Made in the USA (Again) – Foreign Policy (blog)

In 1998, Drew
Greenblatt took control of Marlin Steel,
a small, family-owned company in
Brooklyn. The company produced handmade steel-wire
baskets used in display cases at bagel stores, and for decades business had
boomed, all through the 1990s and even through the early 2000s. But around 2003,
two things happened: The skyrocketing popularity of the low-carb Atkins
diet took the bagel business out at the knees, and Chinese suppliers began to undercut
traditional basket-makers by producing cheaper baskets.

By 2004, the company was on the verge of bankruptcy — and
then, quite out of the blue, Boeing hired Marlin Steel for a rush order of
ultraprecision baskets in which to store airplane parts during production. Greenblatt
quickly realized that handmade baskets would fulfill neither demanding nano-measurements
nor volume requirements, and he made a bet on a computer-guided robot that
could rapidly cut metal and bend it into a wide variety of wire baskets.

And the rest, Greenblatt says, is history. “We have shipped
over 1 million highly customized baskets from our factory in Baltimore … without
a single quality defect.” During the recent recession, its shipments actually increased,
and the company expanded its customer base,
exporting to China, Mexico, Singapore, Taiwan, and Canada. Over the next decade, Marlin Steel hopes to hit $100
million in sales.

Marlin Steel’s experience is far from unique. The Illinois-based
Reshoring Initiative counts as many as
200 examples of U.S. companies over the past 10 years bringing their production
operations back to the United States. General Electric now makes industrial
batteries at one of its oldest industrial sites, in Schenectady, NY, (as well
as “smart” washers and dryers at a moribund appliance park in Kentucky). Apple
just announced a second new American plant in Arizona, and U.S.-made Macs
will soon be rolling out of an Apple-Flextronics plant in Austin, TX, for
the first time since 2004 (even though Steve Jobs said this would never
happen). Google now assembles smartphones in Texas, where South Korea’s Samsung
also makes chips for Apple. Airtex Design Group, known for its fashion-oriented
designs, is producing textiles again in Minneapolis. Tesla Motors in Palo
Alto, CA, just announced plans to build a massive lithium-ion battery plant in the
United States. Caterpillar, Ford, Germany’s BASF, China’s Lenovo, Chile’s
Methanex, and Egypt’s Orascom are just a few other examples of companies that
have started or relaunched production in the United States. 

If 10 CEOs had been asked a decade ago — even five years ago
— where they were going to build their next plant, at least nine would have
answered China. Today, no more than two or three would give that answer, and as
many as five would say the United States. After a serious slump, U.S.
manufacturing is once again the fastest-growing part of the U.S. economy. But
perhaps more importantly, the
United States is regaining an unexpected edge in the global race for
competitiveness after losing ground to low-cost manufacturers in China and
other emerging economies over the past decade.

More and more often we are hearing about this kind of reversal
of the outsourcing trend to China or India. In April 2012, a survey conducted
by the Boston Consulting Group on major U.S. companies found that half of the companies with sales
over $10 billion are actively considering reshoring production back to the
United States and more than one-third of companies with sales over $1 billion
are too. Among those surveyed, 70 percent found sourcing from China more
expensive than they had believed, and 90 percent worried about further raises
in wages in China.

Central to this shift is a collective mix of regret and brand-new
understanding. It’s finally sinking in that outsourcing was always as much
about getting into new markets as it was about saving on wages. (In any case, wages
are a bad proxy for labor costs because they have to do as much with how
productive a worker is as with how much that worker gets paid.) What really matters
in competitiveness goes far beyond labor costs. Companies learned — or rather
relearned — that quality and shipping time actually matter to their customers,
that transportation costs often turn out to be more expensive than expected, and,
with the discovery of shale gas, cheap energy is beginning to make a real
difference in the United States. Moreover, separating innovation from
manufacturing turned out to be a really bad idea.

For some time,
information technology and social media represented the innovative face and
competitive strength of the United States, but that is about to change as
innovation is spreading from Silicon Valley to Main Street. The new frontier of
the knowledge economy will be “brainfacturing,”
the successor to the old manufacturing
that will integrate traditional industrial strengths with the digital world,
automation, research-based new materials, and sensors.

These are not isolated instances, and though some are still
somewhat mysterious, they add up to a major shift in global competitiveness
this time in favor of the United States. What’s more, the whole notion of a
“decline” of American manufacturing will soon be viewed in an entirely new
light. What we talk about when we talk about manufacturing — and the language we
use to talk about it — will change.
Terms like “labor-intensive” and “economies of scale” or the concepts of
“manufacturing vs. service sector” will be redefined.

