employment by industry group Index: 100 = January 1995

Job patterns similar by industry, but intensity—and causes—vary

78 71 84 66 62 47 Regionally processed goods (food, metals, plastics) Heavy industrial goods (machinery, cars, equipment) All manufacturing Resource-intensive goods Tradable technology goods (consumer electronics) Labor-intensive tradables (clothing, footwear)

McKinsey & Company | 3 SOURCE: McKinsey Global Institute analysis

• 3
• 2
• 1

1 2 3 4 5 6 7 2010 05 95 90 85 2000 1980

Output growth collapsed during the two recessions of the 2000s

US manufacturing value added and productivity growth 5-year moving average of annual growth, 1980–2010

Productivity Real value added

McKinsey & Company | 4 SOURCE: McKinsey Global Institute analysis

• 300
• 250
• 200
• 150
• 400
• 350
• 100
• 50

50 Transport equipment (ex. auto) All advanced industries Precision instruments Chemicals incl. pharmaceuticals Machinery and equipment Motor vehicles and parts 85 2000 10 Electronic devices 05 90 1980 95 2015

• 0.3
• 0.7
• 0.4
• 1.2

Overall trade balance as a share of GDP

• 2.1
• 2.1
• 2.5

Trade deficit has widened in advanced industries, highlighting supply chain gaps

Net US exports in knowledge-intensive manufacturing $ billion, real (2005)

• 1.5

McKinsey & Company | 5 SOURCE: McKinsey Global Institute analysis

Global sample Emerging markets Value added

16% 24% 12%

Employment

14% 16% 9%

Exports

70% 73% 61%

Private sector R&D

77% 78% 67%

Productivity growth

37% 24% 30%

Manufacturing is core to a nation’s competitiveness

Share of manufacturing in select economic indicators

McKinsey & Company | 6 SOURCE: McKinsey Global Institute analysis

Some priorities for US manufacturing

▪ Faster and broad-based productivity growth,

especially among smaller firms with less exposure to export and investment growth

▪ Rising share of service activities that make

up growing value share in the manufacturing value chain, both pre- and post-production

▪ Greater digital investments along the value

chain to promote efficiency and broaden participation in productivity and exports

▪ Place-based strategies to reinvest in

manufacturing communities, mitigate trade dislocation, older workers, declining mobility

Productivity Services Digitization Addressing dislocation

Thank you

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