Manufacturing's Demise Greatly Exaggerated - Modern Distribution Management

Manufacturing’s Demise Greatly Exaggerated

MAPI: Government underestimates impact of factory sector.
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Manufacturing accounts for about one-third of U.S. GDP, three times the impact that government analysis suggests, according to recent data compiled by Daniel J. Meckstroth, chief economist for the MAPI Foundation, the research affiliate of the Manufacturers Alliance for Productivity and Innovation.

Using analysis of national input-output tables by Interindustry Forecasting (Inforum) at the University of Maryland, Meckstroth "shows that two measures commonly used by the government to quantify manufacturing’s overall footprint significantly underestimate the impact of the factory sector."

One measure of manufacturing's impact on the U.S. economy, the multiplier effect – "which expresses the increase in income and consumption generated by a specific economic activity – is also almost three times as high as presumed," according to the MAPI Foundation’s report.

The organization estimates manufacturing’s value added multiplier at 3.6, which means that "for every $1 of value added by domestic manufacturing, the sector generates $3.60 of value-added elsewhere in the U.S. economy."

Manufacturing also has a bigger impact on employment than recent government data might suggest. While the factory workforce accounts for 9 percent of full-time employees in the U.S., an additional 23 percent of workers are linked to manufacturing, giving the sector a footprint equal to 32 percent of the total U.S. workforce.

“Economic statistics say that manufacturing industries are of only minor importance, but our research shows that they lie near the center of a substantial and complex value chain, and that the conventional measurement of manufacturing’s footprint is grossly underestimated,” Meckstroth said.

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