Samuel W. Bodman

Deputy Secretary, Department of Commerce

These are momentous times here in Washington and around the world. We are a nation awakened to danger and acutely aware of risk. We are a nation at war. Like many of you, I spent my weekend glued to the television. The images that we are seeing serve as constant reminders of the courage and sacrifice of the men and women who are defending our nation’s most precious and steadfast ideals: freedom, equality, and hope. In these uncertain days, we can all be certain of the resolve and resiliency of the American people, the great skill and bravery of the fine men and women of our military, and the strong and courageous leadership of their commander in chief. I have seen President Bush in action and I can tell you that we are most fortunate to have him at the helm. He is a decisive leader totally dedicated to protecting the American people. As our armed forces confront this great threat to peace and freedom in Iraq, we all must push forward with our work here at home. And so we are here today to discuss a topic that is of significance to all Americans—to our economy, to our health, to our security, and to our way of life—the U.S. manufacturing sector. It’s a topic of great importance to me, to Secretary Evans, and to President Bush.

The secretary and I look forward to getting a full report on this event and to reviewing the Academies’ analysis. I trust that this forum will provide valuable insights into the major trends that will influence manufacturing in the coming decades, with the goal being to highlight future opportunities as well as challenges. I understand that over the course of the next 2 days you will discuss, among other issues, the economic significance of manufacturing to both rural and urban America, as well as some of the major drivers that affect manufacturers, like labor costs and training, globalization, and technological advances. You also will examine the policy and regulatory structures that our nation’s manufacturers confront.

I know that you’ll be hearing from a host of experts on this wide array of topics, and I appreciate this opportunity to offer my two cents. Let me start off by restating the obvious: The U.S. manufacturing industries are vitally important to our economy and to our nation. The manufacturing sector directly employs more than 18 million people in this country. Manufacturing drives economic growth and prosperity. Over the past 50 years, large productivity increases in the manufacturing sector have powered this country’s economic boom. In the last decade alone we have seen enormous productivity gains from the manufacturing sector. For example, in durable goods—the heart of technology-intensive manufacturing—productivity surged 39 percent from 1994 to 2001, more than twice the 16 percent growth of the economy overall. Our prosperity and future growth are tied to the performance of the nation’s more than 300,000 manufacturing businesses. While we often focus on the impressive economic statistics, manufacturing is more than just an engine for growth. It is about research and innovation, higher incomes, and quality-of-life improvements for all Americans.

Our nation’s manufacturing industries account for about two-thirds of private research and development expenditures. Even during the industrial downturn of the last 2 years,