But perhaps most important is that, finally, the idea that
manufacturing is old-fashioned, even dirty, has itself become an old-fashioned
way of thinking. In fact, manufacturing is
not dead in the United States. It’s making a comeback.

* * * 

For more than two centuries, manufacturing was a huge source
of growth, economic power, innovation and — yes — pride in the United States.
It was the main road to the middle class, and at its peaks contributed around 40
percent to gross domestic product (GDP) (from 1890 to 1960) and 36 percent (around 1950) to employment. Today,
manufacturing contributes 12 percent to GDP, and 12 million Americans (9
percent of the workforce) are employed in manufacturing. The United States is
not alone in these winnowing numbers. All over the “industrialized” world, the manufacturing base has been
shrinking in very much the same
fashion as high-tech and finance jobs have gained glamour and other less-compensated
services kept growing. Since the 1970s, the invention of the microchip has had
a lot to do with the decline. Meanwhile, manufacturing has been rising in
emerging economies.

Although it started much earlier, the decline in manufacturing
accelerated to alarming proportions at the turn of this century. The United States had once taken great
pride in its homegrown manufacturing, but when newcomers from emerging
economies arrived on the scene offering hard-to-beat labor costs, many manufacturers
from textiles and shoes to electronics seemed to have lost their ability or
even their will to compete. This led to rapid job losses in manufacturing,
particularly in labor-intensive industries, though many other industries were
barely affected.

Between 2000 and 2007, 3.5
million manufacturing jobs were lost. This staggering downturn caught the
United States off guard. Manufacturing output expanded at a snail’s pace of
barely 0.5 percent annually in a growing economy. That was even before the
Great Recession hit, which further added to job losses and factory closings. Since
2001, more
than 40,000 factories (over 10 percent of the total) have closed their
doors.

Many new
plants in China — even those set up by foreign investors from the United
States, Europe, and Japan — did not and still don’t “steal” jobs away from the United States, but are simply a
response to the growth of the emerging consumer. The global economy is not a zero-sum
game. And economists do not all agree on which is more to blame — automation
or competition — for many of the job losses. Less than half the manufacturing
jobs lost were linked to new competition from, and outsourcing to, emerging
economies. Of course, it made no sense to ignore much lower labor costs abroad. Competitors from China and other emerging
markets were not only able to undercut prices, but they also had large markets themselves. Unfortunately, in the rush to capitalize on these efficiencies,
companies often ignored some costs and overlooked many risks. What was given up
in outsourcing was not adequately analyzed.

Whatever cause there is to blame, there is little question that the United States had difficulty competing with the onslaught of low-cost labor
from China and other emerging markets. Deng Xiaoping, the reformist Chinese
leader who turned the Maoist revolution upside down, once declared, “It does not matter whether a cat
is black or white as long as it catches mice.” By the early 1990s, China began to
invest heavily in a race to catch up. With very low labor costs, strong ambitions,
and huge investments (of nearly 50 percent of GDP) in
infrastructure and manufacturing, it soon became known as the factory of the world. The massive outflow of outsourced jobs was, in essence, a
knee-jerk, defensive response to millions of low-cost workers in China, India,
and other emerging markets joining the global workforce during the past 20
years. The problem was not that U.S. manufacturing was doing worse
but that others were getting better faster.

At the same time as other countries boosted research and
development, government and corporate
budgets were being cut in the United States. Bell Labs, once the gold
standard for corporate innovation, home of Nobel Prize winners and numerous
inventions, became a shadow of its former self. The same was true for many
other corporate research centers that had been at the heart of much innovation.
Instead, the focus of innovation shifted from manufacturing to information
technology and social media, not to speak of the use of rocket science-type
minds in creating new financial instruments that were partly responsible for
the financial crisis. It may have taken a decade or two, but this short-term
focus on profits in manufacturing firms, rather than a long-term focus on
innovation and engineering excellence, began to hurt dramatically.

This complacency, lack of support, and diversion of innovation
ultimately undercut the U.S. manufacturing industry’s competitive edge. Short-term
corporate thinking also played a part in outsourcing, which became a fashion,
especially since the turn of the century. Low wages seemed so attractive that
the costs of lower productivity, quality defects, shipping times, and higher
transportation costs were sometimes ignored.

