Rebutting the U.S. Manufacturing Has Never Been Healthier, So Dont - - PowerPoint PPT Presentation

@ITIFdc Rebutting the “U.S. Manufacturing Has Never Been Healthier, So Don’t Blame Trade” Argument

Presentation at the SPEA “What the Next President Should Do About U.S. Manufacturing” conference

• Dr. Robert D. Atkinson

President, ITIF Washington, DC September 14, 2016

@RobAtkinsonITIF

About ITIF

• One of the world’s top science and tech think tanks
• Formulates and promotes policy solutions that accelerate innovation and

boost productivity to spur growth, opportunity, and progress

• Focuses on a host of issues at the intersection of technology innovation

and public policy: – Innovation processes, policy, and metrics – Science policy related to economic growth – E-commerce, e-government, e-voting, e-health – IT and economic productivity – Innovation and trade policy

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The Problem

• We need a robust national manufacturing competitiveness strategy.
• However, that requires a consensus that there is a competitiveness challenge for U.S.

manufacturing.

• Unfortunately, the Washington trade establishment engages in willful disregard of the data

and evidence of the competitive challenges facing U.S. manufacturing. They go out of their way to assert that U.S. manufacturing has never been healthier and the all or the vast majority of job loss is from superior productivity, not competitiveness challenges.

• The trade establishment worries that if the evidence shows that there is a competitiveness

challenge for manufacturing, that support for globalization and increased trade will fall.

• The problem is that their “denialism” means that the support for needed solutions (e.g.,

more trade enforcement, a stronger domestic manufacturing strategy) is weakened. Why act when all is well?

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Washington Trade Establishment: “All is Well”

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Their Claims:

• Manufacturing output and

exports at all-time levels

• U.S. global share

unchanged

• Manufacturing job loss

due to technology, not trade

CLAIM: Manufacturing Exports At All-Time High

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REALITY:

• GDP at all time high,

imports even higher

• Exports have grown, but

imports have grown faster

• Manufacturing trade

deficit up 35% since 2012

$500 $700 $900 $1,100 $1,300 $1,500 $1,700 $1,900 $2,100

Billions of Current U.S. Dollars Manufacturing Imports and Exports, 2002-2015

Exports Imports

CLAIM: Manufacturing Output At All-Time High

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REALITY:

• GDP grew even faster (up

230 percent)

• Manufacturing output

down 1% since 2007, while GDP is up 10%

90 95 100 105 110 115 120 125 130 135 Axis Title

Real Value-Added Growth, 2000 = 100

Manufacturing Rest of economy

“U.S. factories produce twice as much stuff as they did in 1984.”

—Rex Nutting, MarketWatch, 3/28/2016

CLAIM: U.S. Share Unchanged

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REALITY:

• In fact, it has declined by

7 percentage points since 2000.

15% 17% 19% 21% 23% 25% 27%

U.S. Share of Global Manufacturing Output

“The U.S. share of global manufacturing has held at around 20 percent for 40 years.”

—Robert Zoellick, WSJ, 8/7/2016

CLAIM: Productivity Killed Jobs

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REALITY:

• Then why did we lose 2.4%
• f manufacturing jobs in the

90s when manufacturing productivity growth was similar?

“Manufacturing employment has fallen because of productivity growth, not a decline in output.”

—Congressional Research Service

• 2.4%
• 33.2%

53.0% 65.6% 24.5% 17.8%

• 40%
• 20%

0% 20% 40% 60% 80% 1990-2000 2000-2010

Manufacturing Sector by Decade

Employment Productivity Productivity Delta

REALITY: Most Industries Are Producing Less

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• Real manufacturing value

added grew 2% from 2008 to 2015

• Rest of the economy grew

11%

• 14 of 19 manufacturing

sectors lost output

• 30%-20%-10% 0% 10% 20% 30% 40% 50%

Manufacturing Primary metals Computer and electronic products Miscellaneous manufacturing Chemical products Food and beverage and tobacco products Machinery Nonmetallic mineral products Apparel and leather and allied products Textile mills and textile product mills Furniture and related products

Value-Added Growth by Industry, 2008-2015

REALITY: USG Overstates Output Growth

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• Computers and

electronics (NAICS 334) accounted for 111% of U.S. manufacturing value added growth from 2005 to 2015

90 100 110 120 130 Manufacturing Manufacturing minus computers Rest of economy Real Value Added Growth, 2000=100

Relevant ITIF Reports

• “The Myth of America’s Manufacturing Renaissance: The Real

State of U.S. Manufacturing”

• “A Critique of CRS’s ‘U.S. Manufacturing in International

Perspective’”

• “Worse Than the Great Depression: What the Experts Are

Missing About American Manufacturing Decline”

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Thank You!

Robert D. Atkinson | ratkinson@itif.org | @RobAtkinsonITIF

@ITIFdc