I believe this has something to do with our educational system. It must be flawed. Our educational system probably encourages students to go to college a little too much.
I remember last year when the German exchange students arrived they told us that in Germany, students are separated into the ones that will and the ones that will not go to a college/university by the end of elementary school ?
Anyway, as bad as that sounds, it's probably a better system overall. It makes things easier on everybody. Some people are naturally better at some things than others. And some people are naturally smarter than other people. I know that's harsh, but that's reality.
The main question is, what can a country do to improve this horrible economic situation?
Hm, your exchange student didn't tell you much about Germany...

Yes, in Germany the future academics are separated from the future workers at the age of ten.
But in fact, we have also to much college students, and most of the college students are studying something that isn't related to manufacturing, hard science or engineering.
Almost all popular colleges are overcrowded... and particular popular studies like sociology, politics, germanistics and "anything about media" are very overcrowded.
And because of the many graduates in those studies most graduates don't get a well paid job - only a lot of lousy or even unpaid internships.
But that's no reason to not study those sciences, because after graduation you may not have a job, but you are still a academic - a part of the Educated German Elite.

Studies like engineering, chemistry or mathematics are less popular, and a lot of students left after the first semesters because it's to complex for them.
So the German college isn't the only reason for the strong manufacturing sector in Germany.
An other strong factor are the workers, or to be more precise the system of professional education.
Most workers start at the age of 16 an apprenticeship in a company, which last two to three years.
Usually a apprentice spends 3 days in the company and has training on the job, and 2 days in a state founded school for the more theoretical aspects of his trade, like mechanics, mathematics, construction.
At the end of the apprenticeship there are exams by the state and by the trade group.
It's not uncommon for the best apprentices to attend later to college or get further professional education in their trade (at least two years full time school for a degree as state certificated technician or as master craftsman, but in most cases 4 years part time in the evening and the weekends ) and becoming manager of a department at the age of 25.
http://en.wikipedia.org/wiki/Apprentice#Germany It's impossible to run a manufacturing plant only with academics, especially in sectors like chemistry or automated plants.
You need electricians, mechanics, hell even plumbers (nowadays even the plumber is half an electrician) to keep your manufacturing line running. You need them 24 hours, 7 days a week.
If you in charge of a 3 million dollar manufacturing line for PBCs and it stands still because a stupid 30 dollar valve is blocked you learn the value of high skilled worker.
At the moment I'm working in a company that sells chemistry world wide. And according to our salespeople the biggest problem in country's like China or Indonesia is the lack of skilled workers.
There is a hard competition for those guys, and it's not uncommon to get them from the competitor by offering more wage.
So it's not only the college education that's important for a strong manufacturing sector.
And IMHO the USA has still a strong manufacturing sector.
Agriculture is strong, also aircraft construction, military equipment, and if you want you can even count Hollywood and the rest of the media industry to the manufacturing sector.
What is gone is the cheap manufacturing sector for shoes, clothing or simple montage work in the electronic industry. But those sectors are also gone in Western Europe.
All those jobs went first to Taiwan, Indonesia, Malaysia and after the fall of the iron curtain to the Eastern European Country's, and later to China or Egypt and Morocco.