High-tech manufacturing has captured a lot of attention since President Obama pledged $140 million in federal funding to build two new high-tech manufacturing hubs in Detroit and Chicago last week. Two similar hubs were created in Ohio and North Carolina last year, and the White House has plans to launch four more high-tech manufacturing hubs this year. However, many people are still wondering what all the hype is about and what economic impact the new hubs will have on the US economy.
The manufacturing industry has added roughly half a million jobs nationwide since 2010. However, this number is still about two million less than the number of new manufacturing jobs added in 2007. Many factors, including reshoring and the rising cost of manufacturing in China, have contributed to the increase in jobs, but still, it’s not quite the manufacturing boom that economists predicted last year. As a whole, the industry has managed to slowly and steadily rebuild, and the goal for the new high-tech manufacturing hubs is to help the manufacturing industry continue to improve and give it more stability in the long term.
Many economists and politicians believe that high-tech manufacturing is what has kept Japan and Germany’s manufacturing industries stable during rough economic times. Combining smaller niche manufacturing operations with large-scale operations makes the industry more diverse and challenges the strengths of economies dependent on large-scale manufacturing. However, the effect high-tech manufacturing will have on overall manufacturing employment is still unclear.
Since the White House implemented high-tech manufacturing hubs in Ohio and North Carolina, the US has seen an increase in the number of new jobs, but the type of those new jobs is drastically different than those added throughout the 1990s. Mark Muro, a senior fellow at the Brookings Institution, stated that the US lacks a competitive advantage in areas where cost is the main driver, such as low-end mass-produced items, but he has noticed that manufacturers are thriving in more advanced industries. High-tech manufacturing relies heavily on research and development, creating multiple opportunities for those with science, engineering, and technology backgrounds.
According to Muro, it’s the advanced industries that have the best shot of surviving, and any manufacturing that isn’t innovative is in danger. Obama’s high-tech manufacturing initiatives target goals that include LED integration throughout the auto industry and developments in other areas where new innovations will help improve products in mass production. Detroit’s new high-tech manufacturing hub will focus on products, such as lightweight metals, that can be used in the energy, auto, and defense industries; Chicago’s hub will focus on digital manufacturing and design innovation.
The economic impact that high-tech manufacturing will have on the US has yet to be seen. However, one thing is for sure: the manufacturing industry is evolving, and those reliant on the past are sure to be left behind.
(Photo courtesy of freedigitalphotos.net)
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