Manufacturing is a critical sector for American economic well-being. The value chains in the American economy that rely on manufactured goods account for 25% of employment, over 40% of gross domestic product (GDP), and almost 80% of research and development (R&D) spending in the United States. Yet U.S. leadership in manufacturing is eroding. U.S. manufacturing employment plummeted by one-third—and 60,000 U.S. factories were closed—between 2000 and 2010 (Bonvillian and Singer, Advanced Manufacturing: The New American Innovation Policies, MIT Press, 2018, 52, 265.) Only some 18% of the production jobs lost in the United States during the Great Recession were recovered in the following decade, and production output only returned to its pre–Great Recession levels in 2018. This hollowing out of U.S. manufacturing has been largely driven by international competition, particularly from China. China passed the United States in 2011 as the largest global manufacturing power in both output and value added. The nations have literally traded places: China now has 31% of world manufacturing output while the U.S. has dropped to 16%. The U.S. has not just lost leadership in low-price commodity goods: As part of its massive trade deficit in 2023 of $733 billion in overall manufactured goods, the U.S. ran a deficit of $218 billion in advanced technology goods.

Declining U.S. manufacturing has sharply curtailed a key path to the middle class for those with high school educations or less, thereby exacerbating income inequality nationwide. As a country, we are increasingly leaving a large part of our working class behind an ever-advancing upper middle class. The problems plaguing the domestic manufacturing sector are multifold: American manufacturing productivity is historically low; the supporting ecosystem for small and midsized manufacturers has thinned out so they are slow to adopt process and technology innovations; manufacturing firms lack access to financing when they seek to scale up production for new innovations; manufacturing is poorly supported by our workforce-education system; and we have disconnected our innovation system from our production systems.

The United States can address many of these problems through concerted efforts in advanced manufacturing. Advanced manufacturing means introducing new production technologies and processes to significantly lower production costs and raise efficiency. This would reposition the United States to better compete internationally. Advanced manufacturing also requires that we reconnect innovation with production. A milestone in advanced manufacturing came in 2012, when the federal government established the first of 17 Advanced Manufacturing Institutes with two more planned. Each institute in this network is organized around developing new advanced technologies, from 3D printing to digital production to biofabrication. Each also represents a collaboration among industry, government, and academic institutions. Three federal agencies invest a total of approximately $200 million per year in the institutes—an amount matched by industry and states. 

The manufacturing institutes have proven successful to date. But they cannot reboot American manufacturing alone; other efforts are needed. Key U.S. trading partners and competitors spend far more on maintaining their manufacturing base and investing in advanced manufacturing compared to their GDP than the U.S. does. To restore U.S. leadership in manufacturing and rebuild manufacturing as a route to quality jobs for Americans, the federal government must double down on advanced manufacturing nationwide. Specifically, the next administration should:

• Create a White House Office of Advanced Manufacturing to provide centralized agency leadership and develop a strategic plan positioning the United States as world leader in advanced manufacturing.
• Create a new financing mechanism for scale-up of promising advanced manufacturing production.
• Grow the funding for manufacturing institutes and improve the program. 
• Multiply the level of R&D in advanced manufacturing at federal agencies and better connect the manufacturing institutes and manufacturers to the strengths of the federal research system.
• Link new technologies emerging from research agencies and the manufacturing institutes to acquisition programs of the Department of Defense for implementation.
• Create a new workforce-education system designed to prepare workers for jobs in advanced manufacturing.
• Develop an ongoing assessment of advanced production capabilities emerging in other nations. 

More detail on these and related recommendations is provided below. 

Challenge

Obstacles facing U.S. manufacturing

The United States faces multiple obstacles related to manufacturing:

• Low manufacturing productivity. The rate of U.S. manufacturing productivity growth has been in decline for more than a decade. Since 2009, annual U.S. manufacturing productivity growth has averaged less than a quarter of a percent, far behind Germany, Taiwan, the United Kingdom, South Korea, France, and Italy. Low productivity signals a problem with the innovation system underlying the domestic manufacturing sector. 
• Thinned-out manufacturing ecosystem. Investment in capital plant, equipment, and information technology is at historically low levels. The U.S. financial sector has pressured firms to lower financial risk by cutting back on the scope of their production activities, vertical integration and connections to suppliers (known as going “asset light”). This has incentivized offshoring, outsourcing, and a thinning of the shared links between firms in areas like training and best production practices—the manufacturing commons. This was particularly problematic for small and midsized manufacturers who relied on this commons. The U.S. has been slow to implement advanced manufacturing—for example, in robots per manufacturing worker, the U.S. is seventh among industrialized nations, far behind Korea, Germany, and China. A large part of this problem is that small and midsized firms, which have close to half of U.S. manufacturing output, are left behind in manufacturing innovation and are slow to adopt new advanced manufacturing technologies.
• Limited capacity to conduct and scale innovation. Small and midsized manufacturers, which tend to be risk-averse and thinly capitalized, have limited capacity to conduct in-house R&D and innovation. Although larger firms have greater capacity for innovation, becoming increasingly globalized has affected U.S. firms’ innovation capacity. And the entrepreneurial, venture-backed startups that have traditionally injected innovation into the U.S. economy have focused overwhelmingly on software, services, and biotechnology. “Hardtech” firms that plan to manufacture received only a small fraction of U.S. venture-capital investments. In contrast, China provides massive financing for its firms to scale up production in critical technology areas and to adopt advanced manufacturing, totaling approximately $500 billion a year. It has also authorized $1.6 trillion in “guidance funds,” private-sector funds with joint private capital and government funding for scaling up manufacturing production. The U.S. has no comparable production scale-up mechanisms.
• Poor support from the workforce-education system. Although a highly skilled workforce is essential to rapidly introduce new technologies, the United States has reduced spending on workforce training, including in manufacturing. The U.S. government also significantly underinvests in workforce-training programs, dedicating just 0.1% of GDP to active labor-market programs—less than half of what it did three decades ago. (By comparison, other Organization for Economic Development governments dedicate an average of 0.6% of GDP to such programs.) The U.S. labor market also lacks a system to help employers and employees learn about and navigate training programs or make connections between school and work to help new entrant workers handle the transition. Labor Department programs focus on underemployed workers, not upskilling incumbent workers with the new skills required in manufacturing, and Education Department programs focus on college education, not workforce education. 
• Delinked innovation and production. There is a tendency to think of innovation exclusively as part of R&D. Yet production is a key stage in the innovation pipeline. Production—especially of a new technology—requires creative engineering and iteration with researchers. Investing in basic R&D but not innovative manufacturing technologies and processes makes us strong on technology ideas but lacking the capacity to move these ideas from prototype to production. Because innovation and production are so closely linked, outsourcing production equates to outsourcing innovation—which in turn makes it easier for international competitors to capitalize on American ingenuity and erode American economic strength. 

From 2000 to 2010, U.S. manufacturing employment fell precipitously, from about 17 million to under 12 million. While employment declined in all manufacturing sectors, those most prone to globalization (such as textiles and furniture) were especially affected. This is largely attributable to China’s competitive entry into manufacturing, which experts have estimated caused the loss of 2.4 million U.S. manufacturing jobs.

The U.S. manufacturing decline has adversely affected economic well-being in numerous historically industrialized regions—especially for the men without college degrees who have long led U.S. manufacturing employment. Full-year employment of men with a high school diploma but without a college degree dropped from 76% in 1990 to 68% in 2013, and the share of these men who did not work at all rose from 11% to 18%. While real wages have grown over recent decades for men and women with college degrees, they fell for men without college degrees. These trends have affected the working class overall and are particularly worrying for the socioeconomic mobility of minority populations in the United States. African Americans and Hispanics have long comprised a significant portion of the manufacturing workforce, and manufacturing jobs have long been a critical route to enter the middle class. With manufacturing’s decline, this avenue upward has significantly narrowed. While post-COVID workforce shortages slightly improved the economic position of the working class for the past two years, a deep gulf of economic inequality remains.

Opportunity

Although lagging behind countries such as Germany, Japan, Korea, Taiwan, and China in manufacturing innovation, the United States is still a world leader on R&D innovation overall. There is a valuable opportunity to leverage domestic capabilities in R&D innovation to bolster manufacturing capabilities in. A variety of cutting-edge technologies—including new sensor and control systems, big data and analytics, robotics, artificial intelligence (AI), complex simulation and modeling, advanced materials and composites, biofabrication, mass customization (the ability to produce small customized lots at mass-production costs through 3D printing and computerized controls), nanofabrication, and photonics—have potential applications in manufacturing. Using such technologies to create new advanced-manufacturing paradigms could transform manufacturing efficiency, productivity, and returns on investment. 

