Does manufacturing create jobs, spur innovation, or both?

There’s been a lot written here and elsewhere in the last several years about the critical need to revive U.S. manufacturing. But it remains unclear precisely what a manufacturing revival would mean for western economies.

Few would dispute that the ability to make design and make products and services (yes, services must be produced) is a key to boosting innovation. We can’t innovate unless we know how to make things.

Aside from automobile manufacturing, however, there are fewer manufacturing jobs being created in most high-tech industries. One reason, of course, is the efficiencies created by automation. Factory floor robots reduce the cost of manufacturing high-ticket durable goods. That makes western products more attractive in global markets.

The same is true of practically any new product since the goal of most western manufacturers is to add value. Apple’s iPod is a prime example. The consumer electronics giant created a new product category, came up with a sleek new design and outsourced the design of key components. Most of the actual assembly was done in China. Apple reaped the lion’s share of the profits while Chinese manufacturers churned out millions of iPods but made very little profit in terms of value added.

“The real payoff is at the systems level,” noted Tom Hausken, senior engineer and applications adviser to the Optoelectronics Industry Development Association.

We spoke to Hausken after the release of a report earlier this week by the National Research Council on reviving the domestic optics and photonics industries. Among other things, the report recommended a coordinated initiative to bring communications-related optoelectronics manufacturing back to the U.S. We still think that’s a good idea, since the onshoring of optoelectronics manufacturing will surely boost innovation in a field with national security implications.

Moreover, there are indirect links between technology innovation and job creation. Innovation creates ecosytems of suppliers and service providers that will eventually hire workers indirectly involved in the creation of new products.

But will such efforts actually put more design engineers to work? As presidential campaign rhetoric heats up about the next engine of economic growth, that question remains unanswered.

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