Key to US Economic Revival

Learn how US manufacturing can help bring US Economic Revival from the Op-Ed published from the CEO of one of the top US LED Light Manufacturers. This Op-Ed was published in the Philadelphia Inquirer on July 07, 2014

By Charlie Szoradi

A recent Brookings Institution study found that the United States has become “less entrepreneurial” in recent years: American businesses are dying more rapidly than they are born.

The study, authored by Ian Hathaway and Robert E. Litan, shows that business creation declined by about 50 percent between 1978 and 2011. Frighteningly for the American economy, from 2009 to 2011, the rate of business destruction exceeded the rate of creation.

There are signs of an end to this downward spiral, particularly in the area of technology manufacturing.

My experience may serve as an example: When Independence LED Lighting returned production of light-emitting diode tubes and fixtures to the United States from China in 2010, we discovered that the benefits of the move went far beyond generating more reliable products at a competitive cost. We’ve also seen a rapid proliferation of jobs.

In relocating manufacturing to the United States, our initial aims were to improve quality control, increase turnaround time on engineering prototypes and testing, and reduce shipping costs for U.S. customers. We improved on all counts by moving stateside. However, what we also discovered was that the move spurred the growth of other businesses. Like any other manufacturer, we need partners, distributors, and suppliers (who have suppliers of their own). As part of the illumination industry, we’ve hired (directly or indirectly) a legion of energy auditors, a larger army of installers, and a wide variety of support personnel. As we have grown, we have increasingly realized how much power small businesses have in stimulating the creation and growth of U.S. jobs and businesses.

The actual production and assembly process is just the first and most immediate step in job creation. The different phases in manufacturing establish the demand for a wide variety of occupations, ranging from industrial roles to professional positions. In 2011, manufacturing supported about 17.5 million jobs in the United States; 5.5 million of those positions were in sectors not directly related to manufacturing, including transportation, agriculture, accounting, consulting, insurance, and wholesaling.

Independence LED saw first-hand how its manufacturing of more than 1,000 different LED tubes and fixtures created a continuous and growing job cycle not limited to the manufacturing process.

For example, targeted research and development efforts led to job opportunities in system and component engineering, while material sourcing and prototype assembly required both in-house and third-party testing and verification. With the manufacturing occurring in the United States, these high-paying, strategically critical jobs are staying here at home.

A technology manufacturer can create thousands of jobs far outside the company’s offices and production facilities. Manufacturers need sales representatives to spread the word about products and authorized resellers to ensure that end users get what they need. In the clean-tech business, our reach extends to hiring at energy service companies, utility rebate inspector firms, electrical contractors, architects, and more. Additionally, because we build in America and sell around the world, “ripple effect” jobs are not limited by proximity to our offices in Southeastern Pennsylvania. From Hawaii to Maine to everywhere in between, hardworking people are counting on an increased demand for American technology manufacturing.

Lighting isn’t the only business with an expanding “job glow”: Technology manufacturing inherently stimulates the economy through the creation and expansion of support businesses. According to the Bureau of Economic Analysis, manufacturing has the highest multiplier effect of any industry.

That means that in addition to the outright creation of new businesses, technology manufacturers stimulate the growth of other U.S. businesses by providing better training. Once a company is established, it has a better understanding of its own industry and is in a good position to mentor smaller, start-up outfits. And with both manufacturing and technology companies showing 20 percent budgetary increases in employee-training expenditures, companies have an increasing wealth of knowledge to offer their American partner companies.

For example, my company helped in the development of Southern LED Solutions and Round 2 Lighting in Philadelphia. In just two years, their business has grown from a start-up division of a family-run enterprise to a company with major account traction and installed case studies. As a manufacturer always on the lookout for top-quality talent, we have established training programs around the United States, including with minority-, women-, and veteran-owned enterprises. This training leads to high-quality, satisfying jobs that pay great wages.

By itself, the U.S. manufacturing sector would be the eighth-largest economy in the world. It would be smart for America to leverage this economic strength to its advantage. Technology manufacturing fosters job growth, provides training opportunities, and spawns the growth and expansion of other companies. U.S. technology manufacturing is clearly the key to stimulating the reemergence of American entrepreneurialism, and the time to revive the spirit of innovation in this country is now.

Charlie Szoradi is CEO of Independence LED Lighting. charlie@independenceled.com

For more on US Economic Revival see the LED Press Coverage.