High-Tech, High-Touch, and Manufacturing’s Triple Bottom Line

After decades of neglect, the manufacturing sector is now getting welcome attention as a critical element in the revival of our national economy. But research and policy development on U.S. manufacturing have tended to focus on technology-intensive subsectors and processes, including, most recently, “advanced manufacturing.” As defined in a recent $26 million federal funding announcement, advanced manufacturing is “a family of activities that (a) depend on the use and coordination of information, automation, computation, software, sensing, and networking, and/or (b) make use of cutting edge materials and emerging capabilities enabled by the physical and biological sciences (for example, nanotechnology, chemistry, and biology).”

Thus defined, “advanced manufacturing” takes advantage of our nation’s depth of engineering talent and offers the U.S. a competitive edge against countries whose advantages have been based in part on low labor costs.

But for policymakers at the federal, state, and local levels, a U.S. manufacturing renaissance should not only be about technological leadership and market share; it should be just as much about leveraging the potential of an increasingly diverse workforce, revitalizing cities and inner suburbs, and maintaining a high quality of life while reducing the environmental impacts of production and consumption. A narrow technological focus will miss opportunities based on other competitive advantages, such as sophisticated design, market insight, and the ability to respond to quick shifts in demand. Moreover, a narrow definition will not produce the broad-based benefits that we need so desperately to address the growth in income disparity that characterizes our service-driven economy.

Figure 1.

Subsectors in Large Cities:

Area of Bubble Represents Numbers of Unique 6 Digit NAICS Subsectors

Source: US Census 2010

Relatively little research has taken a triple bottom line approach to “new manufacturing” or considered the impact it has not only on our economy but also on our society and our environment. From this perspective, it may be useful to identify “high-value/high-performance” (HV/HP) subsectors, intentionally including makers of both “high-tech” and “high-touch” products, and to compare recent trends in their activity to each other and to the manufacturing sector as a whole. The high-touch grouping illustrates how performance and value can be created from attributes other than advanced technology.

The high-value/high-performance rubric takes in everything from technologically advanced producer goods to high-end consumer products made by traditional processes. Though companies within these emerging subsectors may be disparate in the products they make, the processes they employ, and the markets they serve, they have five important characteristics in common:

• • High value added, which enables high wages (though the actual opportunities created for different types of workers is likely to vary among sectors and by place)

• • High value added incorporating a low environmental impact—low-bulk, low-waste, low-transportation impacts—as well as the use of green products and processes

• • High level of innovation, meaning:

  • ○ A short cycle time for design > prototyping > production

  • ○ A large proportion of new products

  • ○ A high degree of customization and response to insights from clients and markets

• • High employment multipliers

• • High level of interaction with other firms and/or clusters

Table 1.

Selected High-Value/High-Performance Manufacturing Subsectors

High-Value/High-Performance Manufacturing: A Snapshot

As part of our mission, the Pratt Center for Community Development is exploring the ways that new manufacturing can make the economies of New York and other U.S. cities not only more competitive but more inclusive and sustainable.

For this project, we selected five large and five mid-sized Metropolitan Statistical Areas (MSAs), looking for regional and demographic diversity. We also considered manufacturing diversity, based on the number of unique six-digit North American Industry Classification System (NAICS) codes with a substantial presence in each MSA. We aimed for geographic variety by including MSAs on the coasts, and in the Midwest and South. We then identified eight manufacturing subsectors (at the four-digit NAICS code level) that we define as high-value...