American manufacturing is on the rise. According to the latest figures from the U.S. Department of Labor, the nation’s factories added 50,000 jobs in January—their strongest showing in a year—on top of 32,000 jobs in December 2011. Overall, employers added 243,000 jobs in January, the most in nine months. Manufacturing was the second-biggest gainer, behind professional and business services.
Employment numbers aren’t the only indication that manufacturing activity is picking up. According to the Institute for Supply Management, growth in new factory orders rose to a nine-month high in January. In addition, vehicle sales in January rose to a seasonally adjusted annual rate of 14.2 million, the fastest pace in several years.
However, U.S. manufacturers are not out of the woods yet. Although the sector added 404,000 jobs from January 2010 to January 2012, it’s still down 3 million jobs from January 2003. And, the 11.8 million manufacturing jobs tabulated in January 2012 is still a fraction of the peak level of 19.5 million in 1979. Other data provide further cause for concern. From March 2006 to March 2010, business startups are down 24%. In 1960, the U.S. accounted for more than two-thirds of global R&D. Today, two-thirds of global R&D is performed outside of the U.S.
A recent study by Booz & Co. grouped U.S. manufacturing sectors into four categories based on levels of global competitiveness. The study found that nearly half of the current U.S. manufacturing base is at risk. Conversely, the study suggests that American factories still competitively produce about 75% of the goods sold in the U.S. and roughly 20% of goods sold globally.
Keeping the U.S. manufacturing sector on the upswing will require the coordinated action of business, labor, academia and government. Such a plan was published in December 2011 by the Council on Competitiveness. Based in Washington, D.C., the council is a nonprofit, nonpartisan organization dedicated to elevating U.S. productivity and leadership in world markets, and raising the standard of living for all Americans. The council’s report, “Make: An American Manufacturing Movement,” provides dozens of specific recommendations for addressing the five key challenges facing U.S. manufacturers: