The U.S. manufacturing sector no longer holds the same share of the national economy. However, this may not be as bad for the industry as it looks. New reports suggest that while growth in the service sector has given manufacturing the appearance of relative weakness, it is actually stronger than it has been in years.
According to research firm IBISWorld, manufacturing's share of the economy fell from 10.7 percent to 8.1 percent between 2005 and 2015. However, the report added that during this time, the manufacturing sector enjoyed much faster absolute growth than many expected. The sector's declining share of the economy is only the result of a service industry that is growing even faster.
For instance, one of the largest industrial subsectors in the U.S. is the chemical industry. The IBISWorld report found that chemical industry revenue is expected to exceed $1 trillion by 2020, in part due to easier access to domestic natural gas.
"In reality, many manufacturing industries have continued to expand, and the United States remains one of the largest manufacturers in the world," the report said.
While this is positive news, one obstacle that still stands in the way of a strong manufacturing sector is a lack of skilled labor. As manufacturing becomes more high-tech, firms need employees who understand the complicated machinery and computers that are required.
It's important for state governments to incentivize the growth and development of CNC machine shops in order to bolster their local manufacturing industries. Creating initiatives that facilitate the training of new workers is part of this process.