Manufacturing’s Bang for the Buck

You’ve all heard me say (ad nauseum) that at Applied Process we get paid to Austemper people’s parts, but what we really do is help customers convert from one material/process combination to a better, faster, cheaper one.  In the larger sense, however, we are simply one step in the manufacturing process.  Manufacturing takes materials from the earth and, step by step, synthesizes them into goods that we use.  Manufacturing creates wealth.

Applied Process is a proud member of the National Association of Manufacturers ( ).  NAM’s primary function is to represent the manufacturing community’s interests.  That includes keeping track of US manufacturing and telling our story.  In a recent edition of NAM’s publication “Member Focus” NAM’s Chief Economist, Chad Moutray, painted a very interesting picture of the state of US manufacturing’s tremendous impact on the US Gross Domestic Product (GDP).  In 2010 the value added by manufacturing equaled $1.7 TRILLION (about 13% of the total GDP).  Manufacturing supports 17 million jobs in the US with 11.7 million being employed directly in manufacturing.  And in the recovery since the Great Recession US manufacturing has added well over 500,000 new jobs.

Manufacturing, Agriculture and Mining/energy have carried the country out of a deep recession.  The US Commerce Department, finally awake to the importance of manufacturing to US growth, had its Bureau of Economic Analysis compete a study on the multiplier effect of various jobs within the economy.  Lo and behold, they found that “a flourishing manufacturing sector in the United States is crucial to our future competitive strength”.  No kidding?  The data show that the manufacturing sector had the largest multiplier effect of any economic sector.  In other words, for every dollar of GDP created DIRECTLY by a given sector, how much additional INDIRECT GDP activity is generated.  The chart below shows the results…….and it ain’t even close.  For every dollar of manufacturing GDP an additional $1.35 of GDP is created indirectly.

Now I’m no economist, but even I can see why “all of a sudden” the folks in Washington D.C. are taking an interest in the state of US manufacturing.  Manufacturers create wealth.  And US manufacturers and their direct (and indirect) employees pay taxes.  I’m glad the politicians are finally awake.  Maybe they just want our vote this fall and then they’ll forget about us again until the next election.  But maybe this election will show that we can’t be so easily forgotten.

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