The Entrepreneurial Spirit: Fostering Investment in Manufacturing Startups in the U.S.
A Q&A with Cliff Waldman, chief economist at the Manufacturers Alliance for Productivity and Innovation (MAPI) Foundation.
What is the business climate for entrepreneurs wanting to invest in manufacturing startups in the U.S.?
The climate for business startups—including new manufacturing businesses—has been less than stellar, not only in the U.S., but around the world. Startup activity really fell off after the 1990s. It’s turned around somewhat lately, but not a heck of a lot. I think this is because of a lack of dynamism in the economy, the uncertainty over policy issues and the strict regulatory climate. In terms of the manufacturing sector specifically, entrepreneurial activity is worse than what it is in the broader economy. This is unfortunate because any sort of public investment in trying to spur entrepreneurship in manufacturing could have a very high rate of return. Automation innovation and the preponderance of new automation technologies are making it possible for solo entrepreneurs to scale up their operations more quickly and, thus, make them a better investment that would attract venture capital.
What federal policies should be put in place to spur entrepreneurship in manufacturing?
Supporting entrepreneurship in small manufacturing companies will help the U.S. support job growth. Small firms and startups create significant job opportunities. We should understand the unique needs of the manufacturing entrepreneur—the need for quick access to technical expertise and to material supply lines—and invest in those needs to spur more manufacturing startups.
How significant of an impact can any one administration have on an industry like manufacturing?
The success of an industry is not a function of one president or one governor or one politician. The forces that impact business and industry are often bigger than that.
However, federal policy affects manufacturing with its ability to create a more favorable climate for business investment. For example, there is uncertainty regarding corporate tax changes, supply chain tariff impacts, and trade, which could potentially affect manufacturers’ success. If we were to make it easier to start a business, or allow the Small Business Administration to increase its resources—and help students realize that entrepreneurship is a solid career opportunity—all of those things could be impactful.
How optimistic are you about the future of small-to-medium-sized manufacturing in America in the coming years?
I would say I’m neutral. If we make the right investments, then, yes, I’m optimistic. The U.S. is still a fairly competitive manufacturing sector, but in order for any sector to replenish itself, startups are essential. Larger companies have a disproportionate impact on capital spending; smaller ones have a disproportionate impact on jobs. If we make the right moves, the right investments and encourage startups, then I’m optimistic about the future of this sector of the market.
What advice do you have for small-to-medium-sized manufacturers competing in today’s business climate?
Know your markets. Form relationships with educational institutions. Form genuine and lasting relationships with your community. Know what government resources are available to you. Doing all of these things will make a difference.
Encouraging entrepreneurship as a career option is important for the future of small-to-medium manufacturing.