By 2011, the United States had a nearly $500 billion current
account deficit — one more in a long series. This should come as no surprise. Countries
that are not competitive in manufacturing are doomed to have large deficits
because manufactured goods make up three-quarters of global trade. It could be
ignored for so long only because foreign imports and exports were only such a
small part of the huge American economy. At that point it really did seem as
though the United States had lost its manufacturing prowess.

In contrast, manufacturing never quite went out of fashion in Northern
Europe, where it remained relatively strong (especially in Germany and
Switzerland) and where outsourcing due to cheap labor costs (rather than market
opportunities) never really caught on as much. Indeed, Northern Europe has managed
to keep a $500 billion current account surplus in recent years, even if some of that went to other
European countries, mostly thanks to manufacturing exports.

* * *

American manufacturers have faced headwinds, especially during
the first decade since 2000, but these seem to be coming to an end thanks to an
unexpected series of true game-changers. This time around, the newest tilt in the
ever-shifting sands of global competitiveness will, for a change, benefit the
United States.

There is no denying that the “pull” of growing
demand in emerging economies continues. Even with slower growth in emerging
markets and a recovery in the United States, Europe, and Japan, the shift in
the global economy toward developing nations remains intact as the emerging-market
consumer is increasingly replacing the American consumer as “king.”
Companies recognize that their future long-term growth is tied to foreign
rather than domestic markets. What has changed is that the “push” of
loss of competitiveness has dwindled.
It has sometimes even been reversed in the face of three unexpected developments:

• 
  Cheap energy: Shale gas gives American manufacturers a new edge and makes the United
  States energy independent
• Fewer worries about cheap labor: Adjusted for productivity, the huge differences in labor costs have
  narrowed, and automation is making its impact felt.
  
• American innovation is blossoming
  again: The United States may be at the cusp of a new era of
  manufacturing innovation that few others can match as Silicon Valley-style
  cooperation between universities and start-ups bear fruit, with manufacturing
  at a new crossroads with IT, sensors, medical discoveries, and new materials.
  

Cheap energy is giving American manufacturing
an unexpected and massive competitive advantage (resulting in more than $90
billion in new
investments in manufacturing). Estimates on how much shale gas will add to
economic growth vary, but many economists believe it is at least 0.5 percent per
year for the next years. This competitive boost is especially huge for
petrochemicals, chemicals, fertilizers, steel, aluminum, and other
energy-intensive industries. It has reshaped the plans of companies like Shell,
Chevron, Dow Chemical, DuPont, Phillips 66, Williams, CF Industries, and
Germany’s Bayer and BASF. In many other industries, energy is an important cost
factor, even more so as the labor-cost gap starts eroding. Once trucks and even
trains switch from diesel to gas for fuel, transportation costs for American
manufacturers will also come down, adding a further competitive advantage. All this
is certainly enough to worry Asian and European manufacturers, even if some
stubbornly refuse to acknowledge its impact.

This is in sharp contrast with a few years ago, when
there were fears in the United States that there was little oil and gas left to
explore at home, the world was running out of energy, oil prices were going to
$200 per barrel, and America was becoming increasingly dependent on the Middle
East. Shale gas production keeps growing, and shale oil will make the United
States the largest oil producer by 2015.

Natural gas is increasingly replacing much dirtier coal for
electricity, but it is also hugely important for manufacturing, which accounts for 28
percent of all gas used. This demand is projected to grow 27 percent per year
between 2009 and 2035. What matters most immediately to manufacturers is that shale
gas has brought down the cost of natural gas from $13 per million British
thermal units (MBtu) in 2008 to the $3-5 range, making the United States one of the world’s
cheapest and most competitive producers. Natural gas sells for $14 to $17 per
MBtu in China and Japan and for not much less in Europe. Moreover, gas at $4
per MBtu is equivalent to $24 per barrel of oil, well below the international
$100-plus oil price. And the environmental issues related to fracking seem much
less daunting today than when the industry started a few years ago, though they
obviously need close attention.

For the first time in 37 years, not just one but four new “complex”
refineries are being built (or are planned to be built) in the United States at
a combined cost of around $800 million. They will again distill crude into all
kinds of products, such as gasoline, diesel oil, kerosene, and specialty
chemicals. Unsurprisingly, they will be located in shale-rich North Dakota,
which has been buzzing with new exploration activity. The surge in shale
oil production (and pipeline bottlenecks) have led to lower regional oil prices,
which have given refiners higher margins and profits. And mining companies from
Chile and elsewhere are now considering taking advantage of the cheap gas in
the United States as they face higher costs at home. In short, the United
States has become one of the most attractive locations again for
energy-intensive industries.

