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Manufacturing matters.

That sums up the strong belief of the third group of attitudes toward manufacturing, and they believe we need to get the environment right for productivity and innovation.

This third camp outside the Washington D.C. beltway believes that productivity will continue to drive U.S. manufacturing’s recent recovery and long-term growth despite grid-locked industrial policies and government-related relatively high cost burdens.

Strong improvements in U.S. manufacturing productivity and output since 1990 began with less capital-intensive TQM, Six Sigma, Kaizan strategies, but evolved into larger investments in automation which have been eliminating many routine jobs.

A large majority of the 5 million manufacturing workers displaced in the past decade had only a high school education or less. Less than 40 percent of U.S. manufacturing employees today are engaged in actual production. But the new jobs will look different.

“Investing in technology, equipment and automation” is the #1 way that U.S. manufacturers say they can increase their  competitiveness .   That’s what 40,000 Harvard Business School graduates told Michael Porter when he asked that open-ended question for his landmark “Prosperity at Risk” report.

This camp believes that technology investments can drive the next era of greater industrial productivity and global competitiveness, and at the same time that these flexible factories of the future will be safer, cleaner, and more energy efficient.

In addition, this camp expects an eminent “Fourth Industrial Revolution” could spark a real manufacturing revival. “Industry 4.0,” coined at Hannover Fair this Spring, broadly describes the advent of smart factories, intelligent machines and networked industrial processes.

New organizations like the Smart Manufacturing Coalition established last year or President Obama’s plan to start establishing a National Network of Manufacturing Innovation Institutes this year could provide fuel for this transformation.

As U.S. business leaders also discover the innovation advantage of locating manufacturing in closer proximity to R&D, it may unexpectedly add to any technology-driven U.S. manufacturing resurgence.

Manufacturing is responsible for 69% of private R&D spending in the U.S. Recent studies show that this R&D is sometimes more effective when co-located with manufacturing.

“We must rebuild the nation’s industrial commons – the collective R&D, engineering and manufacturing capabilities that sustain innovation.” according to Harvard professors Gary Pisano and Willy Shih in an often-cited Harvard Business Review article “Restoring American Competitiveness.

NuCor Steel became America’s largest steel producer through a series of manufacturing innovations establishing their reputation as the “technology leader.”  However, NuCor has no R&D labs.  When engineers want to pioneer new steel products, they’re sent to the factory floor to develop them in collaboration with the manufacturing teams.

Which camp do you belong to? Are you ready for the future?

Photo credit: Department for Business, Innovation and Skills on Flickr