Revitalize American Manufacturing by Nurturing the Industrial Commons
After a steep decline starting in the 1980s, manufacturers have added back more than a million jobs over the course of the economic recovery, and further revitalization has become a bipartisan priority with growing momentum. A critical component of future growth, popularized by Harvard Business professors Gary Pisano and Willy Shih and written about by The Century Foundation, is to grow the “industrial commons.” The commons is a way to unify regional actors around their shared goals: increase research and development; improve skills and training opportunities; and strengthen connections between suppliers. No single company alone can provide these critical shared resources, and so the industrial commons fosters collaboration in order to increase access to them for everyone.
Figure 1
Manufacturing Employment, US, 1979–2018. Notes: All manufacturing employment in thousands, seasonally adjusted, 1979—2018. Source: Federal Reserve Bank of St. Louis.
A pilot program launched in 2014 by the Commerce Department proved to be a promising approach to putting this idea into action. The Investing in Manufacturing Communities Partnership (IMCP), administered by the Economic Development Administration, aimed to strengthen the U.S. manufacturing sector and bolster regional economies. IMCP encouraged coordination among public and private actors and rewarded coalitions that provided actionable strategic plans for their region with a special designation. Through a competitive process, communities would be designated a “manufacturing community” (MC), based on their capacity to create well-paid jobs, spur innovation, and improve workforce development in the manufacturing sector.
The program officially designated twenty-four regions as “manufacturing communities.” Twelve communities were designated in 2014 and another twelve in 2015, with each designation lasting two years. Each community consisted of a mix of local governments, public private partnerships, regional planning agencies, workforce training agencies, and higher education. Federal assistance was provided to each group to help realize strategic goals, and to access existing funding opportunities.
Through its efforts with these designated communities, IMCP tackles a range of current economic development issues:
Worker training and placement: Many companies report difficulty finding skilled workers. Coordinated efforts improve training pathways for boosting skills in the workforce, and provide a matching mechanism for worker placement.
Industry innovation and competitiveness: Single-company tax-based incentives, or so-called “smokestack chasing,” pit states against each other and privilege the attraction of new companies over the retention and growth of existing companies. Sector-based strategies are a good low-cost alternative that spur innovation and competitive industries.
Connecting smaller businesses with resources: Coordinating regional supply chains provides access to capital for small- and medium-sized businesses, which historically have been an engine for economic growth in America.
The benefits that IMCP offers have not been extended by the Trump administration. However, there is a bipartisan bill currently under negotiation that would re-authorize IMCP and designate even more manufacturing communities. Senator Kirsten Gillibrand has introduced the bill and has bipartisan support from Senators Jerry Moran (R-KS), Shelley Moore Capito (R-WV), and Susan Collins (R-ME), along with four others1. A bipartisan House version was introduced by Representative David Cicilline (D-RI), and has been cosponsored by Tom Reed (R-NY), Tim Ryan (D-OH), and Claudia Tenney (R-NY), among others.
Figure 2
IMCP Designations by Area, Sector, and Year Designated. Source: Economic Development Agency.
How did communities get designated?
Eleven participating government agencies2, led by the Economic Development Administration of the Department of Commerce, together distributed a request for proposals, inviting local and regional institutions to band together to envision a regional industrial development strategy. These institutions, if selected, would be designated a “manufacturing community.”
Community proposals centered on key industries to be strengthened, described a vision for achieving goals for their region’s competitive manufacturing sectors, and included a list of key partners. As shown in Figure 2, Pittsburgh and Chicago specialize in metals manufacturing; south Kansas, central Washington, southern California, and Connecticut specialize in aerospace; Memphis and Minneapolis in medical devices; Tennessee Valley and Detroit in auto manufacturing; and so on. Each community would work toward unique goals, which were determined by the communities in the application. For example, Pittsburgh’s vision was to integrate new technologies into existing production, whereas Peoria’s was more based on building resilient supply chains. Chicago had a big focus on workforce development partnerships, and central Washington State aimed to grow the innovation pipeline.
Within each region’s specialization, communities would need to be able to measure progress in 6 main areas: workforce and training; research and innovation; infrastructure and site development; supply chain support; trade and international investment; and operational improvement and capital access. Communities were encouraged to report on recent progress in these areas. For example, the request for proposals encouraged documentation of “increases in private investment in the sector, creation of middle-to-high wage well-paying jobs, increased median income, increased exports, and improved environmental quality.”