A national advanced manufacturing initiative would yield multiple benefits. Investment in advanced manufacturing could restore U.S. manufacturing leadership and therefore help employment; in addition, certain advanced-manufacturing technologies (e.g., 3D printing) could re-localize supply chains and generate additional jobs. Pursuing innovative manufacturing methods could improve production cost efficiency, enabling the United States to compete successfully with nations where labor costs are lower. Production innovation will also generate better products and create new product markets. Finally, robust domestic manufacturing capabilities are increasingly understood to be essential to national security. Advanced manufacturing constitutes a “leap ahead”: If the U.S. could lead on the mix of these new innovative technologies and related processes, it could again be a manufacturing leader. 

Plan of Action

A manufacturing transformation requires the following steps:

• Create White House Office of Advanced Manufacturing to coordinate advanced manufacturing policy across agencies and with industry and develop an ongoing strategic manufacturing plan. 
• Implement a new financing mechanism to scale up advanced manufacturing in companies.
• Improve and adequately fund the manufacturing institute program. 
• Undertake R&D on manufacturing technologies and processes at federal research agencies and connect it to the institutes. 
• Link new manufacturing technologies emerging from the R&D agencies and the manufacturing institutes to acquisition by the Department of Defense for implementation.
• Reform the manufacturing workforce education system.
• Develop an ongoing assessment of innovation and advanced production capabilities in critical technology areas emerging in other nations. 

Recommendation 1. Create a new White House Office of Advanced Manufacturing to coordinate across agencies and develop a strategic plan for positioning the United States as a world leader in advanced manufacturing.

The White House Office of Advanced Manufacturing should work with the National Economic Council and the President’s Council of Advisors for Science and Technology (PCAST)—as well as industry, university, and government leaders—to develop a public/private national advanced manufacturing strategic plan. Staffing and support could come from Manufacturing USA (the network organization for the institutes) and the three federal agencies that fund the institutes (DOD, DOE, and DOC), as well as from other involved agencies. The plan should:

• Outline recommended policies to support overall manufacturing-technology development, expand advanced workforce education, address needed trade measures, and secure a sound manufacturing economic climate.
• Coordinate the manufacturing R&D and development efforts across federal agencies, including the three leading departments (DOD, DOE and DOC) as well as R&D agencies. This should include coordination across the manufacturing institutes and the through the Manufacturing USA network.
• Specify funding levels needed to carry out key advanced-manufacturing efforts and address recommendations listed below.
• Provide specific implementation steps for the President and Congress.

The strategy should also establish a mechanism and timeline for periodic updating of the plan.

Recommendation 2. Create a New Financing Mechanism for Scale-Up of Advanced Manufacturing

While venture capital has been a major force financing innovation in the U.S., it is now focused overwhelmingly on software, biotech, and various services sectors, not on “hard tech” – innovations that must be manufactured. This means there are few mechanisms to scale up manufacturing production in the U.S. 

Shifting to advanced manufacturing requires scale-up financing to support it. This is particularly a problem for small and midsized manufacturers who are reluctant to take the risk of significant investments in new advanced manufacturing technologies. We have a number of models for scale-up financing: The CHIPS Act, to reestablish U.S. manufacturing of advanced semiconductor chips because of national security concerns, provided grant authority of $39 billion for new fabrication facilities as well as low-cost financing and investment tax credits. Operation Warp Speed in 2020 used guaranteed contracts to COVID-19 vaccine makers to reduce their risks and assure production. Senator Chris Coons and colleagues have proposed an industrial finance corporation for innovative manufacturing. The DOD in 2022 created a new Office of Strategic Capital for technology scale up, although it appears focused more on national security rather than broader economic security goals. The Biden Administration proposed repurposing an established federal bank, the Ex-Im Bank, to provide manufacturing scale-up support along with its long-standing export financing role. The DOE’s Loan Programs Office has since 2005 provided financing for scale-up of new energy technologies. In addition, states have often provided financing to firms to support regional job creation. 

There are a range of possible manufacturing scale-up mechanisms. Because it is an existing bank fluent with industry lending and risk, Ex-Im appears a logical contender for significant expansion of its program into manufacturing scale-up financing. It has a broad authorization that would enable it to do so and has embarked on initial lending in this area. This uses the capability of an existing institution and avoids having to create a new one. Applying this and other mechanisms with expanded lending authority for advanced manufacturing scale up could be a solution to this serious manufacturing system gap. 

Recommendation 3. Improve the Advanced Manufacturing Institute Program 

A key part of the manufacturing transformation involves improving the federally funded advanced manufacturing institute program, also called Manufacturing USA (a.k.a. the institutes). The institutes, which were formed to help close the gap between R&D innovation and production innovation, involved the critical actors required for developing advanced manufacturing technologies: industry, universities, community colleges, and federal, state, and local government. 

Established based on recommendations from the industry- and university-led Advanced Manufacturing Partnership (AMP) in 2012, the 17 institutes are designed to create new production paradigms in different production areas, shared across the supply chains of large and small firms and across industry sectors. The institutes are partially funded by federal agencies: nine are funded by the Department of Defense (DOD), seven by the Department of Energy (DOE), and one (plus the two upcoming institutes funded through the CHIPS Act) by the Department of Commerce (DOC). Total federal funding for the institutes is currently approximately $200 million per year. Each federal dollar is typically matched by about two dollars from industry and state governments. 

Why institutes? One key reason is that the great majority of the U.S. manufacturing sector firms are small and midsized, producing nearly half of U.S. output, that—as noted above—typically do not perform in-house R&D and have difficulty accessing the production innovation they need to compete. Challenges facing small and midsize manufacturing firms became even greater in the 2000s, when U.S. manufacturing output stagnated and factories closed. Moreover, even larger firms with R&D capabilities need to collaborate to share the major risks and costs of transitioning to new production paradigms. The institutes address these challenges and needs by acting as test beds—providing a range of industries and firms with opportunities to collaborate on, test, and prove prototypes for advanced production technologies and processes. The institutes also help fill manufacturing talent gaps, training technical workers to use advanced technologies and to develop processes and routines for introducing advanced technologies into established production systems. And, as noted, they can bring the critical actors together (industry, academia, government). Any manufacturing technology program to work has to connect these actors. 

In short, the manufacturing institutes help fill gaps in the U.S. manufacturing innovation system by: 

• Connecting small and large firms in collaborative innovation to restore the thinned-out manufacturing ecosystem.
• Relinking innovation and production through collaborations between firms and universities.
• Pursuing innovations that improve manufacturing efficiency and productivity.
• Providing shared facilities to support scale-up of promising technologies.
• Training a skilled workforce to use advanced manufacturing technologies. 

Although technology development is a long-term project, the institutes have already delivered some notable results. Institute-supported achievements to date include:

• The first foundry for tissue engineering
• Standards to guide implementation of 3D-printing technology
• Optimized sensor networks for smart manufacturing
• Advanced fibers that contain individually controllable electronic devices
• A virtual software tool that replicates supplier tools in order to verify that production can meet highly precise standards
• A suite of online courses to educate technicians and engineers in integrated photonics production

These successes notwithstanding, the current institute program cannot solve the systemic problems plaguing U.S. manufacturing. The next administration should dramatically scale up and expand the role of the institutes as part of an effort to usher in a new era of advanced manufacturing nationwide.

The institutes’ collaborative, cost-shared, public/private model is designed to engage all critical stakeholders. But with U.S. manufacturing contributing $2.3 trillion to GDP, federal spending of just $200 million annually to support the institutes (even if those funds are matched by industry and state governments) will not make a large impact. Specific recommendations for the institutes are:

Increase funding for the Manufacturing USA institute program 

The institutes are delivering successes, but they are not funded at a level commensurate with their important role. The level of seed funding has significantly declined in the institutes supported by the DOE and DOD. While the DOC’s single institute has kept up its funding level, the others have faced reductions in the federal share after their initial terms of five years. This has limited, in particular, their programs with small and midsized companies and in workforce education. The federal investment per institute needs to return to well above the $50–70 million level initially awarded per institute over their initial five years. Given what our international competitors are investing, an institute program of at least $500 million a year is needed. The new national strategic plan for advanced manufacturing (described above) could guide funding requests. 

