U.S. Governement Creating New Policies to Support Manufacturing Industry

Renewed Interest of Government to Support Manufacturing

Manufacturing has been in the news a lot lately, and for good reason. As the United States continues its uphill climb toward economic vitality, job growth in the manufacturing industry is turning the heads of politicians and their advisors.

The surprising growth streak is the largest since 1995, and economists across the nation are crediting manufacturing with leading America’s economic recovery. The result: a more concerted effort by the federal government to develop a true federal manufacturing policy. Proponents of manufacturing think it’s about time.

Bruce Katz, VP of The Brookings Institution

Like Bruce Katz, vice president of the Brookings Institution and founding director of the Brookings Metropolitan Policy Program, a group that counsels decision makers in the public, corporate, and civic sectors with policy ideas for improving the health and prosperity of cities and metropolitan areas. Katz says that the renewed interest of government to support manufacturing was born out of the country’s recent recession.

“I think for the last 30 years, frankly, both political parties decided that the U.S. somehow would be a post-industrial economy where we would generate ideas but produce everything offshore, and I think that’s a recipe for long-term economic decline,” Katz explained. “The silver lining to this recession is that we actually rediscovered the importance of manufacturing because it—and exports—are leading the recovery. The recession was a wake-up call, and not just for national leaders but for state and metropolitan leaders as well.”

In 2011, the Obama administration established the Advanced Manufacturing Partnership, one of the first signs the federal government had taken notice of manufacturing’s impact on the recovery. Shortly thereafter, a new Cabinet-level Office of Manufacturing Policy was established, co-chaired by Commerce Department Secretary John Bryson and Director of the National Economic Council Gene Sperling. This move marked the first time in the country’s history such a group has been led by people with this level of influence. Katz says it’s too early to tell how the establishment of these offices will impact manufacturing, but it’s a step in the right direction.

“I think this is absolutely essential, not just for there to be an office, but more importantly, for the president to talk about it consistently and persistently,” said Katz.

But, in an election year focused on economic policy, many wonder if the sudden emphasis on manufacturing is political rhetoric or if there is real momentum toward establishing a strong federal manufacturing policy. If the latter is true, others wonder if a Republican-elected president could slow this momentum. Katz says no matter who wins the 2012 election, he expects cuts in government spending to be significant.

“There is no doubt in my mind that either Obama or Romney will scale back the national government by major proportions,” began Katz. “The question is whether they will do that even remotely smartly and strategically. At a minimum, you want to have this really high-end, advanced R&D funding maintained. And, I would hope that we would maintain funding for manufacturing-extension applied technology centers.”

If funding for manufacturing policies and programs is cut, or if decisions are thwarted due to partisan conflict, Katz says it will be up to states and metropolitan areas to compensate.

“If the federal government remains in partisan gridlock, how much slack will the states have to make up?” questioned Katz. “If I’m a betting person, I would say that the states and metro areas are going to have to do more rather than less.”

“Best Practice” Examples of Metro Areas Supporting Advanced Manufacturing

Two examples of metropolitan areas that Katz says are “best practice” examples for supporting advanced manufacturing are Northeast Ohio and Chicago. Both recently completed metropolitan business plans that build on their regional strengths in advanced manufacturing. In Northeast Ohio, regional leaders launched PRISM, the Partnership for Regional Innovation Services to Manufacturers initiative. The goal of PRISM is to help small and medium-sized manufacturers in old commodities industries, like steel and automotive, to reinvent their products and business models to take advantage of growth opportunities in emerging markets like bioscience, healthcare, and clean energy. Katz says this group brings together higher education institutions, regional economic development organizations, and Ohio’s Edison Technology Centers to provide market research and business consulting services, increase firms’ access to capital and talent, and foster stronger relationships within growing industry clusters.

In Chicago, Mayor Rahm Emanuel oversaw the completion of a regional business plan, where one of the primary goals was to make Chicago a leading hub of advanced manufacturing. Katz says this strategy is aimed at accelerating growth in the advanced manufacturing industries in which Chicago specializes, to help low-growth legacy manufacturers repurpose assets and adopt advanced technologies, and expand workforce training programs to meet the needs of the regional labor market.

“States and the federal government should align with these metro plans,” explained Katz. “The federal government should lead where it must, and set a strong, clear national platform for productive and innovative growth in areas such as budget, trade, taxes, and immigration, but then get out of the way to let the states and metros innovate.”