Sign up for updates.
What Did Communities Gain from the Designation?
Grant support
Each MC was provided a federal point of contact (POC) from one of the participating agencies. POCs helped their MC identify and access existing federal economic development funding. Communities especially valued this personal assistance in navigating bureaucracy and the various funding channels, so much so that some leaders designated their point of contact as their Best Friend Forever, or BFF3.
Designated communities were also given preferential consideration by some of the eleven participating agencies for grant funding and technical assistance, depending on the grant program, and at the discretion of the agency. Major federal IMCP adopters included the Environmental Protection Agency (EPA), the Department of Defense (DOD), and the Department of Labor (DOL), among others. The EPA has shown particular interest in supporting sustainable manufacturing development, especially in helping communities with the remediation and redevelopment of brownfield sites. The DOD has supported manufacturing communities not only for procurement but to help sustain businesses and communities impacted by the 2014 military downsizing, for example in the central Washington MC. The DOL has supported communities by spearheading a movement toward practical education by, in particular, funding training centers for advanced manufacturing, for example, in southern California’s MC.
EDA Boosts Funding for Manufacturing Communities
The EDA is the nation’s leading economic development agency and has utilized its own tools to bolster the communities it had designated. Small investments have had a high payoff. According to EDA’s 2015 Annual Report, less than $800,000 invested in a south Arkansas training center is projected to create and retain over 500 jobs, and to stimulate a 15-percent increase in advanced manufacturing jobs over the next five years. The EDA has also done some heavier lifting and helped spur additional private funding. A $3-million investment in a short-line railroad extension for more efficient transport of Illinois’ manufactured goods could create over 1,000 new jobs and over $300 million in private investment.
MCs were featured in SelectUSA investment summits organized by the U.S. Department of Commerce as a way to attract foreign direct investment. The summits provided a space for their strengths to be recognized on an international scale. According to program analysts, this exposure boosted job growth and amount of capital raised.
Figure 3
Source: SelectUSA, summit impact by state.
Strategic Coordination
A key goal of the program was to spur enhanced strategic coordination, and interviews with community representatives confirmed that the program was successful on this count. In a group interview of MC leaders with The Century Foundation4, sentiments toward the designation were resoundingly positive, even among those communities that did not see a boost in grant funding. Almost all MC representatives noted the benefits of focus and coordination among groups that were previously only loosely connected. Coordination boosted capacity for higher-impact investment, regional cohesion, and workforce development.
A representative from the Alamo/San Antonio community said the designation encouraged them to look outside of their own metropolitan statistical area to loop in parts of the supply chain that were previously considered on the margins or out of the way, and that it has helped their surrounding communities significantly.
Strengthening workforce development pipelines requires coordination in order to align priorities of education with needs of industry. Sally Hanley, a director of Peoria’s Economic Development Council in Illinois, said the workforce piece of their MC strategy has been “very coalescing for the needs of our manufacturers.” One strategy for Peoria’s heavy equipment manufacturing cluster, Hanley said, has been developing “very good relationships with public schools.”
Deepak Bahl, program director at University of Southern California’s Center for Economic Development, said the “biggest outcome [of the designation] has been partnership development” among academia, industry, and government. New partnerships turned a single-county initiative into a broad-based effort with more than 150 partners. “Outcomes,” he said, “have been job creation at the local level, increased revenues, and workforce training.”
Sarah Lee, a project director at the Washington Department of Commerce, said the “forced partnership” allowed their community to “focus on a few catalytic investments in each [identified priority] category.” This allowed their aerospace industry cluster to “get jobs and keep manufacturers in business.”
What’s Ahead for IMCP?
A bipartisan group of senators are working to continue the progress made by the IMCP pilot program. The bipartisan bill, the Made in America Manufacturing Communities Act of 2017, would revitalize the manufacturing community designations. Many details in process and intention are the same as the original IMCP program. Communities will again be selected for a two-year designation by competitive process based on capacity for strategic plan creation and realization. All federal agencies will again be invited to participate in offering technical and grant assistance.
The bill implicitly acknowledges the benefit for communities, and for national competitiveness, of the designation and the program’s ability to enhance U.S. manufacturing. According to Senator Gillibrand, the bill would “help create good-paying manufacturing jobs, launch new businesses, and help grow our economy for years to come.”
