After losing the top spot to China in 2010, the United States remains the No. 2 country in the world in manufacturing output, with a 16.6% share of global manufacturing output compared to China’s 28.4% as of 2018, according to Statista.
Total output from manufacturing was $2.3bn in 2018, according to the National Association of Manufacturers. The manufacturing sector employed about 12m workers, equivalent to 8.5% of the U.S. workforce. These workers earned an average annual salary of $88,406.
Despite dropping out of first place, U.S. exports continue to grow. From 1990 to 2018, U.S. exports of U.S. manufactured goods of quadrupled from $329.5bn in 1990 to about $1.4tn in 2018, according to NAM.
Exports have grown substantially to the United States’ largest trading partners, the North American market. Canada and Medico purchased $483bn in manufactured goods from the U.S. in 2019, more than the next 10 largest trading partners combined. Meantime, manufactured exports to China nearly tripled from $31.9bn in 2005 to $87.5bn in 2019, according to the U.S. Commerce Department.
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Not surprisingly, the pandemic has negatively impacted productivity. Manufacturing labor productivity decreased 15.5% in the second quarter of 2020, the largest decrease since recording began in 1987, according to the U.S. Bureau of Labor Statistics (BLS).
The BLS projects that manufacturing could experience the largest job loss between 2014 and 2024 of any sector in the economy. The projected loss of 814,100 manufacturing jobs would reduce manufacturing employment to 11.4m in 2024. While the loss is large, it’s less than 40% of the 2.1m manufacturing jobs lost between 2004 and 2014.
Overall, the U.S. economy is becoming less reliant on manufacturing. In 2018 manufacturing accounted for 11% of GDP, the smallest share since 1947, according to the U.S. Commerce Department.
Output growth in U.S. manufacturing has been concentrated in just a few industries, including pharmaceuticals, electronics and aerospace, according to a report by McKinsey Global Institute.
The majority of manufacturing firms in the United States are small. Of the 248,039 manufacturing firms in the United States, 98.4% are considered to be small, having fewer than 500 employees. Three-quarters of the small firms have fewer than 20 employees, according to the U.S. Census Bureau.
These small and mid-size firms have suffered while the largest manufacturers have managed grow despite challenges, according to McKinsey.
The United States ranks third worldwide in its manufacturing environment, according to a 100-point scale developed by the Brookings Institution. Factors used in the rankings included pro-business environment, risk index, corruption, open trade policies, tax policies, workforce quality, costs such as fuel and health care, infrastructure, innovation and hazard exposure. The United States scored 77 points out of 100, just behind the U.K. and Switzerland with 78 points each.
U.S. manufacturers perform nearly 62% of the nation’s private sector research and development.
For every $1 spent in manufacturing, another $2.74 is added to the U.S. economy.
Taken alone, manufacturing in the United States would be the eighth-largest economy in the world, according to the International Monetary Fund.
Looking ahead, the United States has an opportunity to boost annual manufacturing value added by $530bn, 20%, over current trends by 2025 by better positioning its manufacturing sector to compete, according to McKinsey.
