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June 17, 2003

Studies reaffirm the economic importance of manufacturing

A new national study of manufacturing shows that this sector ir the key factor in the nation's continuing growth and prosperity. The finding echoes a similar study of manufacturing in New York released by The Public Policy Institute in September 2002.

"Manufacturing's innovation process is the key to past, present, and future prosperity and higher living standards. This process not only generates new products and processes, but also leads to well-paying jobs, increased productivity, and competitive pricing," said Joel Popkin author of Seeing America's Future: The Case for a Strong Manufacturing Base.

The study, commissioned by the Council of Manufacturing Associations (CMA), was released June 10. CMA is affiliated with the National Association of Manufacturers (NAM).

Despite cuts in manufacturing employment over recent decades, manufacturing is still one of the biggest employers in the U.S. and is facing a potential shortfall of qualified employees, according to the new CMA study.

The study also found that:

The study warned that the manufacturing industry is in a precarious position due to loss of jobs, export potential, investments, and dramatically rising costs.

"If the U.S. manufacturing base continues to shrink at its present rate and the critical mass is lost, the manufacturing innovation process will shift to other global centers," the study warned.

"Once that happens, a decline in U.S. based living standards in the future is virtually assured."

The Business Council has long argued that New York's manufacturing sector is critical to its economy, and that debate over state policies should consider how policy changes will affect manufacturing.

A September 2002 report by The Public Policy Institute, The Business Council's research affiliate, showed manufacturing remains an essential foundation of New York's economy, especially upstate, where half of all jobs depend on manufacturing.

The report, The Key to the Upstate Economy? Manufacturing - Still, showed that new government policies to enhance competitiveness of traditional and high-tech manufacturers would make New York more prosperous.

"Manufacturers directly employed 805,200 New Yorkers as of June 2002 -- more than 11 percent of all private-sector jobs in the state," the report noted. "Upstate, manufacturing jobs were 17 percent of all private-sector jobs, or one of every six. That's more than the nation as a whole, in which 15.2 percent of non-government jobs are in manufacturing."

On June 16, a report from the Federal Reserve Bank in Buffalo showed that New York State's "factory index" for June rose to 26.80, its highest level ever. It had been 10.60 in May. Readings above zero indicate that most manufacturers reported improved business.