“We have to work together to make sure American manufacturers stay competitive,” adds co-sponsor of the House bill Representative Reed (R-NY). “This is done by encouraging different levels of government to work with businesses and education leaders to help manufacturers succeed.”
Representative Claudia Tenney (R-NY) expressed benefits of the bill from a different perspective. “As the owner of a small manufacturing facility,” she said, “I understand the importance of public support and the impact it can have on local job creators. Partnerships created by this legislation will ensure that our local economies thrive by giving job creators the opportunity to become competitive and lead in their industries.”
Key features of the proposed legislation include:
Previously designated communities would be re-designated for up to three two-year terms (six additional years). All previously designated communities would need to submit their track record on key metrics.
Preferences for community selection would include those that incorporate workforce strategies focusing on the inclusion of women and minorities, who are under-represented in manufacturing jobs.
Technical assistance from the federal government to identify appropriate federal government sources that would boost competitive, high-paying manufacturing clusters.
Increased collaboration between the private sector and government, academic institutions, and other stakeholders through the required strategic planning process.
One argument against the bill is that it leaves non-designated communities behind, while helping others to get ahead. Another perspective is that IMCP makes the most of limited federal economic development dollars by incentivizing communities to come together to create a strategic plan before they get federal grants.
The benefits of this type of project are telling, even for communities that applied but failed to get designated in previous rounds. According to former EPA official Matt Bogoshian in an interview with The Century Foundation, IMCP coordinators received thank-you letters from communities that did not get designated expressing appreciation for the substantive connections gained through the process of applying.
Moreover, this approach recognizes the unique contributions of manufacturing to the U.S. economy. Manufacturing adds disproportionately to GDP and has much higher multiplier value throughout the economy, and represents a disproportionate share of innovation investment. However, manufacturing faces distinct international competition and the best way for the United States to maintain its global competitiveness is to focus on clusters of strong subsectors. The IMCP program would allow stakeholders in those competitive clustered sectors to maintain their edge. Not surprisingly, many of these communities are in parts of the country that have been economically disadvantaged by global trade deals, and IMCP is one way that the federal government can help those communities catch up.
The bill passed the U.S. Senate Commerce, Science, and Transportation Committee and is awaiting further action.
IMCP was a great example of how a small federal investment can lead to big results in creating the distinct public–private cooperation needed to revitalize U.S. manufacturing. It’s not surprising that leaders from both sides of the political aisle are working to continue the effort.
Notes
Senators Richard Blumenthal (D-CT), Angus King (I-ME), Amy Klobuchar (Democrat-affiliated, MN), and Tammy Baldwin (D-WI).
The Appalachian Regional Commission (ARC); Delta Regional Authority (DRA); Department of Housing and Urban Development (HUD); Department of Labor (DOL); Department of Transportation (DOT); Environmental Protection Agency (EPA); National Science Foundation (NSF); Small Business Administration (SBA); U.S. Department of Agriculture; U.S. Department of Commerce (DOC); and the National Institute for Standards and Technology (NIST). The initial request for proposals was issued in 2014.
Related by these community leaders to the author in a group interview, March, 2018.
Interview conducted by the author with manufacturing community leaders by phone, March, 2018.
Amanda Novello is a policy associate at The Century Foundation and works with Century’s Rediscovering Government Initiative. Her research interests include labor economics, the history of policy and economic development, and progressive economic policy.
Revitalize American Manufacturing by Nurturing the Industrial Commons
After a steep decline starting in the 1980s, manufacturers have added back more than a million jobs over the course of the economic recovery, and further revitalization has become a bipartisan priority with growing momentum. A critical component of future growth, popularized by Harvard Business professors Gary Pisano and Willy Shih and written about by The Century Foundation, is to grow the “industrial commons.” The commons is a way to unify regional actors around their shared goals: increase research and development; improve skills and training opportunities; and strengthen connections between suppliers. No single company alone can provide these critical shared resources, and so the industrial commons fosters collaboration in order to increase access to them for everyone.
Figure 1
Source: Federal Reserve Bank of St. Louis.
A pilot program launched in 2014 by the Commerce Department proved to be a promising approach to putting this idea into action. The Investing in Manufacturing Communities Partnership (IMCP), administered by the Economic Development Administration, aimed to strengthen the U.S. manufacturing sector and bolster regional economies. IMCP encouraged coordination among public and private actors and rewarded coalitions that provided actionable strategic plans for their region with a special designation. Through a competitive process, communities would be designated a “manufacturing community” (MC), based on their capacity to create well-paid jobs, spur innovation, and improve workforce development in the manufacturing sector.
