Manufacturing matters to the nation's economy and security.

• Author: Farrell, Lawrence P., Jr.
• Position: PRESIDENT'S PERSPECTIVE

* Manufacturing has enormous impact across all aspects of the U.S. economy and national security. Manufacturing represents almost 14 percent of the U.S. gross domestic product.

U.S. manufacturing output, at $1.6 trillion, produces more goods than any other country. Each dollar spent on manufacturing generates $1.37 in economic benefits. This ratio is higher than any other industrial sector. The jobs are higher paying and they represent entry into the middle class for many Americans. Manufacturing actually creates tangible wealth.

A detailed discussion of the nation's manufacturing challenges--and their implications for national security--can be found in an NDIA white paper entitled, "Maintaining a Viable Defense Industrial Base." (www.ndia.org/Divisions/Divisions/Manufacturing)

NDIA leaders recently appeared before the Senate banking subcommittee on economic policy, which is part of the Senate Committee on Banking, Housing and Urban Affairs. The subject was the importance of manufacturing to the health of the U.S. economy and security of the nation.

The panel members wanted straight answers to the following questions: Why should Congress care about this issue? How much do manufacturers rely on credit? How are supply chains intertwined and what happens as demand falls? What strategic and security considerations regarding manufacturing should Congress be aware of? What policies should Congress consider in supporting U.S. manufacturing?

The credit issue is particularly vexing in these tough economic times. Manufacturers, especially small ones, rely on credit for working capital. They use this to buy supplies and meet payroll in advance of payment by their customers--a lag time of up to 120 days. A lawyer representing many small manufacturers in Chicago says, "Many of my clients are contemplating filing or are in Chapter 11, not because their business volume has fallen below previously levels, but rather because they can no longer get credit to borrow for their long established working capital needs."

Manufacturing is most productive when all resources are fully utilized. As demand falls and capacity is idled, manufacturers depend upon diversity of clients and supply chains to survive. Serving more than one market sector can help survive the downturns. Supply chains intertwined among various sectors promotes more viable and robust manufacturing enterprises.

The nation's economic health, competitiveness, and the strength of its military rely...