The Myth of Industrial Collapse: The Sector's Value Added Surpassed $2 Trillion, Debunking the Narrative of Its Alleged Decline

Within the U.S. political narrative, the premise that manufacturing is in crisis has become a sort of mantra for leaders of both political spectrums to point to a problem for which they claim to have the solution. A clear example was ex-vice president and Democratic candidate Kamala Harris, who assured in the middle of a speech in 2024 that one of her main objectives, if elected, was to revitalize the manufacturing industry, by arguing that it was in a frank "decline." In addition to the left-leaning leader, then-Republican candidate Donald Trump also laid out a bleak scenario about the sector during a rally in Pennsylvania, arguing that the industry had been "dismantled" and "shipped overseas" over the past few years.

Far from being a reality, the truth is that manufacturing industry is not only in good shape, but has been evolving to the point of having entered an era of advanced technology and historical productivitythat has brought numerous benefits to the country, becoming an essential pillar of the first economy in the world.

Economic data that refutes the alleged decline

Despite the fact that in recent years both Democrats and Republicans have fed the public perception of an industry in crisis, the truth is that manufacturing output is near all-time highs. According to a report published by theU.S. Federal Reserve in 2023, the sector's aggregate value reached an estimated 2.1 trillion dollars, a figure that different economists have explained as a clear sign that growth in this sector has been regularly sustained since the Great Recession.

On the other hand, the Bureau of Labor Statistics (BLS) has reported that even though manufacturing jobs have declined from 19 million to 13 million from 1979 to 2024,real output has increased and this has ended up benefiting the U.S. economy. The BLS showed that thanks to this increase in production, sectors such as the aerospace industry generated 500,000 direct jobs in 2023 alone, while the semiconductors had 15% annual growth over the past ten years.

Automation and productivity: the real transformation
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The economic paradox of finding more production with less work is nothing but a product of automation, with different economists such as the 2024 Nobel Daron Acemoglu explaining that "New technologies increase productivity when they collaborate with workers, enabling them to perform more sophisticated tasks." In the case of the United States, the Information Technology and Innovation Foundation (ITIF) detailed in 2023 that productivity per manufacturing worker grew by no less than 200% since 1980 thanks to various technological advances such as the artificial intelligence and robotics.

Different studies have determined that this shift is extremely similar to that of agriculture in 1900, when 40% of the workforce produced food compared to the 2% we see today and which produces more than ever before thanks to the way the industry was able to capitalize on and adapt to the many technological advances.

In the manufacturing industry, modern plants produce much higher-value goods with considerably fewer employees than in the past. Such a reality is more than positive for the U.S. economy, as it makes an industry so essential to the country not only more productive, but also more profitable and focused on maintaining its effectiveness for the future.

Regional displacement: gains and losses
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While it is true that some major cities such as Detroit have experienced a strong decline in recent years, with the percentage of manufacturing jobs falling by 50% since 1990, this can be considered a short scene in a long movie. After all, just as with upswings in other types of industries, there were other areas and regions of the country that experienced a very different situation than Detroit, seeing their economies revitalized by manufacturing development.

A clear example is the state of Texas, which, according to data from the BLS, add 900,000 jobs in 2024 thanks to manufacturing jobs that have been expanding throughout that territory for several years now. Other examples are South Carolina and its conversion into aproduction center for companies such as Boeing and BMW, or the case of Arizona and its a 10% increase in industrial jobs over the past four years thanks to chip manufacturing.

In his book The New Geography of Jobs, economist Enrico Moretti stressed on this topic that the decline of manufacturing in Rust Belt regions does not represent neither the end of the manufacturing boom nor the end of U.S. industry, but rather a reconfiguration toward new areas of specialization and geographic locations. "Manufacturing is not vanishing from the American landscape; it is simply changing its geographic footprint. While the industrial heartland struggles, other regions are thriving by producing goods that require innovation and skilled labor," Moretti noted.

High tech and globalization

Another reason why manufacturing in the U.S. is not in the gloomy scenario that many politicians claim is the fact that the high-tech sector is booming, taking as a major example the way in which globalization reshaped U.S. manufacturing to the point where the country shifted from producing low-cost goods to focus on higher-value products such as semiconductors or aerospace.

While the production of low goods such as textiles accounted for 20% of industrial jobs in the United States in the 1950s, that reality has changed to adapt to current times in which supply chain relocation has brought back sectors such as pharmaceuticals. Already in the case of high technology, the U.S. manufacturing industry has proven to be in very good shape, as evidenced by the investment of 20.billion by Intel in Arizona for semiconductor production, or how the aerospace industry came to export more than 100 billion two years ago.

A realistic view of the future

Although many politicians, both Democrats and Republicans, have shown themselves to be imbued with the classic narrative of restoring the manufacturing jobs of the last century, the truth is that this is an absolutely anachronistic narrativein the face of the gigantic evolution that manufacturing has undergone, and the different dynamics that have emerged from that reality.

Basically, the return is not only undesirable but also unfeasible, especially in the face of the projections of BLS in which it assures that high-tech manufacturing jobs will grow by 8% by 2030, in the face of the decline of traditional manufacturing. Thus, protectionism could destroy global competitiveness and make goods more expensive, representing a mistake that according to the Peterson Institute for International Economics could generate a loss of 200 billion annually.

Far from being in ruins, U.S. manufacturing is in very good shape and in a transformation that promises to come to fruition and deliver numerous results that will end up benefiting the U.S. economy. To hinder such a transformation could be a historic mistake that would jeopardize the strong industrial future that the United States has been working toward for the past several decades.