The program officially designated twenty-four regions as “manufacturing communities.” Twelve communities were designated in 2014 and another twelve in 2015, with each designation lasting two years. Each community consisted of a mix of local governments, public private partnerships, regional planning agencies, workforce training agencies, and higher education. Federal assistance was provided to each group to help realize strategic goals, and to access existing funding opportunities.
Through its efforts with these designated communities, IMCP tackles a range of current economic development issues:
The benefits that IMCP offers have not been extended by the Trump administration. However, there is a bipartisan bill currently under negotiation that would re-authorize IMCP and designate even more manufacturing communities. Senator Kirsten Gillibrand has introduced the bill and has bipartisan support from Senators Jerry Moran (R-KS), Shelley Moore Capito (R-WV), and Susan Collins (R-ME), along with four others1. A bipartisan House version was introduced by Representative David Cicilline (D-RI), and has been cosponsored by Tom Reed (R-NY), Tim Ryan (D-OH), and Claudia Tenney (R-NY), among others.
Figure 2
How did communities get designated?
Eleven participating government agencies2, led by the Economic Development Administration of the Department of Commerce, together distributed a request for proposals, inviting local and regional institutions to band together to envision a regional industrial development strategy. These institutions, if selected, would be designated a “manufacturing community.”
Community proposals centered on key industries to be strengthened, described a vision for achieving goals for their region’s competitive manufacturing sectors, and included a list of key partners. As shown in Figure 2, Pittsburgh and Chicago specialize in metals manufacturing; south Kansas, central Washington, southern California, and Connecticut specialize in aerospace; Memphis and Minneapolis in medical devices; Tennessee Valley and Detroit in auto manufacturing; and so on. Each community would work toward unique goals, which were determined by the communities in the application. For example, Pittsburgh’s vision was to integrate new technologies into existing production, whereas Peoria’s was more based on building resilient supply chains. Chicago had a big focus on workforce development partnerships, and central Washington State aimed to grow the innovation pipeline.
Within each region’s specialization, communities would need to be able to measure progress in 6 main areas: workforce and training; research and innovation; infrastructure and site development; supply chain support; trade and international investment; and operational improvement and capital access. Communities were encouraged to report on recent progress in these areas. For example, the request for proposals encouraged documentation of “increases in private investment in the sector, creation of middle-to-high wage well-paying jobs, increased median income, increased exports, and improved environmental quality.”
Sign up for updates.
What Did Communities Gain from the Designation?
Grant support
Each MC was provided a federal point of contact (POC) from one of the participating agencies. POCs helped their MC identify and access existing federal economic development funding. Communities especially valued this personal assistance in navigating bureaucracy and the various funding channels, so much so that some leaders designated their point of contact as their Best Friend Forever, or BFF3.
Designated communities were also given preferential consideration by some of the eleven participating agencies for grant funding and technical assistance, depending on the grant program, and at the discretion of the agency. Major federal IMCP adopters included the Environmental Protection Agency (EPA), the Department of Defense (DOD), and the Department of Labor (DOL), among others. The EPA has shown particular interest in supporting sustainable manufacturing development, especially in helping communities with the remediation and redevelopment of brownfield sites. The DOD has supported manufacturing communities not only for procurement but to help sustain businesses and communities impacted by the 2014 military downsizing, for example in the central Washington MC. The DOL has supported communities by spearheading a movement toward practical education by, in particular, funding training centers for advanced manufacturing, for example, in southern California’s MC.
EDA Boosts Funding for Manufacturing Communities
The EDA is the nation’s leading economic development agency and has utilized its own tools to bolster the communities it had designated. Small investments have had a high payoff. According to EDA’s 2015 Annual Report, less than $800,000 invested in a south Arkansas training center is projected to create and retain over 500 jobs, and to stimulate a 15-percent increase in advanced manufacturing jobs over the next five years. The EDA has also done some heavier lifting and helped spur additional private funding. A $3-million investment in a short-line railroad extension for more efficient transport of Illinois’ manufactured goods could create over 1,000 new jobs and over $300 million in private investment.
MCs were featured in SelectUSA investment summits organized by the U.S. Department of Commerce as a way to attract foreign direct investment. The summits provided a space for their strengths to be recognized on an international scale. According to program analysts, this exposure boosted job growth and amount of capital raised.
