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Three factors give cause for optimism about American manufacturing

Demographic changes, technological development and changing global cost structures now promise to make America among the most competitive manufacturing nations in the world.

For decades, manufacturing has been viewed by many people as an industry on the decline in the United States. As the American economy shifted ever more heavily towards services, factory employment in the country has steadily deteriorated. American manufacturing employment peaked at nearly 19.5 million in 1979, and has been steadily on the decline since then, averaging around 12 million throughout the 2010s.

In addition, the past several decades saw the emergence of substantial, low cost, rival manufacturing centers around the globe – particularly in Asia.

Despite this there are indications manufacturing in America has a dynamic future. There are at least three reasons to be optimistic about the future of manufacturing in America.

1) Energy Prices

Manufacturing is a very energy-intensive economic sector. Not only are electricity demands for industrial production enormous, but natural gas and other petroleum inputs are foundational raw materials for many products. Numerous chemicals, including plastics and fertilizer, are manufactured using natural gas. In 2021, the U.S. Energy Information Agency reported industrial energy consumption was 25% greater than residential and commercial consumption combined.[1]

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