1
Why Manufacturing Matters

Overview

A nation that does not produce well may not, in the long run, lose jobs for its citizens, but its citizens will most likely find that the quality of their jobs and their standard of living will deteriorate in comparison to nations that do produce well. Manufacturing matters, because it is a significant component of economy of the United States: nineteen percent of the U.S. gross domestic product is production of durable and nondurable goods;1 approximately 65 percent of total U.S. exports are manufactured goods; the manufacturing sector accounts for 95 percent of industrial research and development (R&D) spending and more than two-thirds of total R&D activity (Jasinowski, 1992); and manufacturing in 1992 provided roughly 17 percent of total nonfarm payroll employment (Manufacturing Subcouncil, 1993).

U.S. companies must be able to manufacture products of superior quality at competitive prices. Key to the quality of any product is an understanding of the manufacturing process by which it is produced. Many different studies undertaken in recent years to define the most important areas of future industrial research have placed process understanding at or near the top of the list. For instance, the report by the National Research Council, Materials Science and Engineering in the 1990s: Maintaining Competitiveness in the Age of Materials, highlights materials synthesis and processing as an important area of expanded emphasis over the next decade (NRC, 1989). Indeed, every nation's success as a global manufacturer requires the development and use of manufacturing

1  

At the end of the third quarter in 1990, manufacturing accounted for 18.9 percent of the gross domestic product in constant 1977 dollars, with 10 percent in durable goods and 8.9 percent in nondurable goods (DoC, 1993).



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 15
--> 1 Why Manufacturing Matters Overview A nation that does not produce well may not, in the long run, lose jobs for its citizens, but its citizens will most likely find that the quality of their jobs and their standard of living will deteriorate in comparison to nations that do produce well. Manufacturing matters, because it is a significant component of economy of the United States: nineteen percent of the U.S. gross domestic product is production of durable and nondurable goods;1 approximately 65 percent of total U.S. exports are manufactured goods; the manufacturing sector accounts for 95 percent of industrial research and development (R&D) spending and more than two-thirds of total R&D activity (Jasinowski, 1992); and manufacturing in 1992 provided roughly 17 percent of total nonfarm payroll employment (Manufacturing Subcouncil, 1993). U.S. companies must be able to manufacture products of superior quality at competitive prices. Key to the quality of any product is an understanding of the manufacturing process by which it is produced. Many different studies undertaken in recent years to define the most important areas of future industrial research have placed process understanding at or near the top of the list. For instance, the report by the National Research Council, Materials Science and Engineering in the 1990s: Maintaining Competitiveness in the Age of Materials, highlights materials synthesis and processing as an important area of expanded emphasis over the next decade (NRC, 1989). Indeed, every nation's success as a global manufacturer requires the development and use of manufacturing 1   At the end of the third quarter in 1990, manufacturing accounted for 18.9 percent of the gross domestic product in constant 1977 dollars, with 10 percent in durable goods and 8.9 percent in nondurable goods (DoC, 1993).

OCR for page 15
--> processes capable of producing high-quality products rapidly and economically in an environmentally acceptable manner. International competitiveness depends on the timely implementation of new and improved manufacturing processes. Although global integration of product markets and advances in reverse engineering techniques have improved the ability of competitors to determine the components of new products, the ability to clone successful products still depends on competitors' ability to make those components. Excellence in developing and implementing manufacturing processes that provide unique production capabilities with cost and quality advantages can be the determinant of market success and the key to future U.S. competitiveness in manufactured products, since this strategy cannot be easily duplicated. Unit Manufacturing Processes: The Cogs That Drive Manufacturing Productivity Any manufacturing system can be decomposed into a series of unit processes that impart both physical shape and structure to the product. Unit processes are intimately linked to one another; the output of one process becomes the input for the next process. The quality of the final product depends not only on the capability of each unit process but also on the proper sequencing of unit processes. Continuous improvement of the manufacturing system involves creation of an understanding of each process by itself, as well as of the influence of each unit process on subsequent unit processes. The R&D priorities of an industrialized country are key indicators of the emphasis attached to different areas. The United States has tended to invest most heavily in the invention of new products. Other nations have invested more heavily in process technologies. For example, the military R&D spending in the United States allocates 3 percent to process technology and 97 percent to product technology (Thurow, 1987). Overall, current industrial R&D spending in the United States is two-thirds on new products and one-third on new processes. Japanese companies invest at the inverse ratio (i.e., one-third on new products and two-thirds on new processes) and have successfully employed that R&D strategy to become highly competitive in the manufacture of consumer electronic products, such as the video camera, the video recorder, and the facsimile machine. The Japanese have graphically demonstrated that the greatest benefits accrue to those who can cost-effectively manufacture new product technologies. Some believe that the U.S. focus on products rather than processes has been fueling the relative decline of American manufacturing with respect to other manufacturing nations (Thurow, 1987). It is time to reverse this trend and to emphasize improvements in the most promising manufacturing processes, so that

OCR for page 15
--> the nation can create products that not only excel in function but also are competitive in both quality and cost in a global market. Since manufacturing is important to a nation's well-being and it is recognized that creation of the product is dependent upon each unit manufacturing process, both individually and together with other processes as a whole, sufficient resources should be provided to educate the manufacturing work force and to develop and improve key manufacturing processes. The alternative will lead to the decline of the United States as a manufacturing nation. R&D in unit manufacturing processes can be considered to occur on two levels—proprietary research that is conducted on a confidential basis, since it may have near-term applicability in a competitive market, and precompetitive or generic research that helps establish the foundation for a technology for the benefit of everyone with access to the results. This report primarily deals with the latter case.

OCR for page 15
--> References DoC (Department of Commerce). 1993. Economics and Statistics Administration, Bureau of Economic Analysis News Bulletin. Dertouzos, M.L., R. Lester, and R. Solow. 1989. Made in America: Regaining the Productive Edge. Cambridge, Massachusetts: Massachusetts Institute of Technology Press. Jasinowski, J. 1992. Report on Manufacturers 1992. Washington, D.C.: National Association of Manufacturers. Krugman, P. 1990. The Age of Diminished Expectations: U.S. Economic Policy in the 1990s. Cambridge, Massachusetts: Massachusetts Institute of Technology Press. Manufacturing Subcouncil. 1993. Forging the Future: Policy for American Manufacturing. Manufacturing Subcouncil to the Competitiveness Policy Council. Washington, D.C.: Competitiveness Policy Council. NRC (National Research Council). 1989. Materials Science and Engineering: Maintaining Competitiveness in the Age of Materials. Committee on Materials Science and Engineering, NRC. Washington, D.C.: National Academy Press . Thurow, L. 1987. A weakness in process technology. Science 238:1659-1663.