Manufacturing adds valueto materials because it increases their usefulness. The output of manufacturing is often calculated in terms of value added the difference between what industry pays for the raw materials that go into production and what it charges for the finished goods.
Factories can produce either consumer or producer goods.
A consumer product is made to be sold to the public, like a radio or an automobile. A producer good is used in the production of another product. The component parts of a radio or an automobile are producer goods, also called intermediate goods because they come at an intermediate stage in production. This industrial structure reflects the maturity of the American economy. Manufacturing industries are high-technology industries that make complex products involving advanced technology.