Meanwhile, cheap labor is becoming less relevant. Currently, the biggest American manufacturing
employers are food, transportation equipment, and fabricated metal products,
each with about 1.4 million workers; followed by
computers/electronics and machinery, with 1.1 million each.
Together these industries employ 6.4 million people, or more than 55 percent of
American manufacturing workers. The most labor-intensive industries (like
apparel, shoes, furniture, and basic electronics) have already largely
disappeared from American shores and may, in fact, make a surprising comeback (though
with many fewer workers) as automated plants with sophisticated robots manned
by trained machine operators are becoming competitive again.

The use of robots in manufacturing is expanding rapidly. While
once expensive, unwieldy, and hard to use, today’s robots are getting much
cheaper, more versatile, and easier to use. Robots work 24/7, never strike, and
have learned (or are programmed) to do many of the things low-cost workers used
to do. One robot can sometimes do what hundreds of workers used to do. Cheap
labor will not be the unique advantage it once was, leveling the playing field.
Labor-intensive may, in fact, become an antiquated concept. Robots require
highly trained operators, so this will not be a bonanza for many types of
workers, especially those without much education.

The use of 3-D printing will also become more widespread. Rather than the traditional
method of cutting, drilling, or removing pieces, it is a revolutionary new way
of making three-dimensional objects (from machine tools to body parts) by
adding layer upon layer with digital technology. It allows prototypes to be
developed and brought into production much faster than before, cutting months
and years to days or hours. It also reduces waste and allows small start-ups to
get into manufacturing much more easily than before. The first of a chain of manufacturing
innovation institutes that Barack Obama’s administration hopes to establish
(along the lines of the German Fraunhofer Institutes), the National Additive Manufacturing Innovation
Institute in Youngstown, OH, will support these initiatives. It is a good
example of broad cooperation by 40 major corporations, nine research
universities, five community colleges, and 11 nonprofit institutions.

Over the last 10 years, the idea of cheap Chinese labor and
expensive American labor has become rapidly outdated. Wages in China have risen
400 percent between 2001 and 2012, according to Ernst & Young, and the
Chinese renminbi has strengthened 20 percent against the dollar while wages
have barely risen in the United States during the same period. In fact, unit
labor costs have come down 12 percent
in the United States since 1995 (a performance exceeded only by Sweden in the
developed world). Moreover, trade unions are now more flexible when it comes to
work rules that once crushed efficiency, while pension and medical benefits
have come under scrutiny, for example in the plane- and car-manufacturing
industries. Outsourcing abroad and the move of manufacturing to Southern states
have provided an impetus that did not exist before.

Furthermore, China’s labor surplus of just a few years ago — one
that kept wages low and made China “the” manufacturing center of the world — has
basically evaporated. Incredibly, the Chinese media is full of articles on skilled-labor
shortages, and China’s working population will be declining by 2018. Part of this can be explained by pure demographics:
Chinese births are declining from 26 million in 1987 to only 15 million in 2012.

Wage costs cannot tell the full story. Productivity per worker
also matters a lot. The Chinese had a lot of catching up to do in productivity.
It remained at only 13 percent of that of the United States in 2008, rising
from a minuscule 3 percent of the U.S. level in 1978. Meanwhile, American productivity has
increased enormously. The value of manufacturing output is 2.5 times what it
was in 1970, but this output is produced with 30 percent less labor. 

As the wage gap erodes, productivity advantages are becoming
more important. If an American factory worker is four or five times as
productive as a Chinese or Indian worker, that worker’s compensation can be
that much higher. What economists call “total factor productivity” is
among the world’s highest in the United States and seems to be growing again
(after a hiatus in the years after 2000) at a pace that is faster than that
found just about anywhere else. Why does all this economic “stuff”
matter? In the end, it is productivity that drives competitiveness, economic
growth, and living standards.

Employment in manufacturing has grown faster than elsewhere in
the U.S. economy since the 2008 recession. Thus far, the employment impact of 50,000
new jobs from specific reshoring initiatives has been only a trickle, comprising
less than 10 percent of the 650,000 new manufacturing jobs created in recent
years. But looking at both labor costs and productivity, the Boston Consulting
Group expects net labor costs for manufacturing in China and the United States
to converge by around 2015. It estimates that the erosion of the wage gap and
reshoring could turn the trickle into a flood of 2.5 million to 5 million in
job gains in U.S. manufacturing (and related service industries) over the next decade.