Action steps

The next president should seek additional funding for additional institutes, with a goal of increasing the total federal support for institutes of $500 million The next president should also ask other federal agencies with significant research budgets and mission stakes in the industrial economy—such as the National Aeronautics and Space Administration (NASA), the U.S. Department of Agriculture (USDA), and the Department of Health and Human Services (HHS)—to consider sponsoring institutes. Funding levels per institute should be determined by a combination of institute performance, national-strategy recommendations, and the particulars of proposed projects.

Instead of term-limiting institutes, the agencies have been establishing a formal process for determining whether an institute’s term should be extended, but they need to provide funding at least comparable to the institute’s initial term

The institutes were initially established with five-year fixed terms. But the job of the institutes is not done in five years—addressing the deep structural issues in U.S. manufacturing innovation will require sustained effort over decades. Continuing federal seed funding is still needed at least at levels of their initial five-year terms to leverage private sector investment. However, the agencies have been going in different directions on subsequent funding. Congress has recognized that the institutes should not face fixed terms. But this does not mean that all institute terms should be automatically renewed. The federal government should extend those that are working well, end those that aren’t, and require improvements in others. Like any experiment, the institutes will engender successes and failures. The institute network needs a governance process that recognizes that. 

Two of the three federal agencies that currently fund and oversee the institutes—DOD, and DOC—have been implementing performance metrics aligned with the strategic goals of the institutes. DOD and DOC have developed a formal evaluation process that each institute must go through when it approaches the end of its term and applies for term renewal. DOE is now following their lead, subject to availability of funding. This review process was specifically recommended by a National Academies study. Agencies should consider elements such as an institute’s progress on its technology-development roadmaps, the impact of its current and planned technology development, the reach of its workforce-education efforts, involvement of small and midsized firms, and continued support from and cost-sharing by industry and states. The evaluation process and criteria should be carefully developed such that they can be conducted by an impartial, third-party expert review team. Finally, the evaluation process should be as consistent as possible across the entire institute network.

Where the evaluation concludes that an institute is making adequate progress, the evaluation team should recommend that its funding be renewed for an additional five-year term. If progress is inadequate, the institute could be terminated or recommended for renewal contingent on specific improvements. In cases where an inadequate institute has responsibility for an essential technology area, the evaluation team could also recommend seeking different leadership and organizational changes. All evaluations—even those for institutes deemed to be making adequate progress—could provide recommendations for improvements.

It is not enough to establish a formal review process; if an institute is performing well, it should be extended for an additional term at funding levels at least comparable to the funding level it received for its initial term. The agencies have gone in different directions on this key point. DOC has extended its institute with full funding; DOD and DOE provide only limited funding to the extent that it is available. Given the gravity of U.S. manufacturing problems, this needs to change. 

Action steps

When institutes are meeting their mission goals, they should extend their terms at funding levels at least comparable to what these institutes initially received. 

Use the institutes to strengthen industry supply chains by bringing all supply-chain participants into demonstration facilities

Most of the institutes have established hands-on and virtual demonstration and design facilities accessible to small and midsized firms participating in the institutes. These facilities are important because smaller firms are less likely to adopt new production technologies unless they can see how those technologies would work within production lines, train employees in using new technologies, and estimate the potential efficiency gains new technologies could yield for them.

But many advanced-manufacturing technologies—such as digital-production technologies—cannot be implemented unless adopted by all participants in a given supply chain. The institutes need to bring in participants of industrial supply chains in addition to individual firms in order to disseminate advanced-manufacturing technologies most successfully.

Action steps

The institutes should develop programs whereby larger manufacturers can bring in other participants in their supply chains as new technologies become ready for adoption. Manufacturing USA should support supply-chain-level demonstration and testing using institute demonstration facilities. NIST’s Manufacturing Extension Partnership (MEP) programs should be asked to assist in these efforts given their access to small manufacturing firms. In general, the new administration should support expanded collaboration and system-wide thinking at the implementation stage of advanced-manufacturing technologies and ensure that new technologies and processed developed at institutes move deep into the supply chain, not just to larger firms.

Network the manufacturing institutes to package their different technology advances to be integrated and readily useable by manufacturers

Because companies will want to adopt a series of new technologies, collaboration across the institutes will likely be essential to improving workforce education. Cross-institute collaboration will also help private-sector participants build “factories of the future” that integrate multiple advanced-manufacturing technologies. The role of Manufacturing USA needs to be expanded to support collaboration in these areas as well as cost sharing, dissemination of best practices in intellectual property, membership organization, involvement of small and midsized firms, and joint access to facilities and equipment. Yet agency cooperation to sustain the network has been limited at the time when the need for a collaborative network is becoming clearer. Companies, particularly smaller companies, don’t want individual stovepiped technologies. They want robotics and digital production technologies and analytics plus new areas such as 3D printing—and they need to be interoperable. They don’t want one-off technologies. Presenting manufacturers with integrated packages of technologies with demonstrated efficiency increases will be key to adoption. Similarly, companies would like workforce skills packaged and integrated across new technology fields. 

Action steps

The next administration should expand the role of Manufacturing USA to help the institutes, participating companies, and the workforce as a whole confront the challenges of implementing advanced manufacturing. In particular integrating multiple advanced-manufacturing technologies from multiple institutes to be offered to manufacturers as a package will be key.

Recommendation 4. Bring the strength of the U.S. early-stage R&D innovation system to bear on advanced manufacturing

Federal R&D agencies do not have significant research portfolios around advanced manufacturing technologies and processes, contributing to a serious innovation gap in U.S. manufacturing. While federal research agencies have made massive contributions to information technologies and life science advances, for example, they have not focused on manufacturing technologies. Given our societal challenge in manufacturing, they need to develop this approach. These new research efforts must be connected to and involve industry to help identify the most significant technology opportunities. Because the institutes work on applied and later-stage research, they rely on “feeder systems” for early-stage research. When the institutes aren’t connected closely enough to early-stage research systems—when they have limited knowledge of what research is being carried out and limited capacity to inform the research agenda—they risk “stranded technology” problems. In other words, they will be limited in their ability to capitalize on new results and/or to keep developing concepts progressing. The incoming administration should strive to better link the federal basic-research system (including DOD’s 6.1–6.3-level research programs, NSF’s engineering and computing research and its new directorate for Technology, Innovation and Partnerships, and DOE research at ARPA-E, OS, and EERE) both to industry and to the institutes and their technology focus areas. 

Action steps

The next administration should work through OSTP, with its agency-convening authority, to require federal entities responsible for basic research to develop and implement significant research portfolios around advanced manufacturing. Industry should advise and participate in this research. In addition, OSTP, in cooperation with the proposed White House Advanced Manufacturing Office, should form joint R&D agency and manufacturing institute planning and roadmapping processes to support the institutes’ technology focus areas. Such an effort will assist agencies in developing and highlighting research activities that complement the institutes’ technology-development activities, and vice versa. 

Recommendation 5. Link new manufacturing technologies emerging from the R&D agencies and the manufacturing institutes to acquisition by the Department of Defense 

DOD has a massive annual procurement program; this program could be used to introduce advanced production technologies and processes that could help DOD lower costs and improve system performance. DOD has done this before. When computer numerically controlled (CNC) equipment was developed at MIT in the 1950s, DOD saw that it could significantly improve the precision and performance in missiles and other technologies. It therefore required its manufacturing suppliers to adopt CNC equipment and helped finance its introduction at these firms. Application at these firms spread CNC equipment to virtually all manufacturers today. We could use this same approach today to get advanced manufacturing technologies in place.

DOD did not select the technology focus areas for its nine manufacturing institutes by accident; these technologies support its industrial base and new systems need them. Thus, the institutes are critical for ensuring that DOD possesses the domestic capacity to produce new innovations at scale. Technologies produced by non-DOD-funded institutes are often relevant to DOD as well. For example, the power electronics coming out of a DOE-funded institute will yield not only improved energy efficiency but improved electronics and power systems in general, which are important to DOD. Another DOE-funded institute is developing advanced composites that could significantly improve DOD operating platforms.

Unlike other agencies, DOD not only has a major acquisition system, but it is connected to its R&D system—it can research, develop, and build new technologies. Most private-sector manufacturing firms, particularly smaller firms, tend to be risk- and cost-averse and are hence often reluctant to lead on production in new areas. DOD can fill this gap by using its acquisition system to support testing, design prototyping, and initial procurement for new technologies coming out of the institutes. This would benefit the nation by jump-starting deployment of emerging innovations and would benefit DOD by providing the agency with early access to technologies not yet available on the private market. 

Action steps

The incoming administration should direct DOD to (1) review its relevant demonstration, testing, and acquisition processes so they can be used for implementing advanced manufacturing technologies, (2) identify specific options for the agency to leverage these processes to procure emerging manufacturing technologies it needs, including from the institutes, and (3) identify changes to existing regulations and systems that would help link DOD acquisition with advanced manufacturing innovation emerging from R&D agencies, industry and institutes. ( For example, DOD may be able to reinstitute a form of its industrial/modernization incentive program or apply its Defense Production Act Title III authorities.) The next administration should then take prompt action to implement recommendations arising from the review. 

Recommendation 6. Work to create a new workforce education system designed to prepare workers for jobs in advanced manufacturing

Germany has long gained productivity improvements from a famously well-trained manufacturing workforce based on an apprenticeship system. In contrast, U.S. companies have generally tried to get productivity gains from capital plant and equipment investments and ignored the workforce side. German firms understand, however, that productivity gains from new equipment will soon spread worldwide, while a gain from a high-quality workforce will be enduring and provide a long-term competitive edge. Like Germany, the U.S. needs both inputs. 

Unfortunately, American workforce-education systems are largely broken. The U.S. has a deep disconnect between the education system and workplaces, which lies at the heart of many of its workforce problems. (See detailed discussion of these issues and corresponding recommendations in Bonvillian and Sarma, Workforce Education.) Other causes include:

• Disinvestment in workforce education by both government and employers in recent decades
• Federal training programs that have limited focus on higher technical skills and incumbent workers
• Federal education programs that have large gaps in filling workforce needs and are not linked or complementary to other federal programs
• A vocational education system in secondary schools that has largely been dismantled.
• Underfunded community colleges that lack the resources to provide advanced training in emerging fields
• Colleges and universities that could help develop higher-end, new technology skills are disconnected from workforce education and other participants in workforce-education systems (particularly from community colleges)
• The limited scale of those creative, advanced technical education programs that do exist
• A broken labor-market information system that doesn’t effectively serve workers, employers, or educators

Complicating efforts to establish new and improved workforce-education systems is the fact existing systems depend heavily on actors in complex, established “legacy” sectors that are hard to change. At the federal level, only a modest NSF program in Advanced Technological Education (ATE), through community colleges, provides education and training in advanced manufacturing. The manufacturing institutes are also developing workforce education efforts at both the technician and engineering levels, but these are also modest in scope. NIST’s Manufacturing Extension Partnership is encouraging new workforce programs for its SME participants. Neither the Department of Labor (DOL) nor the Department of Education (DOEd), however, has a program dedicated to education or training in advanced manufacturing. These existing programs need to be strengthened. The institutes, for example, through their unique blend of academic, public, and private-sector participation, are well positioned to help build a skilled advanced-manufacturing workforce. The institutes also have the deep technical expertise needed to effectively guide the content and structure of new workforce-education manufacturing modules in emerging technologies. 

If the U.S. wants to adopt advanced manufacturing, its workforce must be ready for it. This requires rebuilding much of workforce education. Reforms are needed at all levels. Community colleges must introduce advanced manufacturing curricula, create short programs more adapted to upskilling workers already in the workforce, establish certificates around particular skills that stack toward degrees, and turn around low completion rates. At the federal level, disconnected Labor and Education Department programs need to be integrated and efforts to expand registered apprenticeship programs accelerated. At the industry level, firms must collaborate with each other and with community colleges to build new training and apprenticeship programs, including youth apprenticeships starting in high school. Solutions will have to be pursued in the U.S. federal system, since education is largely state and local government-led. These federal agencies need to improve community college funding and support, integrate advanced manufacturing programs across community colleges, promote apprenticeships and work closely with area firms on reforms and curricula. 

Action steps

The White House Office of Advanced Manufacturing (OAM) proposed above, working with Manufacturing USA, DOD, DOL, DOEd, NSF ATE, and NIST, should launch a coordinated effort to identify best practices in workforce education at the involved agencies, institutes, and elsewhere, including for online education. OAM and Manufacturing USA should also develop an education “commons” of shared advanced-manufacturing courses, modules, and materials. OAM, the workforce education agencies noted above and Manufacturing USA should ensure that current and future workforce-education efforts are coordinated for a unified cross-agency effort. Working with existing manufacturing skills standards groups, OAM and these agencies will likely also need to establish standards for certifications in advanced manufacturing fields, so that certifications can be earned at one place and recognized at another. Manufacturing USA Institutes can play an important role because of their expertise in their specific technology areas. Expert teams will need to be assembled to develop these training resources and standards, as well as to evaluate their effectiveness. Because workforce education tends to suffer from the “tragedy of the commons”—many want it but few want to pay for it—the incoming administration should support federal funding for all of the above efforts and ensure that relevant participating agencies include these efforts in their budget requests. 

Recommendation 7. Develop an ongoing assessment of advanced production capabilities in critical technologies emerging in other nations

In 2023, pursuant to the CHIPS and Science Act, NSF sponsored a study commission to develop a pilot program to assess international innovation and manufacturing capability in critical technology sectors. The U.S. doesn’t undertake such a systematic critical technology assessment, and it has become a major gap in our capabilities and understanding. We are integrated into an  international economy that we helped create and now face massive trade deficits in manufactured and advanced technology goods. The U.S. is failing to track our increasingly innovative competitors and their implementation of emerging technologies. In effect, in a highly competitive world the U.S. is flying blind. The report provides a framework for undertaking this kind of assessment. Adoption of a critical technology assessment of competitor nations and the U.S.’s comparative status is important to both national and economic security; we need a benchmarking system on where we stand and the new approaches others are adopting that we need to pursue. 

If located in the intelligence or defense agencies, this would help ensure longer-term sustainable support, and these agencies could also collaborate with key non-defense agencies. Since national security is now so closely tied to economic security, this is an appropriate role for intelligence or defense organizations. It is important to have a sustained assessment effort led by a talented staff team that can build expertise in the complex assessment process, which is also connected to draw on university and industry experts.

Action steps

The next administration should direct the Director of National Intelligence or DOD (working with DOC, NSF, and DOE, which also have relevant technical capabilities) to conduct an ongoing assessment of the progress of other leading nations in critical technologies and advanced manufacturing. The assessment should examine the strategic goals, internal organization, and funding levels of international advanced-manufacturing initiatives. Such an assessment should emphasize aspects of advanced manufacturing where the U.S. industrial base, including from a national security perspective, has a significant stake in future technology, such as advanced materials, semiconductors and computing, composites, photonics, functional fibers, power electronics, biofabrication, and a suite of digital tools that are finding applications in manufacturing and other sectors (e.g., AI, machine learning, the Internet of Things, robotics, simulations and modeling, data analytics, and quantum sensors and computing). Such an assessment would help us understand the status of critical elements of its industrial base and inform the focus areas and technology-development agendas of the various institutes and agencies. The assessment would also benefit the United States as a whole by guiding national manufacturing strategy and ensuring that the institutes are used to maximize the country’s global competitiveness in manufacturing.

Implementation

The need to bolster the U.S. manufacturing has become a political imperative for both parties. Many aspects of the recommendations detailed above could be implemented quickly by presidential directives and would not require legislation. Increasing funding for the institutes and advanced manufacturing generally is, of course, the exception. But congressional approval for increased advanced manufacturing funding seems likely. Despite the sharp political divides of the past decade, Congress overwhelmingly passed bipartisan legislation in 2014 authorizing the institutes and amended that legislation in 2019—a strong political signal of political support around this issue. Congress has also been willing to back advanced manufacturing in appropriations bills each year. A bipartisan congressional manufacturing caucus, and deep understanding by a number of key congressional figures of issues related to advanced manufacturing, provide a solid foundation of expected legislative-branch support for executive-branch actions to further advanced manufacturing.

Conclusion

Production plays a disproportionate role in U.S. economic well-being. As international competitors move rapidly on advanced manufacturing while U.S. manufacturing capabilities stagnate, the U.S. economy is increasingly vulnerable. These are national security issues as well as economic security issues, and the two are increasingly merged. Public-private models, (particularly Manufacturing USA and the manufacturing institutes), organized around advanced manufacturing, offer a promising model for helping reverse these trends and restoring U.S. leadership in manufacturing. The institutes bring together the key actors: industry, universities, community colleges, and government (federal, state, and local). But the institutes as they now stand simply do not have the capacity to affect the U.S. manufacturing sector at the scale needed. 