Figure 3
Strategic Coordination
A key goal of the program was to spur enhanced strategic coordination, and interviews with community representatives confirmed that the program was successful on this count. In a group interview of MC leaders with The Century Foundation4, sentiments toward the designation were resoundingly positive, even among those communities that did not see a boost in grant funding. Almost all MC representatives noted the benefits of focus and coordination among groups that were previously only loosely connected. Coordination boosted capacity for higher-impact investment, regional cohesion, and workforce development.
A representative from the Alamo/San Antonio community said the designation encouraged them to look outside of their own metropolitan statistical area to loop in parts of the supply chain that were previously considered on the margins or out of the way, and that it has helped their surrounding communities significantly.
Strengthening workforce development pipelines requires coordination in order to align priorities of education with needs of industry. Sally Hanley, a director of Peoria’s Economic Development Council in Illinois, said the workforce piece of their MC strategy has been “very coalescing for the needs of our manufacturers.” One strategy for Peoria’s heavy equipment manufacturing cluster, Hanley said, has been developing “very good relationships with public schools.”
Deepak Bahl, program director at University of Southern California’s Center for Economic Development, said the “biggest outcome [of the designation] has been partnership development” among academia, industry, and government. New partnerships turned a single-county initiative into a broad-based effort with more than 150 partners. “Outcomes,” he said, “have been job creation at the local level, increased revenues, and workforce training.”
Sarah Lee, a project director at the Washington Department of Commerce, said the “forced partnership” allowed their community to “focus on a few catalytic investments in each [identified priority] category.” This allowed their aerospace industry cluster to “get jobs and keep manufacturers in business.”
What’s Ahead for IMCP?
A bipartisan group of senators are working to continue the progress made by the IMCP pilot program. The bipartisan bill, the Made in America Manufacturing Communities Act of 2017, would revitalize the manufacturing community designations. Many details in process and intention are the same as the original IMCP program. Communities will again be selected for a two-year designation by competitive process based on capacity for strategic plan creation and realization. All federal agencies will again be invited to participate in offering technical and grant assistance.
The bill implicitly acknowledges the benefit for communities, and for national competitiveness, of the designation and the program’s ability to enhance U.S. manufacturing. According to Senator Gillibrand, the bill would “help create good-paying manufacturing jobs, launch new businesses, and help grow our economy for years to come.”
“We have to work together to make sure American manufacturers stay competitive,” adds co-sponsor of the House bill Representative Reed (R-NY). “This is done by encouraging different levels of government to work with businesses and education leaders to help manufacturers succeed.”
Representative Claudia Tenney (R-NY) expressed benefits of the bill from a different perspective. “As the owner of a small manufacturing facility,” she said, “I understand the importance of public support and the impact it can have on local job creators. Partnerships created by this legislation will ensure that our local economies thrive by giving job creators the opportunity to become competitive and lead in their industries.”
Key features of the proposed legislation include:
One argument against the bill is that it leaves non-designated communities behind, while helping others to get ahead. Another perspective is that IMCP makes the most of limited federal economic development dollars by incentivizing communities to come together to create a strategic plan before they get federal grants.
The benefits of this type of project are telling, even for communities that applied but failed to get designated in previous rounds. According to former EPA official Matt Bogoshian in an interview with The Century Foundation, IMCP coordinators received thank-you letters from communities that did not get designated expressing appreciation for the substantive connections gained through the process of applying.
Moreover, this approach recognizes the unique contributions of manufacturing to the U.S. economy. Manufacturing adds disproportionately to GDP and has much higher multiplier value throughout the economy, and represents a disproportionate share of innovation investment. However, manufacturing faces distinct international competition and the best way for the United States to maintain its global competitiveness is to focus on clusters of strong subsectors. The IMCP program would allow stakeholders in those competitive clustered sectors to maintain their edge. Not surprisingly, many of these communities are in parts of the country that have been economically disadvantaged by global trade deals, and IMCP is one way that the federal government can help those communities catch up.
The bill passed the U.S. Senate Commerce, Science, and Transportation Committee and is awaiting further action.
IMCP was a great example of how a small federal investment can lead to big results in creating the distinct public–private cooperation needed to revitalize U.S. manufacturing. It’s not surprising that leaders from both sides of the political aisle are working to continue the effort.
Notes
Related posts: