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  September 22nd, 2015 | Written by

ITIF Report: All is Not Well with U.S. Manufacturing

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  • ITIF: U.S. manufacturing needs “supportive manufacturing policies” from the federal government.
  • ITIF: Congressional Research Service “mistakenly suggests that U.S. manufacturing is healthy.”
  • ITIF president: We need to take an honest look in the mirror. The state of U.S. manufacturing is not pretty.

According to a Washington, D.C.-based industry think tank, the U.S. manufacturing sector “is in trouble and needs help more than ever,” namely “supportive manufacturing policies” from the federal government.

Over the last 15 years, “the U.S. manufacturing sector has declined significantly compared to those of competitor nations,” said the Information Technology and Innovation Foundation (ITIF).

“In the face of this decline,” it charged, “congressional action is needed more than ever to reduce the effective corporate tax rate; to boost investment incentives, including for R&D; to better enforce trade rules globally; and to support manufacturing innovation and workforce development.”

The ITIF analysis was published in response to a recent Congressional Research Service (CRS) report – U.S. Manufacturing in International Perspective – that was compiled in response to a congressional request to better ascertain the condition of the sector and the need for policies and programs to support American manufacturing.

The CRS study, charges the ITIF, contains “significant flaws” and “mistakenly suggests that U.S. manufacturing is healthy while dismissing the need for supportive manufacturing policies.

Manufacturing employment, it said, “has decreased at rates that cannot be explained by productivity gains, real value-added output has been stagnant, and the foreign direct investment and R&D statistics cited by the CRS are both inflated and poor indicators of manufacturing success.”

The CRS estimate of a 12 percent manufacturing employment decline between 2003 and 2013 “used unofficial data and a poorly selected timeframe” as statistics from the Bureau of Economic Analysis, by contrast, “showed a decline of more than 30 percent between 2000 and 2013,” the non-partisan think tank said.

In addition, ITIF analysts said a series of positive indicators cited by CRS — research and development, foreign direct investment and domestic manufacturing inputs — were “misrepresented or overstated.”

The CRS report, it charged, “consistently errs on the side of ‘all is well’ when in fact actual U.S. manufacturing performance is declining significantly. It denies that American manufacturing is in trouble, and that congressional action is capable of helping it. Thus, CRS endorses an agenda of inaction.”

“We need to take an honest look in the mirror,” said ITIF President Robert Atkinson. “Right now, the state of U.S. manufacturing is not a pretty picture.”