The recommendations detailed here provide the next administration with a roadmap for launching a nationwide effort to strengthen advanced manufacturing—an effort that builds on the institutes’ successes and significantly expands their capabilities, roles, and impacts. Briefly summarized, the recommendations are:

• A White House Office of Advanced Manufacturing to coordinate manufacturing policy across agencies and with industry and to develop an ongoing strategic manufacturing plan; 
• A new financing mechanism for scaling-up advanced manufacturing in companies;
• Improving and adequately funding the manufacturing institute program by:
  • Increasing funding for the Manufacturing USA institute program; 
  • Providing ongoing funding at least comparable to the institute’s initial term;
  • Strengthening industry supply chains by bringing all supply-chain participants into demonstration facilities;
  • Networking the manufacturing institutes to package their different technology advances so they are integrated and readily useable by manufacturers;
• Undertaking R&D on manufacturing technologies and processes at federal research agencies and connecting it to the institutes and industry; 
• Linking new manufacturing technologies emerging from the R&D agencies and the manufacturing institutes to acquisition by the Department of Defense for implementation;
• Reforming the manufacturing workforce education system; and
• Developing an ongoing assessment of innovation and advanced production capabilities in critical technology areas emerging in other nations so we understand the competition. 

Douglas Brinkley’s book American Moonshot tells how, in 1961, President Kennedy mobilized the American public around a new space mission. The mission was rationalized in part on Cold War competition but also on the dramatic mission-related technology advances—from communication satellites to STEM education to computing—that the president argued would (and did) boost the economy. The direct tie between advanced manufacturing and the future of the American economy is, frankly, far more visible to the public than the space race. Strong presidential leadership could unify public support around a shared goal of manufacturing leadership and building quality jobs in a period of political fracture. There is a dramatic competitive aspect: China has already passed the United States on manufacturing output while we as a nation play catch-up, and China’s increased economic power and the corresponding. decline in the U.S. share of world manufacturing output have important implications for the future of democracy and world leadership. Furthering advanced manufacturing in the United States also involves rethinking and rebuilding our workforce-education systems, another potentially highly popular imperative. And, finally, advanced manufacturing includes not only government but industry, universities, community colleges, and nonprofits as well. In short, advanced manufacturing can unite nearly all American institutions—and nearly all Americans.

This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.

PLEASE NOTE (February 2025): Since publication several government websites have been taken offline. We apologize for any broken links to once accessible public data.

WASHINGTON, D.C. — Today the Federation of American Scientists (FAS) calls upon Congress to reach a final agreement by the end of July on H.R. 4521, the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act, and S. 1260, the U.S. Innovation and Competition Act (USICA). 

“The need for this legislation is broadly recognized, and delay or failure should not be an option. We believe sensible bipartisan compromises can be reached on many of the outstanding issues and that a final agreement coupled with supplemental funding would bolster U.S. competitiveness, address supply chain issues, and enhance U.S. security,” the letter reads. 

Congress is at the cusp of making major policy improvements and much-needed investments that will enable the U.S. to remain the global leader in science and technology. Without these improvements, however, the U.S. stands to not only lose its status as global innovator, but lose scientific talent seeking opportunity elsewhere.

“American scientific excellence and technological leadership is not magically sustained – it is fostered by policy that nurtures and funds innovation. Congress should make a down payment on American competitiveness, sponsor a generation of world-class technological talent, and let the fruits of that talent make the case for America’s competitive edge,” says FAS CEO Dan Correa.

“The need for a new American investment in research and development is widely recognized, so what better moment for Congress to invest than now? The bipartisan bills before Congress share a similar goal – to supercharge American science. Congress should seize the moment and make the robust investments we need,” says FAS Associate Director of Research & Development and Advanced Industry Matt Hourihan. 

“Congress has a once-in-a-generation opportunity to pass legislation that will strengthen our nation’s commitment to prioritizing science and technology, advancing American innovation and bolstering global leadership. We urge both chambers of Congress to support this bipartisan, bicameral legislation—investment in science and innovation is essential for America’s future,” says American Association for the Advancement of Science (AAAS) CEO Sudip Parikh.

“After nearly three years of bipartisan efforts to craft this legislation, it’s time to finish strong and deliver a final agreement that helps propel American science, innovation, and competitiveness into the next decade and beyond,” says Association of American Universities (AAU) President Barbara R. Snyder.

“Congress is on the brink of passing legislation with the potential to bolster U.S. research and development investments to better support innovations that not only spark new discoveries, but also solve intractable challenges facing our country and world. APLU urges Congress to heed the recommendations of the research university community and pass this critical competitive legislation,” says Association of Public and Land-grant Universities (APLU) President Peter McPherson.

In addition to FAS, the letter is signed and endorsed by over 30 science societies. 

We have reproduced the letter below:

Dear Speaker Pelosi and Leaders Schumer, McCarthy, and McConnell: 

Congress is poised to significantly strengthen our nation’s competitive advantage in science and innovation to the benefit of American economic competitiveness, security, and prosperity. As leading science, engineering, and higher education organizations – representing hundreds of thousands of American researchers and educators – we urge your concerted attention to reach a final enactment by the end of July on H.R. 4521, the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act, and S. 1260, the U.S. Innovation and Competition Act (USICA). 

Our global competitors are not sitting idle. The need for this legislation is broadly recognized, and delay or failure should not be an option. We believe sensible bipartisan compromises can be reached on many of the outstanding issues and that a final agreement coupled with supplemental funding would bolster U.S. competitiveness, address supply chain issues, and enhance U.S. security.

Key aspects of the House and Senate bills are quite consistent with each other. While it is routine in Washington to focus on differences, the most striking feature of the science and technology portions of the two bills is how similar they are in their goals and their policy approaches.  

For instance, both bills would:

• Authorize the creation of a flexible new Directorate at the National Science Foundation empowered to creatively  fund research aimed at meeting specific practical goals, including making the U.S. more competitive.
• Authorize significant and needed funding increases for all aspects of the National Science Foundation and for key innovation-oriented programs of the Department of Energy;
• Authorize the creation of a network of regional tech hubs to ensure that the benefits of research and innovation accrue to this nation’s diverse communities and geographies;
• Authorize the creation of a National Engineering Biology Research and Development Initiative to build a diverse bio-workforce and advance innovation; 
• Expand the number and kinds of students and institutions involved in STEM research and education through a variety of measures, including new fellowships and traineeships, and programs to strengthen the success rate of institutions competing for NSF funding; 
• Require assessments of the U.S. position in science and technology globally to enable the development of a comprehensive national strategy for U.S. leadership in critical and emerging domains.

These and other similar measures would strengthen American science and innovation and make the U.S. more competitive and more secure for years to come. We recognize there are still important issues to be worked out, including the research security provisions, but we believe this can be achieved given the agreement on overall goals and approaches.  

It is also vital to ensure that the programs that are strengthened and created by the final bill are not just aspirations. Neither bill would provide the actual funding needed to implement the shared vision articulated in the legislation. We urge Congress to make a down payment on American competitiveness by adding $10 billion in supplemental appropriations for the National Science Foundation, Department of Energy, and the National Institute of Standards and Technology as part of a final agreement. Making this initial investment would jumpstart our nation’s science and innovation enterprise as we seek to reclaim our competitive advantage.

Similarly, we support the bipartisan funding of $52 billion in appropriations for the domestic semiconductor manufacturing industry to ensure U.S. excellence in this crucial sector that is driven by continued advancements in science and engineering. We urge that the CHIPS package remain in the overall legislation and that it not be separated. Intel’s recent decision to delay breaking ground for the Ohio semiconductor manufacturing plant underscores the need to move quickly. Delay in passing a final conference agreement with CHIPS would waste valuable time that competitor nations will undoubtedly use to further challenge U.S. leadership in semiconductors and critical research areas such as quantum information science, artificial intelligence, robotics, cybersecurity, biotechnology, and advanced communications technologies. 

After several years of work, Congress is now on the cusp of making major policy improvements and needed investments that will enable the U.S. to remain the leader in science and technology. The creative, focused approaches in the legislation need to become law, along with the funding to make them a reality. We urge swift action and are committed to working with you to this end.  

