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Can American manufacturing really be cornerstone of economic revival?

For decades, the US manufacturing sector has shriveled, but President Obama now envisions it as an engine of a revived US economy. The basis of his optimism may be hopes for 'advanced' manufacturing.

By Ron SchererStaff writer / February 8, 2012

Students practice the process of making silicon wafers at the Semiconductor Manufacturing Technology lab at the Hudson Valley Community College’s TEC SMART campus in Malta, N.Y.

Alfredo Sosa/Staff

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Malta, N.Y.

In this small upstate community, a company called GlobalFoundries is ramping up to produce silicon chips for IBM and other customers.

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The new plant, which is about the size of six football fields, has hired 1,100 workers in the past two years and plans on adding another 300 this year. Construction workers are still bustling around the $4 billion facility, which has expanded before it's even shipped a silicon wafer – and will eventually be a $7 billion operation.

The company is attracting the attention of high-tech companies around the globe. And because the company is more dependent on PhDs than on manual labor, it is an example of where the United States has an advantage over places such as China, where labor costs are so low.

The optimism surrounding the plant is emblematic of a change that is taking place from Charleston, S.C., to Detroit: America's manufacturing sector – particularly what is termed "advanced" manufacturing such as that at GlobalFoundries – is starting to come alive.

President Obama has made support of US manufacturing an important part of his plan to further an economic rebound. He promoted the sector in his State of the Union message in late January.

True, some commentators continue to question whether American manufacturing can compete in the global economy, especially when so many US jobs have moved offshore. But some policymakers see progress.

"We are the most competitive in manufacturing that we have been for the past two or three decades," said Gene Sperling, director of the National Economic Council, in a session with reporters last month.

A rebound in manufacturing has important ramifications for the US economy. Sixty percent of exports relates to manufacturing, 90 percent of patents, and 70 percent of private-sector research and development. Moreover, as can be seen around Malta, N.Y., the opening of a large manufacturing plant has a big ripple effect in a community: Builders erect new housing, more restaurants open, and more tax dollars come in that can be spent on providing services.

"We do believe manufacturing punches above its weight economically," said Mr. Sperling.

The actual number of new jobs in manufacturing is relatively modest, in part because US productivity is so high. Last year, according to the Bureau of Labor Statistics, the economy added about 330,000 manufacturing-based jobs. By way of contrast, some 2.3 million manufacturing jobs were lost in the recession, which officially ended in June 2009.

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