Add to this a new wave of American innovation in
manufacturing. Scientific research in the United
States remains among the most advanced in the world, and spending on R&D is
the highest, though China is catching up fast. Higher education remains a trump
card, with the largest number of top universities and high-quality graduates.
The Chinese numbers are big, but so is China’s population. In 2003, the United
States graduated 456,000 scientists and engineers, compared with 617,000 in the
European Union and 672,000 in China. Most observers agree that graduates of the
top American and northern European universities are still well ahead of those
in China.

What is new is that scientific
research is climbing out of its silos, in universities as well as in the
business world. Discoveries increasingly come from between the old disciplines
of chemistry, biology, and physics. Insights are gained from a much more
interdisciplinary approach that is gaining ground. All this requires new forms
of intensive collaboration, “brains meet brains.” Just as the most interesting
fundamental discoveries are based on interdisciplinary research, applied
research now centers on universities surrounded by major companies and
innovative start-ups. Leading corporations scout for these discoveries while
focusing on what they do best — the development in R&D and the scaling-up
and distribution.

Brand-new ecosystems
are forming not only around the universities of MIT, Stanford, Duke, and University Texas, Austin,
but in the old rust belts of New York around Albany, Schenectady, and Rochester;
around Akron and Cincinnati in Ohio; and around Seattle, Minneapolis, Boulder,
and all over the country.

We call this “brainfacturing,”
which will do to manufacturing what the PC did to mainframe computers and
smartphones to computers. Building on traditional manufacturing skills,
brainfacturing is based on fundamental R&D in physics, chemistry, biology,
and nanotechnology. It integrates information technology, robotics, the use of
sensors, 3-D printing, nanotechnology, and new materials. It will also make
active use of big data in the semantic web, social media, the exploration of
the human genome, and other new discoveries.

Sensors are
increasingly used in everything from unmanned cars and medicine to
counterterrorism, logistics, and oil exploration. Homeland security needs have
given American innovators and manufacturers an early lead in this area. New
materials allow planes to be lighter,
hip implants to last longer, batteries to function better, soldiers to be
better protected from explosions, and medicines to be better absorbed.

The U.S.
government has invested $3.7 billion in nanotechnology, substantially more than
other countries. Nanotechnology is
engineering at the molecular scale, constructing items from the bottom up, and making
all kinds of new materials and pharmaceutical products that were unthinkable
until recently. There are over 1,500 nanotech products already (from sunscreen
to coatings and food), with three to four more coming out each week. And
finally, the mapping of the human genome and brain mapping will allow highly customized medical treatment — a form of targeted
bombing instead of carpet-bombing. Biomanufacturing will become a new branch of
advanced manufacturing. Together with sensors and the expanded use of IT, it has
the potential to revolutionize health care and even bend the feared cost curve that
is at the root of projected massive future budget deficits and rising health-care
costs. This would be a triple win for manufacturing.

The $14 billion Albany
NanoTech Complex is just one example of how innovation in critical areas is
moving back onshore. This huge research facility with $1 billion in funding
from New York state has 800,000 square feet of labs, clean rooms, and classrooms
for over 3,000 R&D scientists, researchers, and engineers. Over a decade
ago, much of the semiconductor industry moved to South Korea and Japan, but
Albany is now again at the cutting edge of the next generation of
semiconductors. On-site, corporate partners like IBM, Applied Materials,
and Intel work together with Samsung, TSMC, and Toshiba. Nearby, GlobalFoundries,
a leading independent fabricator of semiconductors, has built a brand-new
plant.

Virtually every
existing product will be made in entirely new ways, and millions of innovative
new products that we can only dream about today will be made on the basis of
cutting-edge research. None of these is an American monopoly or, for that
matter, will remain one, but in many cases, American innovators and
manufacturers have an early start and competitive edge.

In its
2012 “Report to the President on Capturing Domestic Competitive Advantage
in Advanced Manufacturing,” the President’s Council of Advisors on Science
and Technology called
for a national advanced-manufacturing strategy, including a network of
regional manufacturing innovation institutes to bridge the gap between research
and commercial applications. Slowly, this is now beginning to happen.

