In discussions of the U.S. manufacturing industry's decline, growth and future prognosis, reference is frequently made to outsourcing to foreign countries and global competition as contributing factors in the losses in American manufacturing jobs. Who exactly are the countries leading in manufacturing, though? Below, the top manufacturing countries are identified, and their rankings are explained.
The United States once had a solid hold on its position as the world's leading manufacturer. That hold slipped in the past few decades as the U.S. economy experienced various downturns and recessions, several large companies relocated their factories outside of the country and other parts of the world began developing their own capacities for manufacturing, becoming viable competitors in the manufacturing sector.
Recent industry data indicates that U.S. manufacturing is experiencing a turnaround and reversing the trend of declining manufacturing jobs. U.S. manufacturing grew for the third month in a row in April 2014, with national factory activity at 54.9 on the Institute for Supply Management's index. This figure represents an increase of 1.2 points over March. Scores above 50 reflect expansion in the sector.
U.S. manufacturing may be experiencing growth, but the United States has not yet reclaimed its former position as the top country for manufacturing. According to data released by the Manufacturers Alliance for Productivity and Innovation, China is the largest manufacturing economy in the world, with a 22.4-percent share of all manufacturing activity. The United States takes second place with 17.4 percent. China assumed the number one position in 2010.
These rankings reflect a comparison of manufacturing value-added, which is the net output after adding up all outputs and subtracting intermediate inputs. Manufacturing value-added is a measure of manufacturing activity derived by subtracting the cost of materials, supplies, containers, fuel, purchased electricity and contract work from the total value of products. A calculation based solely on manufacturing value-added fails to account for differences in product sophistication, production complexity and manufacturing worker productivity.
An alternative and perhaps more relevant comparison between different economies requires that total manufacturing value-added be normalized and adjusted on the basis of population size. When a per capita metric is used, the rankings of countries in the global competition are dramatically reordered. Of the top 15 manufacturing countries, the two most manufacturing-intensive and productive are Japan and Germany ($8,292 per capita). U.S. manufacturing ranks fourth.
Though the United States no longer reigns as the top manufacturing country, most lists that relate to manufacturing metrics still place the U.S. manufacturing industry high in the rankings. As new technologies continue to be developed, political emphasis refocuses to recognize the value of the manufacturing sector, and U.S. companies partially reverse their outsourcing, the United States promises to remain one of the top manufacturing countries.
(Photo courtesy of digitalart at FreeDigitalPhotos.net)
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