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Big Data Boosts U.S. Manufacturing Productivity

American onshoring keeps rolling along, and the latest good news is the boost homegrown manufacturing is getting from big data. Improvements in data collection and analysis have made forward-looking firms more agile and able to react quickly to fluctuations in market demand or supply. So far, the U.S. seems best qualified to take advantage of this emerging trend. For the Financial Times, Sebastian Mallaby reports:

GE’s venerable Appliance Park in Louisville, Kentucky, is opening a string of new assembly lines to build refrigerators, water heaters and washing machines, bringing home jobs from China and Mexico. President Barack Obama has trumpeted this wave of “insourcing”, while Hal Sirkin of the Boston Consulting Group foretells a US “manufacturing renaissance.” [ . . . ]

On Friday an exhaustive survey of management practices at 30,000 US manufacturing establishments was released. Two of the authors, Nick Bloom and John Van Reenen, had previously shown that US companies were, on average, better managed than foreign rivals. A striking conclusion of their study is that US manufacturers continue to get better, particularly when it comes to capturing and analysing data on everything from customer behaviour to production-line efficiencies.

This is encouraging news. America’s greatest advantage is its ability to react quickly to change without compromising its identity. This is no small matter: As technological change accelerates, the ability to keep pace will separate the economic winners from the losers. The incorporation of improvements in data collection and analysis looks like one way America is keeping its manufacturing industry viable in a globalizing world.

This doesn’t mean that the manufacturing jobs are coming back; machines, not humans, will be doing the lion’s share of the work. But this change is nothing to fear: As we’ve said before, job growth in a post-blue economy will depend on the race to build infostructure rather than infrastructure—to find ways to leverage IT and reform government to reduce friction throughout the economy.

So while big data isn’t bringing back the missing manufacturing jobs, it will help point the way to the jobs of the future.

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