News Watch

While manufacturing has been the engine for healthy economic growth and good jobs, intense global competition and the rising cost of doing business in the United States threaten manufacturing's capacity to maintain the nation's economic strength and standard of living, according to a new study by economist Joel Popkin.

"Manufacturing spawns more economic activity and related jobs than does any other economic sector," says Popkin, president of Joel Popkin and Co.

The study, Securing America's Future: The Case for a Strong Manufacturing Base, which was commissioned by the Council of Manufacturing Associations (CMA), contends that manufacturing is "the heart of an innovative process that powers the U.S. economy to global leadership. America's unprecedented wealth and world economic leadership are made possible by a critical mass of manufacturing within the geographic confines of the American common market."

"Popkin shows how the unique linkages of manufacturing to the rest of the economy create more innovation, productivity and good jobs than any other sector of the economy," says Jerry Jasinowski, president of the National Association of Manufacturers. "Popkin attributes America's high standard of living to the manufacturing innovation process. Research and development stimulates investment in capital equipment and in workers, leads to new processes and products, and ultimately leads to higher living standards."

Industry in America, Jasinowski says, is being squeezed between unprecedented foreign competition based on predatory trade practices that make it impossible to raise prices, and rising health-care costs, soaring litigation and excessive regulation. The result is a dramatic decline in cash flow that forces firms to cut back on R&D and capital investment, and to reduce employment.

"If the U.S. manufacturing base continues to shrink at the present rate and the critical mass is lost," Popkins' study concludes, "the manufacturing innovation process will shift to other global centers. If this happens, a decline in U.S. living standards in the future is virtually assured."