Sincerely, 

American Association for Dental, Oral, and Craniofacial Research

American Association for the Advancement of Science 

American Astronomical Society

American Chemical Society 

American Geophysical Union 

American Geosciences Institute

American Institute for Medical and Biological Engineering

American Institute of Biological Sciences

American Mathematical Society

American Physical Society

American Psychiatric Association

American Psychological Association

American Society for Cell Biology

American Society of Agronomy

American Society of Plant Biologists

Association for Psychological Science

Association for Women in Science

Association of American Universities 

Association of Public and Land-Grant Universities 

Association of Science and Technology Centers 

Biophysical Society

Coalition for the Life Sciences

Crop Science Society of America

Ecological Society of America

Federation of American Scientists 

Federation of Associations in Behavioral and Brain Sciences

Geological Society of America

Natural Science Collections Alliance

Optica (formerly OSA) Advancing Optics and Photonics Worldwide

Population Association of America

Research!America

Science and Technology Action Committee 

Soil Science Society of America

The Gerontological Society of America

The Oceanography Society

cc: All Members of the U.S. House of Representatives

All Members of the U.S. Senate

Our roundtable of senior leadership at the White House National Economic Council and U.S. Dept. of Health and Human Services as well as a diversity of viewpoints across political ideologies from Breakthrough Energy, American Compass, MIT’s The Engine, and Employ America discussed competing with China on advanced manufacturing sectors (bioeconomic, semiconductor, quantum, etc.), supply chain resilience, and new visions for industrial policy that can stimulate regional development. This document contains a summary of the event.

Topic Introduction: Advanced Manufacturing & U.S. Competitiveness

The session began with an introduction by Bill Bonvillian (MIT), who shared a series of reflections, challenges, and solutions to rebuilding American manufacturing:

Advanced manufacturing and supply chain resilience are two sides of the same coin. The pandemic awoke us to our over dependence on foreign supply chains. Unless we build a robust domestic manufacturing system, our supply chains will crumble. American competitiveness therefore depends on how well we can apply our innovation capabilities to the historically underfunded advanced manufacturing ecosystem. Other nations are pouring tremendous amounts of resources because they recognize the importance of manufacturing for the overall innovation cycle. To rebuild American manufacturing, an ecosystem is needed—private sector, educational institutions, and government—to create an effective regional workforce and advanced manufacturing technology pipeline.

Panel 1: Framing the Challenge and Identifying Key Misconceptions

Our first panel hosted Arnab Datta (Employ America), Chris Griswold (American Compass), and Abigail Regitsky (Breakthrough Energy). The questions and responses are summarized below:

What would you say are some misconceptions that have posed obstacles to finding consensus on an industrial policy for advanced manufacturing?

Chris Griswold: The largest misconception is the ideological view that industrial policy is central planning, with the government picking winners and losers—that it is un- American. That’s simply not true. From Alexander Hamilton, to Henry Clay and Abraham Lincoln, and through the post-war period and America’s technological rise, the American way has involved a rich public-private sector innovation ecosystem. Recent decades of libertarian economics have weakened supply chains and permitted the flight of industry from American communities.

Arnab Datta: People like to say that market choices have forced manufacturing overseas, but really it’s been about policy. Germany has maintained a world-class manufacturing base with high wages and regulations. We have underrated two important factors in sustaining a high-quality American manufacturing ecosystem: financing and aggregate demand. Manufacturing financing is cash-flow intensive, making asset-light strategies difficult. And when you see scarce aggregate demand, you see a cost-cutting mentality that leads to things like consolidation and offshoring. We only need to look back to the once-booming semiconductor industry that lost its edge. Our competitors are making the policy choices necessary to grow and develop strategically; we should do the same.

Abigail Regitsky: For climate and clean energy, startups see the benefit of developing and manufacturing in the United States—that’s a large misconception, that startups do not want to produce domestically. The large issue is that they do not have financing support to develop domestic supply chains. We need to ensure there is a market for these technologies and there is financing available to access them.

With the recently introduced bill for an Industrial Finance Corporation from Senator Coons’ Office, what would you say are the unique benefits of using government corporations and why should the general public care? And how might something like this stimulate job and economic growth regionally?

Arnab Datta: The unique benefits of a government corporation are two-fold: flexibility in affordability and in financing. In some of our most difficult times, government entities were empowered with a range of abilities to accomplish important goals. During the Great Depression and World War III, the Reconstruction Financing Corporation was necessary to ramp up wartime investment through loans, purchase guarantees, and other methods. America has faced difficult challenges, but government corporations have been a bright spot in overcoming these challenges. We face big challenges now. The Industrial Finance Corporation (IFC) bill arrives at a similar moment, granting the government the authority to tackle big problems related to industrial competition—national security, climate change, etc. We need a flexible entity, and the public should care because they are taking risks in this competition with their tax dollars. They should be able to have a stake in the product, and the IFC’s equity investments and other methods provide that. It will also help with job growth across regions.Currently, we are witnessing rising capital expenditures to a degree not seen for a very long time. We were told manufacturing jobs would never come back, but the demand is there. Creating an institution that establishes permanence for job growth in manufacturing should not be an exception but a norm.

Abigail Regitsky: We need a political coalition to get the policies in supply to support the clean energy agenda. An IFC could support a factory that leverages hydrogen in a green way, or something even more nascent. These moves require a lot of capital, but we can create a lot of economic returns and jobs if we see the long-term linkage and support it.

What would you say might be the conservative case for industrial policy for advanced manufacturing? And what specific aspects of the advanced manufacturing ecosystem specifically do you see opportunities and needs?

Chris Griswold: It’s the same as the general case—it’s a common sense, good idea. Fortunately, there is much more consensus on this now than there was just a few years ago. Some specific arguments that should appeal to both sides include:

1. The national security imperative to bolster our currently vulnerable supply chain and industrial base.
2. Having national economic resiliency to keep up with competitors. It’s almost unanimous at this point that it will be difficult to compete without an effective advanced manufacturing sector and resilient supply chain. Offshoring all of our capacity has diminished our know-how and degraded our ability to innovate ourselves back out of this situation. We can’t just flip the innovation switch back on—it takes time to get our manufacturing ecosystem up to speed with the pace of technological progress.
3. Deindustrialization has hurt working communities and created regional inequality. It has made not just our country weaker in general, but it has harmed many specific working-class local communities. Working class people without a college degree have been hit the hardest. Working class communities of color have been harmed in unique ways. At the heart of these large discussions is a moral imperative about workers and their families. They matter. We must do more to support local economies, which means caring about the composition of those economies.

Abigail Regitsky: It’s the idea of losing the “know-how” or “learning-by-building” phase of innovation. This is crucial for developing solutions to solve climate change. With climate, time is of the essence; when you are able to tie manufacturing to the innovation process, it fosters a faster scale up of new technology. We need the manufacturing know-how to scale up emerging technologies and reduce emissions to zero by mid-century.

Panel 2: Ideas for Action

Our first panel hosted Dr. Elisabeth Reynolds (WHNEC), Joseph Hamel (ASPR), and Katie Rae (MIT’s The Engine). The questions and responses are summarized below:

In the last panel, we heard from a variety of perspectives on this deep and comprehensive issue, what are a few priorities you have for improving the manufacturing base?

Elisabeth Reynolds: The last panel presented the imperative and opportunity of today’s moment perfectly. The administration is working to reframe the nation’s thoughts on industrial policy. All of those problems outlined existed before the pandemic. What we’re addressing now is a new commitment and understanding that this is not just about national security—it’s about economic security. We don’t need to build and make everything here, but we need to build and make a lot here, from commodities to next-gen technology. We have to support small and medium-sized businesses. The administration’s plans compliment the Industrial Finance Corporation bill and the initiatives included in it. There is a real effort to include and support communities, schools, and people who have not been included. We’refocusing on the regional level—we are aiming to have workforce training at the regional level to build a pipeline for the next generation of workers in manufacturing. Another critical component is the climate agenda, which manufacturing facilities should leverage demonstration funding, tax credits, and procurement to facilitate, especially on the latter, with the role of government as a buyer. Finally, each of these issues, must be approached through an equity lens, in terms of geographic, racial, small vs. big business, and more. We need to create a level playing field, that is where America will thrive.

