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February 29, 2016

MAPI: Manufacturing Sector’s Impact On U.S. Economy Is Much Larger Than Government Data Suggests

The Manufacturing Alliance for Productivity and Innovation (MAPI) Foundation last week released a landmark study outlining the impact the U.S. manufacturing industry has on the U.S. economy. The study, which was written by MAPI Foundation Chief Economist Dan Meckstroth using information provided by the University of Maryland, reveals the manufacturing sector’s impact is much larger even than government data suggests. (MAPI said it used a more complete, accurate methodology for measuring manufacturing’s footprint than has historically been used” to arrive at its conclusions.) 

Specifically, the study, which is available here, found:

  • The manufactured goods value chain plus manufacturing for other industries’ supply chains accounts for about one-third of gross domestic product (GDP) and employment in the United States;
  • For every dollar of domestic manufacturing value-added destined for manufactured goods for final demand, another $3.60 of value-added is generated elsewhere;
  • For each full-time equivalent job in manufacturing dedicated to producing value for final demand, there are 3.4 full-time equivalent jobs created in nonmanufacturing industries;
  • Most (54 percent) of the value-added in manufactured goods destined for final demand is from the downstream sales chain; the upstream supply chain accounts for the remaining 46 percent;
  • Domestic manufacturing accounts for only 22 percent of the value chain of manufactured goods for final demand while nonmanufacturing value-added is 53 percent and imports are another 25 percent;
  • 60 percent of manufacturing imports ($1.024 billion) are final goods that directly enter the downstream sales chain while 40 percent ($694 billion) of manufacturing imports enter the value stream in the upstream supply chain of domestic manufacturing; and
  • Relative to other industries, manufacturing is efficient in delivering value-added. It takes about 5.8 full-time equivalent manufacturing jobs to achieve $1 million in value-added, compared with 7.7 for both transportation and services and 16.9 for retail trade.