The Importance of U.S. Manufacturing

10. Small Companies Dominate the Industrial Landscape

The system of “creative destruction” denotes constant births and disappearances of companies across time and technologies, as new ideas spur entrepreneurs to set up shop to meet changing consumer needs. This process is a sign of innovation and dynamism. The American economy is characterized by a great number of small firms, which shows that entrepreneurship holds up well. Not only is there no stigma attached to modest size, but smaller companies tend to react quickly to a changing economic environment and may offer better opportunities for internal advancement for their workforce. Over time, the expansion of markets and improvements in productivity allow companies to grow in size. Some will die young while others will join the ranks of medium-sized entities.
The largest cohort of manufacturing firms is composed of those employing up to four people. Next in the ranking are companies with 5-9 workers and 20-99 workers. By far, the smallest cohort is made up of the largest companies, i.e., those employing more than 500 people.
Small size does have its downsides; for example, undersized companies tend to offer fewer benefits to workers and are less likely to export.

To Economic Growth

01

The U.S. Manufacturing Sector Is the Ninth-Largest Economy

02

Chemicals Lead Manufacturing in Terms of Output But Not Employment

03

Manufacturing's Multiplier Effect Is Stronger Than Other Sectors'

04

Manufacturing Sector Profitability Is Cyclical

05

Manufacturing Has Improved Living Standards

06

Manufacturing Drives Productivity Growth

07

Manufacturing Sector's Falling Unit Labor Costs Increase Global Competitiveness

08

The Trend in Spending on Goods Depends on the Measure

09

Investment in Equipment and Software Drives Demand for Manufacturing

10

Small Companies Dominate the Industrial Landscape

11

Domestically Manufactured Goods Are Used Throughout the U.S. Economy

12

Manufacturing Makes a Positive Contribution to Most State Economies

13

Business Is the Largest Source of State and Local Funding