Ask Bill Clinton: How Important Is Manufacturing to U.S. Job Growth?
Paul Jacobs, chairman and CEO, Qualcomm
“Advanced manufacturing doesn’t really generate a lot of operating jobs, and the jobs it does create are highly skilled. Manufacturing that requires a lot of lower skilled labor will likely continue to be located outside of North America. So how important, finally, is manufacturing to U.S. job growth?”
Manufacturing remains critical to our ability to build a balanced economy with good jobs. It accounts for over 80 percent of our exports and 90 percent of our patents and R&D spending according to the U.S. International Trade Commission and the Department of Commerce. As such, it’s a jobs multiplier: Every new manufacturing job creates an additional 4.6 jobs to support it. For high-tech manufacturing jobs, the multiplier effect rises to 16 additional jobs. Because of increased productivity, the cost of labor is becoming a less significant factor in siting decisions, while the costs of energy, materials, and transportation increasingly matter more. That bodes well for the U.S., where our workforce is huge, energy is plentiful and cheap, and labor costs are not that high compared with Germany and other countries with strong manufacturing sectors.
We do have continuing challenges. They include training our workforce to meet the needs of a 21st century manufacturing sector; developing and delivering new manufactured products to domestic and global markets; and maintaining and improving our innovation culture. To develop highly specialized products in industries like aerospace, renewable energy, and nanotechnology, our manufacturing sector needs workers with significant training and specialized skills.
Yet today just 7.1 percent of all bachelor’s degrees awarded in the U.S. go to engineering majors, compared with 18.4 percent internationally. Countries like Germany, Japan, South Korea, China, and Taiwan invest in engineering education at many levels. They build workforce pipelines from apprenticeships to university programs. That helps their governments and private-sector companies apply scientific breakthroughs and rapidly move products from concept to production. A robust manufacturing workforce gives economies a competitive advantage. When we fail to keep pace, we risk losing that advantage.
The U.S. also needs to finance and support entrepreneurs to deliver new products in key sectors. That will require networks of investors, entrepreneurs, designers, manufacturers, scientists, and government agencies. This year the new nonprofit Made in America Organization, together with seed support from the Stiefel Family Foundation, made a Clinton Global Initiative (CGI) Commitment to Action to launch a pilot program to identify, support, and scale 10 companies in advanced manufacturing industries. (Commitments to Action are unique to CGI; every member commits to a plan for addressing a significant global challenge.) The four-stage process of the Made in America program is scalable, replicable, and most important, sustainable.
Our nation’s 300,000 small and medium-size manufacturers, meanwhile, account for more than 50 percent of America’s total manufacturing employment and serve as a major source of technological innovations. U.S. research labs have the physical and intellectual assets to help smaller companies build a larger manufacturing sector. Lowering the barriers for small and medium-size companies to innovate is something I know you’ve made a personal priority through the institute you are launching with U.C. Berkeley. The Jacobs Institute will greatly expand the role of design in engineering education at all levels and empower young engineers to design innovative solutions to society’s biggest challenges.