“President Biden recently issued an Executive Order 14017 directing the US government to undertake a comprehensive review of six critical US industrial base sectors. ASPR is the lead for the public health and biological preparedness industry base review. What can you tell us about these efforts to date?”

Joseph Hamel: These efforts are focused on furthering the relationships and leveraging partnerships that were discovered during pandemic response, from the Food and Drug Administration to the Defense Advanced Research Projects Agency and National Institute of Standards and Technology, it is important to explore the right level of coordination. We are conducting a review of essential medicines to identify the most critical and relevant, then exploring potential threats and ways to invest andimprove the supply chain for these drugs. We’re bringing in clinicians, manufacturers and distributor partners to ask questions like “what is the most vulnerable item in our global supply chain and how can we act on it? We’re also establishing an innovation laboratory with FDA to evaluate a wide array of products that are subject to shortage and geographic production dependencies. We are also investigating overlooked capacities for the assembly of these products and leveraging opportunities inside and outside of government so manufacturers can realize new capabilities at scale. We need a more resilient global supply chain, as was demonstrated in the pandemic. And we have to think about doing this with lower-cost, lower-footprint environmental impact so that we can become competitive inside a larger ecosystem.

A few weeks ago the Day One Project held a listening session with several startups in cleantech, semiconductor, and bioeconomy industries that governments overseas provide more incentives, from subsidies to more available tools, to manufacture there than in the United States. What is the most important way to make it easier for small and medium sized companies to manufacture in the United States?

Katie Rae: The Engine was founded to go after the world’s biggest problems. Advanced manufacturing is one of them—ensuring foundational industries are built here. This collides with everything, including our supply chains. The impact is not theoretical—how do we get vaccines to everyone? There’s been a lot of innovation, but our current system didn’t want to support the ideas because they were out of favor for investments. We had the ideas, but we didn’t have the financing, this was a market failure. We need funding to bring these ideas to life. When startups begin scaling, they need capital to do so. It is not inherently provided by the private market, so governments are not picking winners and losers but rather ensuring that money goes to a list of potential winners.

Elisabeth Reynolds: The comments about the financing gap are exactly right. We have less support for the scale up of cutting-edge technologies at their later stage of development. We need more time and capital to get these ideas there. Katie’s team is focused on finding this capital and supporting the commercialization into government. We also have a growing shift in the mindset of the country—first thought has been to take manufacturing offshore, but the equalization of the costs is bringing some of this production back to our shores.

If you were to ask the audience to work on a specific domain, what would you challenge them to do?

Elisabeth Reynolds: We should build in on the positive programs we have; Joe’s is a great example. We also can’t forget about the examples of work outside of government. We innovate well across a wide range of places and the government needs to be a partner in supporting this.

Katie Rae: Loan guarantee programs in procurement is a must-have. Other governments will do it and our companies will relocate their headquarters there.

Joseph Hamel: Furthering investments in platform technology development. We need to leverage what is growing as a bioeconomy initiative and use these applications to create end products that we never thought were achievable. We should explore material science applications and innovation in quality by design, up front.

This summer, National Economic Council Director Brian Deese articulated a new vision for a robust and equitable U.S. industrial policy. The strategy seeks to help us reach the full potential of American competitiveness while delivering justice, equity, and prosperity to all citizens.

To inform the Administration’s new strategy, we pulled together a curated set of ideas from our extensive portfolio of nonpartisan, actionable ideas in science and technology policy. These ideas were diversely sourced from more than 300 Day One contributors — including students, academics, activists, industry leaders, local and international government officials, and more.​

Our letter addresses each of the industrial strategy’s core pillars:

Pillar I: Supply-Chain Resilience
Pillar II: Targeted Public Investment
Pillar III: Public Procurement
Pillar IV: Climate Resilience
Pillar V: Equity

​We hope that these ideas help advance the vision of a modern industrial policy that benefits all Americans.

Summary

President Biden made advanced manufacturing a major policy priority during his campaign, including calling for a significant expansion of manufacturing programs to reach 50 communities through new manufacturing-technology hubs. Expanded manufacturing programs will invest in our nation’s long-term competitive innovation capacity. However, building these programs successfully requires a thoughtful and practical implementation plan. This memo presents two categories of recommendations to improve the U.S. advanced-manufacturing ecosystem:

1. Improve the existing Manufacturing USA institutes. Some new institutes are needed, but the Administration should concentrate first on strengthening support for the 16 existing Manufacturing USA Institutes, renewing the terms of institutes that are performing well, and expanding the reach of those institutes by launching more workforce-development programs, regional technology demonstration centers, initiatives to engage small- and mid-sized manufacturers and build regional manufacturing ecosystems.

2. Implement a multi-part strategy for collaboration among the Institutes: First, the Administration should create a “network function” across the Manufacturing USA Institutes because firms will need to adopt packages of manufacturing technologies not just one at a time. This could be supported by the National Institute of Standards and Technology (NIST) and would combine the advances of different Institutes and package them to be integrated and interoperable for easy adoption by firms. Second, a NIST-led traded-sector-analysis unit should be created to evaluate the manufacturing progress of other nations and inform Institute priorities. Third, the Administration should provide research and development (R&D) agencies with resources to build manufacturing-related R&D feeder systems (e.g., an expanded pipeline of manufacturing technologies) that aligns with Institute needs. Fourth, the administration should establish an Advanced Manufacturing Office within the White House National Economic Council to coordinate and champion all of the above, as well as numerous other manufacturing programs.

Summary

America faces a host of daunting problems that demand forward-looking solutions. Addressing these challenges will require us to unleash the full potential of our research and development community, leveraging new approaches to innovation that break through both technical and institutional barriers and initiate wholly new capabilities. The Advanced Research Projects Agency (ARPA) model has resulted in exactly this kind of high-impact innovation in defense, intelligence, and energy. This model can be applied to other critical societal challenges such as climate, labor, or health. But an ARPA must have the right core elements if it is to create the fresh solutions the country needs.

The ARPA model is distinctly different from other federal agencies in mission, operations, and culture. ARPA organizations are part of a much broader ecosystem that spans from research to implementation. Their role is to create breakthrough, paradigm-shifting solutions and capabilities. In order to position a new ARPA for success, Congress, the Administration, and the agency’s founding leaders must understand the unique properties of an ARPA and the process by which ARPAs approach and manage risk to develop game-changing advances.

To establish a strong foundation for a new ARPA to do this work, Congress and the Administration will need to address four factors:

• Purpose: Clearly and succinctly define the vital national purpose for the new ARPA.
• Operations: Set the agency up to function autonomously, with its own budget, staff, and operating practices.
• Authorities: Give the new ARPA flexible hiring and contracting authorities to draw new and extraordinary talent to the nation’s challenges.
• Leadership: Appoint an exceptional leadership team, hold them to a high standard for impact, and create room for them to deliver on the full potential of the ARPA model.

Over the course of a few years, a new ARPA can grow into a powerfully effective organization with people, practices, and culture honed to create breakthroughs. If well implemented, new ARPAs can be extraordinary additions to our R&D ecosystem, providing unimagined new capabilities to help us meet our most essential societal challenges.

Challenge and Opportunity

America faces some daunting problems today. Many millions of Americans are unable to access our nation’s rich opportunities, leaving all of us poorer without their contributions. Dozens of other countries have longer life spans and lower infant mortality rates, although we spend more per capita on healthcare than any other country. We are not yet on track to contain the damages of a changing climate or to manage its impacts. Global competition has resulted in more and more U.S. research advances being used to create jobs elsewhere. R&D alone won’t solve any of these problems. But every one of these challenges demands creative new solutions.

However, America’s phenomenally productive R&D ecosystem—with its half a trillion dollars spent annually by the public and private sectors—is not aimed at these large, society-wide challenges. How do we create a generational shift in our innovation ecosystem so that it contributes as much to meeting this century’s challenges as it did for those of the last century? What can we learn from our successful R&D history, and what approaches can we adapt to address the problems that we now face?

One part of the answer lies in the Advanced Research Projects Agency (ARPA) model for innovation. This kind of innovation knocks down both technical and institutional barriers to create transformational new capabilities. ARPA organizations are part of a much broader ecosystem, spanning from research to implementation, in which their role is to create breakthrough solutions and capabilities that fundamentally change what we define as possible. In pursuit of revolutionary advances, they accept and manage a level of risk for which companies and other government agencies have no incentive.

