The resurgence of the U.S. manufacturing sector continues to impact trade policy around the world. Over the last ten years, prime manufacturing areas such as Ohio have witnessed first-hand how local manufacturers can remain competitive and positively influence the impact of international trade relations on the people working and producing U.S. manufacturing products.
Understanding the Impact
The success of manufacturing at home is directly related to the failures and successes of a growing number of international trade policies and programs. These partnerships include U.S. Trade representatives, entities within the private sector, governments of foreign lands, international organizations and nongovernmental organizations. While often out of the day-to-day mindset, the policies enacted by these various groups correlate to what’s happening with the industry at home. Considering the current 14 free-trade agreements with 20 countries, the influence of the distribution, production and ultimate consumption of manufacturing goods cannot be understated.
In our home state of Ohio, there’s been undeniable growth in manufacturing output, building from the lowest point in 2009 with continuing growth ever since. In 2015, Ohio-based manufacturing accounted for 17.77 percent of the total output in the state, according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau.
Top 10 Ohio Manufacturing Sectors
Petroleum and Coal Products
Motor Vehicles and Parts
Food, Beverage and Tobacco products
Plastics and Rubber Products
Aerospace and Transportation Equipment
Electrical equipment, Appliances and Components
Measuring the Impact
Shifting production and global supply chains continue to improve the efficiencies of U.S. manufacturers. Evidence of such success is visible in the growing number of investments made across the country. Such expenditures make it critical to understand how policy changes can immediately impact the work of U.S. manufacturers in the short- and long-term. In 2017, trade with free-trade partners represented more than 90 percent of U.S. imports by value and close to 70 percent of exports, according to the U.S. Department of Commerce.
Understanding the interdependence of trade policy logistics helps to understand the potential for disruptions in manufacturing at home including where and how manufacturers procure goods. Depending on the complexities, this could increase production and distribution costs. It’s critical for manufacturers to have alternative plans for sources and guardrails in place to minimize disruptions in the production cycle knowing what’s there today will not necessarily be there tomorrow or even next month.
As overseas manufacturing wages continue to increase, the focus on regional manufacturing throughout the U.S. becomes increasingly valid. Such an advantage becomes more pronounced when considering how U.S. manufacturers continue to make efforts toward innovation, increased research and development, bridging the skills gap and emphasizing abbreviated supply chains. With steady efforts, reinvestment in U.S. manufacturing and its regional players will continue to create jobs where they are needed, driving innovation at home and abroad.