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US manufacturing is key to competitiveness

US global competitiveness is slipping. But there is some good news: US manufacturing is in the midst of a revival. Preparing a skilled workforce for the manufacturing sector should be one of the Obama administration’s top economic priorities. This can boost competitiveness.

By Suzanne Rosselet / February 8, 2013

Chris Book performs maintenance work in the cargo hold of a Boeing 737 at the AAR Corp. in Indianapolis, June 13, 2012. Mr. Book, laid off from a Wal-Mart store in Indianapolis in 2008, was accepted into the first class of a sheet metal apprentice program at AAR. AAR officials say they created the program because public schools and two-year colleges aren’t producing enough qualified workers to fill available skilled jobs.

Michael Conroy/AP/file

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Lausanne, Switzerland

US competitiveness in the global economy is slipping. According to the IMD World Competitiveness Yearbook, the United States fell from its number one slot, mainly due to a dramatic slide in its Government Efficiency ranking, where it has fallen from 5th place in 2002 to 22nd today. And the World Economic Forum’s Global Competitiveness Report puts the US in 7th place, down from 1st in 2007.

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If this isn’t worrying enough, 71 percent of more than 10,000 Harvard Business School alumni surveyed expect US competitiveness to decline over the next three years. In the World Bank’s Doing Business Report, the US ranks 4th in terms of the ease of doing business, including a dismal 69th place for the ease of paying taxes. And the Information Technology and Innovation Foundation puts the US second-to-last on the rate of progress on innovation-based competitiveness since 2000, ahead of only Italy.

But there is some good news: US manufacturing. Until recently, the industry had been in steady decline, but many signs now indicate that America is now in the midst of a historic manufacturing revival. But manufacturers are also facing a skills-gap, as workers are unprepared for the demands of this growing industry. Preparing tomorrow’s skilled workforce should be one of the Obama administration’s top economic priorities. Developing a long-term plan to train workers for new manufacturing jobs is vital to boosting US competitiveness.

There are several reasons for the growth in US manufacturing, but one of the main explanations is that outsourcing to low-cost countries is no longer as tempting as it once was. With labor and transportation costs rising in many of these countries, American companies are bringing work back to the US and foreign companies are more attracted to a cost-competitive US base as well. In addition, a natural gas boon will help make US energy costs some of the lowest in the world. Add to that the benefits of higher quality manufactured goods and state-of-the-art innovation capabilities, and the US has a fair chance of regaining its historical leadership in advanced manufacturing.

A recent study by the Boston Consulting Group claims that the US is indeed on course to regain its status as a global industrial powerhouse, suggesting that the manufacturing resurgence combined with boosting US exports could create between 2.5 million and 5 million jobs by the end of the decade. But meeting the challenges of this “manufacturing revival,” means closing the skills gap through more, and better-targeted, investment in education and training.

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