Is manufacturing overrated?: Industry Trends & Analysis

It’s getting to be a broken record. February was another up month for U.S. manufacturing as output increased 0.4 percent. Output rose 0.7 percent in January after jumping 1.5 percent in December—the biggest gain in 5 years. Also, U.S. manufacturers added 31,000 jobs in February, on top of adding 227,000 jobs in 2011.

Of course, the big question is how long can this last? In recent months, I’ve written about the positive side of the manufacturing recovery. This month, let’s look at some of the opposing opinions (and some facts). For example, writing in the Chicago Tribune, columnist Steve Chapman takes on what he thinks is the “holy grail” of manufacturing.

“Barack Obama and Rick Santorum probably couldn’t agree that August falls in summer, but on one important issue they are closer than the Winklevoss twins,” he wrote. “Both regard manufacturing as precious beyond words, and both think the federal government should be making special efforts to promote it. Obama favors an array of tax breaks to induce manufacturers to keep jobs in the United States, and Santorum wants to completely scrap the corporate income tax on companies in this particular sector.”

Chapman feels that manufacturing doesn’t need help, noting that its share of gross domestic product has declined only because other industries have expanded more rapidly, and that the U.S. share of global manufacturing has been stable for past 20 years. “For the most part, our leaders take it as normal and sensible to defer to consumer demand, rather than try to dictate it,” he wrote. “Given that, why do they think they ought to rig the tax code to push consumption dollars from services, which Americans want, to goods, which they don’t want quite so much? Why should they divert investment from more popular businesses to less popular ones?”