Production and savings are the life-blood of economic growth, So yes, we must make things. It may be old but its an approach that has been tried and proven.
They already have. This has been happening over the course of decades already and is a natural progression and will only continue to happen. You would actually rather have more "knowledge workers"... but we're not only losing the low-end manufacturing race to countries like China (we still manufacture 100s of billions a year more than China), we are losing to India in bpo, programming, etc (knowledge worker realm) etc. The problem is that are deteriorating educational base is not placing us at the forefront of the new wave of jobs that are the ones of the future.