For Americans in the 21st century, innovations are ubiquitous. New technological advancements – and, most notably, our access to them – emerge at a breakneck pace. Those powering the exchange of information and services tend to take center stage. Anyone with a smartphone can tell you about their favorite downstream consumer app that gets them what they want when and where they want it.
But innovation in the United States isn’t limited to the way you order takeout. The same spirit of innovation that keeps us glued to our iPhone or Galaxy screens is the one that is powering American industry. Research and development (R&D), an incomparable part of US manufacturing, is what will sustain it for decades to come — in high-tech sectors of the industry that require skilled and ready workers.
Think of R&D as a slice of a pie.
The pie itself is the “value added” a company contributes to the economy: total sales minus direct expenses that go into making the product. That value added then provides for employee wages, taxes, and – hopefully – profits. But it also covers what the company devotes to R&D, which focuses on the development of new or refined products that can lead to higher growth. A highly nimble company’s investment in R&D can be used to expand its market share and profitability.
U.S. manufacturers spend 11% of their value added on R&D – more than manufacturers in any other country. And even this figure represents an increase from 8% in the early 2000s. R&D is becoming an increasingly crucial part of doing business and how we think of American manufacturing.
But it’s not just the amount of R&D in U.S. manufacturing: it’s also where it’s going. Most countries – even highly industrialized ones in Europe and Asia – tend to see the lion’s share of their R&D expenditures go to sectors of their economy like machinery and automotive manufacturing. American manufacturers, on the other, are seeing R&D occurring most prominently in high-tech sectors. In the last twenty years, significant investment has been made in electronics, aircraft manufacturing, and pharmaceuticals.
American manufacturing is trending towards sectors that are research-intensive and technology-intensive, characteristics that promise even more value added to the economy but which also require the right kind of workers. The need for highly skilled employees to take the result of this widespread R&D and input it into new products is the reason why economic forecasts estimate that manufacturers will need to fill 3.5 million jobs over the next ten years.
The American economy is primed for sustained, high-tech manufacturing. R&D is the fuel for the engine that could add significantly more value to our national output. The question is whether there are enough drivers.
Adam Himoff is the founder and President of Xemplar, an innovative recruiting company that enables U.S. clients to beat the ‘skilled labor shortage’ and reliably source the high-value, high-skill employees they need to thrive. To learn more about Xemplar and to request a no-risk consultation for your industrial business go to www.xemplar.com.
