THE BLOG
03/04/2011 09:04 am ET | Updated May 25, 2011

Manufacturing Leads the Recovery

There is a popular myth that the U.S. has abandoned its reliance on manufacturing as we pass into some sort of post-industrial economy built upon services. In reality, U.S. manufacturing remains the largest and the most innovative in the world, and is today reasserting itself as a pace- setter for the rest of the economy. In fact, the Institute for Supply Management's factory index increased to 61.4 percent in February from 60.8 in January. Anything over 50 means manufacturing is growing. Over 60 means it is growing big time.

And today's unemployment report suggests that manufacturing is at long last turning the corner on job creation. The overall unemployment rate fell to 8.9 in January, still too high but moving in the right direction. Best of all, we added 192,000 jobs in the private sector, and 33,000 of them were in manufacturing.

That is not to suggest that manufacturing will become the job creation machine that it used to be. Most low skill manufacturing jobs have gone away and are not coming back. In fact, one of the major complaints of U.S. manufacturers today is that they cannot find job applicants who are qualified to work in modern, high tech manufacturing. We have a very real skills gap that is going to hinder employment in manufacturing for some time to come.

Even so, the news from the factory floor is positive. Some of the rebound is cyclical, but there is more to it than that, a lot more. The reality is that U.S. manufacturing has gone through a painful restructuring in response to unprecedented global competition and the prolonged recession. U.S. manufacturing companies today are running more productively, have cleaned up their balance sheets, and are now making record profits. They are sitting on cash amounting to more than 7 percent of corporate assets and are spending on rebuilding factories, technology and innovation, growing exports and major acquisitions.

Today, U.S. manufacturers can compete with anyone in the world in both quality and price. The corporate landscape abounds with lean, profitable firms on the cutting edge of technology that are among the best in the world - Apple, Caterpillar, Danaher, Proctor & Gamble, Intel, Boeing, Cisco Systems, 3M, United Technologies, the list goes on and on. These are our nation's most influential economic champions, and they are more than holding their own in the international marketplace.

Our government can support the manufacturing surge by reducing the excessive costs borne by U.S. manufacturers and paving the way for more exports. Now is the time to recognize that manufacturing is driving the recovery and can provide the spark for future growth and job creation. May the manufacturing surge continue!

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute.