Economic Sectors - Manufacturing, Naics 31–33

An organization is considered part of the manufacturing sector if its primary business is to transform raw materials into new products through mechanical, physical, or chemical processes. Manufacturing covers many separate industries, including aerospace, apparel, computers, automobiles, pharmaceuticals, printing, steel, and textiles, among others, and provides products that contribute and support all other economic sectors. According to Manufacturing in America (Washington, D.C.: U.S. Department of Commerce, January 2004), the manufacturing sector accounts for 14% of the GDP and provides employment to 11% of American workers. In 2004 the manufacturing industry produced three-fourths of all exports from the United States. Figure 2.1 shows the contribution of manufacturing to the growth of U.S. private-sector output since 1987. (The term "total real private output" in Figure 2.1 signifies the output of private industry, which is figured as the GDP minus the government sector). According to the National Association of Manufacturers in "Keeping America Competitive: How a Talent Shortage Threatens U.S. Manufacturing" (2003), "Every $1 million in manufacturing sales supports eight jobs in manufacturing and six in other, allied sectors."

According to the Department of Commerce in Manufacturing in America, employment in manufacturing has declined significantly since the late 1970s, when manufacturing employment accounted for 22% of nonfarm jobs. The report explained that many of the lost jobs resulted from productivity gains in manufacturing that "outstripped the growth in demand for manufactured goods." A view of the decline in manufacturing employment since 1994 is shown in Figure 2.2. During the late 1990s the annual average for manufacturing employment was about seventeen million workers, a number that dropped sharply to 14,525,000 by 2003, according to the BLS in Current Employment Statistics. In 2002 alone, 469,774 manufacturing workers filed new claims for unemployment insurance, and the outlook for manufacturing employment was not optimistic. A further 1% reduction of the manufacturing workforce is expected by the BLS during the period between 2002 and 2012. This downward trend runs counter to a projected increase over all in U.S. employment of more than 14%.

During 2003, however, the average hourly earnings of production workers in manufacturing were slightly higher ($15.74) than the average for other nonsupervisory production workers in private industry, whose average wages in 2003 were $15.35 per hour. (See Figure 2.3.) In addition, according to Manufacturing in America, workers in the manufacturing sector enjoyed higher benefits compensation ($8.89 per hour) compared with nonmanufacturing employees ($5.94).

Manufacturing Technology

Technological innovation has long been a hallmark of the U.S. manufacturing sector and continues to affect productivity and efficiency. The U.S. Department of Commerce

FIGURE 2.1

reported in Manufacturing in America that American manufacturing's contribution to the economy is greatly responsible for the high standard of living enjoyed by most Americans compared with other countries. The report further explained that U.S. manufacturers lead the world in innovation and technology. More than 90% of all U.S. patents registered each year are from the manufacturing sector, indicating its emphasis on creating and profiting from new technology. By investing in technological advances, manufacturing firms are ensuring more jobs and launching new industries as they bring products and technologies to market.