Our country remains to be the world’s largest manufacturer, representing one fifth or 20% of the global manufacturing output. In 2009 our manufacturing output was $2.15 Trillion. Yes enough to make it the 6th largest economy in the world on a standalone basis. The next largest was China at about $1.5 trillion. The U.S. is bigger than the U.K., Germany, Japan and Italy combined. It’s big!
The next staggering number is the output or productivity of the U.S. manufacturing worker. It has tripled since 1972 and was at $180,000 in 2009. We have the most productive manufacturing workers in the world!
So what’s the problem if we are the biggest and the most productive?
1 – Well we still feel like we have lost something because the total number of U.S. manufacturing jobs has declined by about 7 million since the peak in the late 1970’s. While total output has grown almost every year since that time.
2 – And our reliance on the Pentagon to spend and spend more has become increasingly critical to our manufacturing growth and total output.
The Pentagon spent about $768 Billion on military defense in 2011. That doesn’t include the $200 Billion on Veterans and military aid. Of the $768 spent on defense I can find at least $200 Billion spent on procurement and research/testing. That means a minimum of 10% of our manufacturing in the U.S. is derived from our own Pentagon.
With the combined need to have to a balanced federal budget and the ever-increasing productivity of workers, we do face challenges in our manufacturing sector. However, “all of the jobs” have not actually gone over seas. In the early 1970’s U.S. factories accounted for about 25% of the total world output while today we are still just above 20%. We are still a big player, in fact the biggest.
So how does Maine take this knowledge and information and turn it into opportunity for itself.
First – don’t build up an increased reliance on defense spending unless your customers are other countries and even then be cautious.
Second – Let the past be the past. Certainly a small chunk of the 7 million jobs lost have come from Maine’s paper and shoe industries but that is the past.
Third – Focus on the technologies being created right here at the University of Maine in technology centers like: The Maine Process Development Center, The Laboratory for Surface Science and Technology, The Advanced Structures and Composites Center and the Advanced Manufacturing Center. We have a great deal of opportunity to develop manufacturing jobs here in Maine simply by commercializing some of this technology.
Fourth – Continue to bring private equity to Maine as we have done with the Blackstone Group. Matching dollars with the technologies we are developing is critical.
Fifth – Last but not final, remember that through training and development we can compete with anyone in the world. Cheap labor can’t steal jobs when the jobs require skills and intellectual capital that cheap labor lacks. We must focus on training and education to support the ‘Technology Corridor’ we have sitting on our doorstep.
Maine can succeed. It can move away from Welfare. It can become a younger state and leave the position as the ‘oldest’ state in the U.S. Yes we have more people over 65 as a percentage of our total population than any other state. We can turn the trends of our recent decades.
We must avoid any tax increases. Support investment and incentives requested by young ventures. Focus on type and quality of education and not volume. With these simple variables being managed I do believe the overall equation can be changed to deliver a positive outcome.
And don’t be afraid to stand firm on a balanced budget for our Federal Government. Our debt poses the single largest threat to our future solvency and security. See this recent BDN article for insight to the Defense spending world: http://bangordailynews.com/2012/02/06/business/defense-cuts-test-lawmakers-resolve-on-deficits/