No one could doubt the importance of manufacturing to the U.S. economy in light of the sobering statistics presented at a workshop at the Power Transmission Distributors Assn.'s Industry Summit, held in mid-October.

Dr. Daniel Meckstroth of the Manufacturers Alliance pointed out that 13 percent of our economic output is derived from manufacturing. Even more interesting is that 40 percent of all research and development is done by manufacturers, and the vast majority of all patents were submitted by manufacturers. Innovation is the hallmark of our manufacturers today, as it was 50 years ago.

We live in a global environment, as Dr. Meckstroth pointed out. While we decry the loss of manufacturing jobs to China and India, consumers are rushing to buy cheaper products from abroad and our trade deficit has ballooned to $660 billion.

"We're buying a huge amount of goods, compared to exporting," Meckstroth told the PTDA audience.

At the same time, foreign companies are buying manufacturing companies in the United States at a strong growth rate. In fact, Meckstroth said 13 percent of all manufacturing workers in this country now work for foreign-owned companies.

He added that during this last recession, some 3 million jobs were lost, and "they're not coming back." We have regained some 70,000 to 80,000 jobs since the recovery, but that represents only a small amount compared to the job loses. If it's any comfort, the United States is not alone. Germany, Sweden and other high-wage countries have seen a tremendous loss in manufacturing jobs.

Take a look back 50 years, when more than half of all the jobs in the United States were related to manufacturing. In 2003, that number dropped to 11 percent, with 14.3 million workers employed in manufacturing firms. Today, nearly 75 percent of all manufacturing firms have fewer than 20 workers, Meckstroth said, accounting for about 8 percent of the manufacturing jobs in the United States.

He added, however, that globalization offers great opportunities for manufacturers, and identified characteristics for plant survival: Plants that produce multiple goods are much less likely to fail than plants producing a single product; plants that export are far less likely to fail than non-exporters; and high-skill plants are better able to survive increases in import shares from low-wage countries.

Though U.S. manufacturing is not what it used to be, there is hope for its future. As 2004 draws to a close, distributors and their trading partners should look forward to a new year filled with challenges and opportunities—in the manufacturing arena and elsewhere.

jkeough@reedbusiness.com