What started two
decades ago with sporadic spinoffs from scientific research at universities
like Stanford, Harvard, and MIT has become a trend in the United
States and abroad. In northern Europe, universities in Zurich, Lund, Stuttgart,
and Eindhoven have also become centers of a network in which companies and
local authorities closely cooperate so that start-ups are no longer a rarity
but are becoming a major source of new employment.

Factory floors
will be different in the future and so will factory workers. In fact,
post-digital factories will be largely unrecognizable and often much smaller.
The large factory floors we remember from movies and economics textbooks do not
exist anymore; indeed, fewer than 200 plants in America employ more than 2,500 workers. The decline
has been much steeper in large plants than in small plants. The heart of traditional manufacturing — production-line workers or “team
assemblers” — now represents only 6 percent of manufacturing jobs. Of the 330,000 factories in the United
States, the vast majority employ fewer than 10 workers.

 

In  the process, there is a relentless shift to higher skill requirements.
Workers with only high school degrees or less (53 percent in 2000) have been
the biggest victims of job losses. This trend has continued in the recovery
from the Great Recession. In contrast to the loss of millions of manufacturing
jobs, the number of manufacturing “workers” with graduate degrees has increased
13 percent since 2000, despite their much higher compensation.

Many companies now face a shortage of trained operators — workers
with vocational training. In this
area, American manufacturers and policymakers have a lot to learn from northern
Europe, especially Germany, with its system of apprenticeships and vocational
training that has made the Stuttgart area one of the largest export centers globally.
In the world of modern manufacturing, the quality of high school education,
vocational training, and cooperation with local community colleges and R&D
centers at the top local universities matter. Increasingly, they make the
difference between success and failure.

Science and
industry must work together to deal with the big issues that confront us. Increasingly,
knowledge is organized around concepts like sustainability, mobility,
urbanization, and aging of the population that affect everything from food and
water to energy and materials.

* * *

The winners in global manufacturing over the next decades will
be those who figure out how to make not just what the American, European, or
Japanese consumer wants but what more than a billion new, emerging consumers
want. Those needs are no longer just food but safe and healthy food, not
clothing but fashion, not simple mobile phones but smart multifunction wireless
devices, not a roof above your head but energy-efficient buildings, not
gas-guzzling cars but self-driving electric and other vehicles, not
chemotherapy but DNA-based, highly targeted medicines. The innovation embedded
in every product will grow, and the labor content will decline.

This will create a new edge for smart companies in the United
States that take advantage of the universities and the innovative high-tech
corporate culture around them. That will be true for small start-ups and for
adaptable multinationals alike. From Procter & Gamble to Caterpillar,
corporations have long understood that their markets are global. They have seen
their growth and profits come increasingly from emerging markets as the
emerging consumer overtakes the American consumer. The global crisis shook them
out of any remaining complacency, and a new, smarter form of competition is now
getting noticed in Asia and elsewhere. Many have learned their lesson fast and
are now challenging emerging multinationals in the same way that these new
competitors challenged them earlier.

During the last decade, the United States probably lost nearly
2 million jobs to outsourcing and other competition from emerging markets.
Because of differences in labor productivity, the country created far more jobs
abroad than it lost at home. As Andy Grove, the former chief executive of
Intel, has remarked, high-tech innovation led to job creation in manufacturing,
but in emerging markets rather than in the United States. But over the next
decade, the Boston Consulting Group estimates that 3-5 million new jobs
are likely to be created because of shale gas, reshoring, and brainfacturing. As
discussed, most will come from the new energy advantage and the erosion of the
wage gap. Brainfacturing will transform manufacturing and even the service
sector. It will probably help stimulate the economy and the economy’s competitive
edge more than job growth because it will add few if any net jobs to the
factory floor. Those with professional training, strong STEM (science,
technology, engineering, and mathematics) skills, and postsecondary degrees
will benefit but, even as automation will require more trained operators, it
may hurt rather than help workers without advanced training. It will, however,
create jobs for salesmen, managers, and others.

Only if new innovations in materials and production processes
continuously add greater value again at home will the new manufacturers stay
ahead of the competition that inevitably will follow. With game-changers
providing a tailwind, American manufacturers have another big chance to be at
the competitive edge again — but not a guarantee of success. We are still
underestimating how shale gas, robots, demographics, scientific breakthroughs,
and knowledge-economy barriers are dramatically transforming who is ahead and
who is behind. Rather than being defeatist, we should have a strong sense of
optimism and confidence in American manufacturing. Increasingly, it will sink
into the national psyche that the glass is not half-empty but half-full. Made in America is back in America.

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