Manufacturing Is Key to Innovation as Well as Jobs

Suddenly, it seems that manufacturing is again in the news. Or, more precisely, manufacturing and jobs are.

“How the U.S. Lost out on iPhone Work,” a recent feature in the New York Times, presents a rather compelling look at why Apple, and specifically Steve Jobs, turned to China and Foxconn City with its 230,000 workers to make the iPhone. And, of course, the link between manufacturing and job creation figured heavily into President Obama’s State of the Union speech on Tuesday night and his strategy for a continued economic recovery.

All that is important. But it is important to not view manufacturing only through the lens of jobs. In fact, the manufacturing sector represents only 9 percent of total employment in the United States and that, according to many experts, is unlikely to change much even with a resurgence in manufacturing. The kind of manufacturing the United States excels at (it remains one of the world’s leading manufacturers, just slightly behind China, in terms of output) tends be the low-labor production of advanced technologies. But manufacturing is critical to the health of the U.S. economy for reasons other than just job creation. Recent academic research and much anecdotal evidence suggest that having a robust manufacturing sector is critical in the development of next-generation technologies.

In a recent cover story for Technology Review called “Can We Build Tomorrow’s Breakthroughs?” I visited a number of startup companies and factories in the United States to explore the connection between innovation and manufacturing.  What I found is that startup companies developing advanced technologies in areas such as batteries and solar power need to be closely connected, both physically and logistically, with existing manufacturing. Your chances of developing a new type of battery are far greater if you can leverage the experiences and expertise—and financial resources—of established battery manufacturers.

The greatest threat of a diminished manufacturing sector in the United States could, in fact, be the danger that it poses to our ability to innovate. The country has many strong competitors in the manufacturing realm, but the United States is still, by most measures, the world’s leader in innovation. If it loses that lead, it will truly be in dire economic straits.