America’s Next Competitive Edge Will Be Built
Randy Wolken, President & CEO
As the United States celebrates its 250th anniversary, there’s much to admire about the economic system Americans have built. The United States represents only about 4 percent of the world’s population, yet produces 26 percent of global GDP, accounts for 27 percent of global research and development spending, and is home to 59 of the world’s 100 largest companies by market capitalization. The McKinsey Global Institute concludes that America remains the world’s most competitive major economy.
But perhaps the most important message in McKinsey’s At 250: Sustaining America’s Competitive Edge is that this position isn’t guaranteed.
Competitiveness isn’t something a country inherits. It must be continually earned.
For leaders in advanced manufacturing, that distinction matters enormously.
America has reinvented itself several times during its history – from an agricultural economy to an industrial powerhouse, then to a scientific and technological leader and, eventually, the center of the digital economy. McKinsey argues that another chapter is now beginning, shaped by artificial intelligence, robotics, biotechnology, advanced computing, energy systems, and geopolitical competition.
Manufacturing sits directly at the center of this transition.
The United States remains the world’s second-largest manufacturing nation, with a substantial industrial base and nearly 13 million manufacturing workers. Yet America’s share of global manufacturing output has fallen significantly. China now produces nearly half of global manufacturing output compared with approximately 11 percent for the United States. Manufacturing’s share of the American economy has also fallen from more than 20 percent several decades ago to less than 10 percent today.
Those numbers shouldn’t lead us toward nostalgia for an industrial economy that no longer exists. They should lead us toward building the advanced-manufacturing economy that comes next.
That requires recognizing something manufacturing leaders already understand: production capability itself is a strategic asset.
Research and invention matter enormously. America remains extraordinarily strong in both. But innovation, separated from the ability to manufacture, eventually creates vulnerability. McKinsey points to semiconductors as one example. The United States retains tremendous strength in semiconductor technology and revenues, while its share of global semiconductor manufacturing capacity declined from 37 percent in 1990 to approximately 10 percent by 2022.
But the lesson extends far beyond chips.
Tomorrow’s competitive economy will require the ability to design and produce semiconductors, robotics, autonomous systems, batteries, advanced materials, energy technologies, and other critical products. Manufacturing capability creates technical knowledge that can’t always be captured in a patent, laboratory, or software model. Engineers, technicians, operators, suppliers, and production teams develop knowledge through the act of making things.
McKinsey describes rebuilding that production know-how as capable of creating a virtuous cycle of greater innovation, productivity, and employment. Recent semiconductor investment demonstrates how foreign and domestic investment can bring not simply factories but new capabilities and knowledge into American industrial ecosystems.
For manufacturing leaders, this creates a larger responsibility.
We can’t define competitiveness simply as attracting the next large factory. We must build the ecosystem surrounding that factory.
That means workforce.
McKinsey highlights declining educational outcomes as a significant long-term competitiveness concern and calls for stronger K-12 achievement, greater emphasis on engineering and technical fields, and substantial business and public co-investment in skills development.
Advanced manufacturing therefore can’t remain primarily a consumer of talent produced somewhere else. Manufacturers must increasingly become partners in creating talent, working with schools, colleges, apprenticeship programs, community organizations, and governments to develop pathways into rapidly evolving careers.
It also means infrastructure and energy.
Artificial intelligence, semiconductor fabrication, advanced materials, automated factories, and large-scale industrial investments all depend upon abundant, reliable, and competitively priced energy. They require transportation, water, digital infrastructure, and communities capable of supporting expanding workforces. McKinsey places energy abundance and modern infrastructure among the essential foundations America must strengthen for its next era of competitiveness.
And it means investment.
Factories become more competitive through continuous capital deployment – new machinery, automation, digital systems, AI, workforce development, and expanded capacity. Public policy should therefore encourage productive long-term investment while creating permitting and regulatory systems capable of moving major projects forward with greater certainty. McKinsey similarly argues that governments must modernize permitting and infrastructure delivery while investing in research and skills.
There’s ultimately an important leadership message running through the report. America should approach this moment with confidence, but not complacency.
Our greatest advantage may not be any individual technology, company or natural resource. It has been our ability to reinvent ourselves when circumstances change.
Advanced manufacturing now offers America another opportunity for reinvention.
The question isn’t whether we can recreate the industrial economy of the twentieth century. We shouldn’t want to.
The opportunity is much greater.
We can build the most innovative, productive, technologically advanced manufacturing economy in the world – one combining American strengths in entrepreneurship, artificial intelligence, research, capital, and innovation with renewed excellence in making things.
But that future won’t simply arrive.
As McKinsey reminds us at America’s 250th anniversary, competitiveness is a national project requiring choices, investment, and continual renewal.
For those of us who lead within manufacturing, that means our role is larger than running successful companies and organizations.
We’re helping build America’s next competitive advantage.