American manufacturing is in a quiet crisis. Low productivity growth and decades of job losses have meant that U.S. manufacturers no longer have the capacity to produce entire categories of goods competitively and at scale. To some, this might not seem like a crisis. Unemployment for the last decade has been comparatively low, and inexpensive imports have continued to satisfy American demand for industrial and household goods. But the weakness of American manufacturing has come with costs for national security, domestic innovation, and consumers at the mercy of global supply chains.
Without a strong domestic industrial base, the U.S. military struggles to source the most advanced technology domestically. Innovators benefit from having the capacity to produce goods near where they are engineered. And in an emergency like a pandemic that shocks the global economy, consumers benefit from reliable domestic sources of supply. The American manufacturing crisis has been quiet because these costs rarely show up in headlines about layoffs or factory closures. Instead, they manifest as missed opportunities to advance government capabilities, middle-skill jobs, and domestic innovation.
There is an alternative path for U.S. manufacturing. Amidst national challenges, some American manufacturing firms and regions have experienced dramatic advances in their technological capabilities, productivity, and wages. These cases represent models for what the U.S. manufacturing economy can achieve. The manufacturing research agenda at the IPC is to understand how some manufacturers thrive as others struggle — and what policies and practices can help replicate the successes of thriving American factories.
The U.S. military relies on manufacturers – particularly small and medium manufacturing firms – to sustain the defense supply chain, and a substantial share of U.S. manufacturing firms count DoD as a customer.
The IPC's manufacturing research builds on MIT's Production in the Innovation Economy (PIE) project, which sought to analyze the state of production in the United States and to propose new routes from innovation through manufacturing to jobs and growth in the United States. PIE was an Institute-wide effort, modeled on the successful Made in America project of 20 years ago, which led to the creation of the IPC.
Led by Suzanne Berger, the PIE team demonstrated why the United States continued to need manufacturing. It wasn't just for national security or good jobs. It was also because production and innovation benefit from being near one another. Without strong manufacturing capabilities, innovation will suffer. These findings informed national manufacturing during the Obama Administration and were foundational for the manufacturing research that followed.
Richard Lester is the founding Executive Director and Faculty Chair of the Industrial Performance Center.
Michael L. Dertouzos
Robert M. Solow
Based on interviews with hundreds of workers, this vivid portrait not only identifies weaknesses and problems in management and productivity, but offers workable solutions for making American business work well again.
Ben Armstrong is Executive Director of the Industrial Performance Center and co-leads the Work of the Future Initiative.
A spotlight is on the U.S. semiconductor industry. After decades of decline, there is a wave of new investment from private industry and the federal government to jumpstart domestic chipmaking with the goal of making U.S. semiconductor production more cost competitive and technologically advanced. Whereas the United States did not have any chipmaking capacity at […]