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FIGURE 2-1 Total employment in U.S. manufacturing by size of firm, 2011.
SOURCE: U.S. Census: Longitudinal Business Database.

Over the past 10 years, the productivity gap between small and large manufacturers3 has been expanding. During that period, large firm productivity grew by about 300 percent (see Figure 2-2), while that of SME manufacturers has grown by 200 percent. Moreover, as large firms started from a much higher productivity baseline in 1997, the absolute gap had widened sharply and was by 2007 about $250,000 per employee.

Over the long run, as NIST MEP points out in Figure 2-2, this growing gap means that SMEs will certainly face increasing competitive pressures.4 Other changes have occurred as well. The globalization of the world economy means that even small manufacturers have the need to become more agile and better marketers as they seek a niche in lengthening supply chains. The impacts of globalization have in part driven MEP's new strategic thrust, discussed in Chapter 6, which focuses on helping companies innovate and grow rather than just cut costs (see below).

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3In most industries, small businesses are defined by the Small Business Administration as those with fewer than 500 total employees.
<http://www.sba.gov/content/what-sbas-definition-small-business-concern>. Accessed July 27, 2012.

4For a discussion of this divergence in manufacturing productivity, see Susan Helper, “The High Road for U.S. Manufacturing, Issues in Science and Technology, Winter 2009. She notes that higher productivity is associated with higher worker training, use of information technologies, and greater integration into high-value supply chains.



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