The first ARPA, the Defense Advanced Research Projects Agency (DARPA), was launched in 1958 at the height of the Cold War. DARPA shifted military capabilities from mass bombing to precision strike with GPS, stealth technologies, and integrated combat systems. These innovations recast defense systems, changed military outcomes, and shaped geopolitics over decades. Meanwhile, DARPA’s programs in enabling technologies also seeded artificial intelligence, developed advanced microelectronics, and started the internet. In recent years, DARPA programs have built the first ship able to navigate from the pier and cross oceans without a single sailor on board,¹ created a radical new approach to reconfigurable military capabilities to outpace global adversaries,² developed the first systems—now in operation by the Port Authority of New York and New Jersey—for cities to continuously monitor for dangerous nuclear and radiological materials,³ and created a rapid-response mRNA vaccine platform⁴ that enabled the astonishingly fast development⁵ of today’s mRNA vaccines for COVID-19.

We are also starting to show that the ARPA model can be successfully adapted to other national purposes. In 2006, the Intelligence Advanced Research Projects Activity (IARPA) was formed to serve the intelligence community. One of IARPA’s programs has developed methods to overcome individual cognitive biases by weighting and synthesizing the judgments of many analysts. This approach provides important gains in prediction and is a new paradigm for forecasting events in a complex world. In 2009, the Advanced Research Projects Agency–Energy (ARPA-E) launched in the Department of Energy. Its programs have created new power semiconductors, new battery technologies, and new methods to improve appliance efficiency, making vital contributions to our clean energy future. Both ARPAs have invigorated R&D communities by connecting them to hard, important problems and giving them a pathway to drive impact.

Implementing the ARPA model to meet other critical challenges could have enormous impact. Indeed, President Biden has already proposed ARPAs for health and climate,⁶ and others have advanced visions for ARPAs for agriculture,⁷ labor⁸ and education. In addition, the Endless Frontier Act⁹ takes inspiration from the ARPA model in its vision for an expanded technology function at NSF to address economic competitiveness.

Behind each call for an “ARPA for X” is a yearning for R&D that throws open new doors to radically better solutions. But the ARPA model is very different from other federal agencies and unlocking its potential will require much more than affixing the name. The starting point is an understanding of how ARPAs generate their outsized advances.

Though specifics vary according to the mission of a new ARPA, the essential operating model is based on these elements:

• An ARPA designs and conducts programs that run for limited periods, typically 3-5 years. Each ARPA program sets out to achieve a specific, bold goal that may seem impossible but that, if demonstrated, can initiate a major advance. Each ARPA program contracts with companies, universities, and other organizations to execute R&D efforts. It also engages the parties who can implement and scale successful program results.
• An ARPA requires exceptionally talented program managers with a rare combination of expertise, vision, and the ability to execute and deliver results.
• ARPA leadership approves a series of individual programs, constructing and overseeing a full and diversified portfolio.

ARPA Programs

An ARPA generates major advances through intelligently managed risk-taking. The fundamental unit of work for an ARPA is a solutions-oriented R&D program that aims at achieving a previously unimaginable goal. Each program has a fixed term, typically 3-5 years, and each is designed, executed, and transitioned by an ARPA program manager.

Design

The program manager designs the program to achieve a bold goal—one that may seem impossible but that, if demonstrated, could catalyze a major advance. They build a rigorous plan to achieve the goal. A set of questions known as the Heilmeier Catechism¹⁰ (from an iconic DARPA director in the 1970s) guides program development:

• What are you trying to do? Articulate your objectives using absolutely no jargon.
• How is it done today, and what are the limits of current practice?
• What is new in your approach and why do you think it will be successful?
• Who cares? If you are successful, what difference will it make?
• What are the risks?
• How much will it cost?
• How long will it take?
• What are the mid-term and final “exams” to check for success?

These questions are easy—even obvious—to ask, but surprisingly difficult to answer well. Program managers typically grapple with them over 6-12 months to design a strong program, and agency leaders use them to guide their judgement about the potential of a new program for approval. The questions also guide program execution.

Execution

Once a program is launched, the program manager contracts with whichever organizations are needed to achieve the program’s goal. That typically means companies, universities, nonprofits, other parts of government, and other organizations with the talent and capacity to conduct the necessary R&D. Contracting this work has the obvious benefit that the ARPA doesn’t have to hire staff and provide facilities for this R&D. But even more important is the fact that this approach mobilizes individuals and organizations. Over the course of the program, these participants become a community that not only delivers the program vision but can help drive it forward beyond the term of the ARPA program.

The work of the program is to weave the threads of research from multiple domains together with lessons from the reality of use and practice in order to develop and demonstrate prototype systems or capabilities. The program rigorously evaluates how well its innovation works, how it works in specific environments, and how it can be scaled. 

An ARPA program often draws on basic research and often generates fresh research, but research is an input rather than the objective. Unlike the management of basic research, these programs drive to a specific goal. They may sometimes resemble product development, but for a prototype product that serves a public purpose rather than a visible market opportunity. Often, they require a much higher degree of risk than product development because they reach for a barely feasible goal. 

An ARPA program aims to demonstrate that a powerful new approach can work despite the risk inherent in trying something radically different. This requires actively managing the multiple efforts within the ARPA program. An ARPA program manager accelerates lines of work that show great promise and redirects or stops work that is not yielding results. They nimbly reallocate resources to keep wringing out risk and driving to the program’s objective.  

Transition

In parallel, the program manager engages the decision makers who can advance, adopt, implement, and fully scale the results of the program. If the breakthrough will require commercialization, that could include additional companies, investors, and entrepreneurs. If full-scale implementation requires changes in policies and practices, that means engaging regulators, policy makers, and community organizations. Understanding the needs and realities of implementers is important from the early stages of program design. It is sometimes the case that these implementers are skeptical about the program’s bold goal at the start. As the program unfolds, they are invited to program reviews and demonstrations. The program strives to address their concerns and may even provide support for their internal analyses, evaluations, and trials. When these engagements work well, the ARPA program manager is able to bring implementers along on the journey from wild dream to demonstrated reality. Successful transition starts when they change their minds about what’s possible. And the ultimate societal impact of the ARPA program comes when these implementers have fully scaled the ARPA breakthrough. 

A fully successful program ends with a convincing demonstration of a new capability; a community that can carry it forward; and decision makers who are ready to support and fund implementation in products, services, policies, and practices.

ARPA program managers

None of this can happen without exceptionally capable program managers. An ARPA organization hires program managers on fixed terms to design, manage, and transition these high-impact programs. ARPA leadership coaches program managers, helps build partnerships and remove obstacles, and approves and oversees all programs. But it puts enormous responsibility and authority on the shoulders of program managers. 

ARPA program managers come from backgrounds in companies, universities, nonprofits, and other parts of government, and they serve at different times in their careers. They bring a “head in the stars, feet on the ground” blend of these key characteristics: 

• The program manager is an expert in a relevant area. 
• They see the big picture and navigate easily from details to strategic outcomes. 
• They are driven to achieve a major impact. Sometimes this is manifested as a constructive impatience with the limitations of conventional organizations and approaches. 
• They are able to project a vision. 
• They are able to build and lead a community to accomplish goals. 
• They have a sound ethical core. 

ARPA portfolios

ARPA leadership approves a series of individual programs, constructing and managing a full portfolio that is diversified to maximize total impact despite the risk inherent in each program. Every program learns, not all succeed, and failure is accepted as integral to the mission.

Plan of Action 

Based on these core elements of a successful ARPA model, we offer four recommendations for policy makers as they establish new ARPA organizations. 

Purpose

Clearly and succinctly define the vital national purpose for the new ARPA. An ARPA exists to create breakthroughs for an important public need. For DARPA, this is national security. For ARPA-E, it is economic and energy security, and for IARPA, it is national intelligence. 

Operations

Set up the agency to function autonomously, with its own budget, staff and organization, and operating practices. An ARPA is a deliberate counterpoint to work already underway, originating from a recognition that something more and different is needed to achieve our national goals. An ARPA will not succeed if it is tightly integrated into its parent organization. Ironically, it may be more difficult to start a successful new ARPA in an area that already has robust federal research, because of the inclination to fit the square-peg ARPA into round-hole traditional research methods. The ARPA model is completely different than our well-honed approach to sponsoring fundamental research. The ARPA solutions-driven approach would not work well for greatly needed and highly valued basic research, and conversely, funding methods for fundamental research will not lead to ARPA-scale breakthroughs for our societal problems. This work is different, and it will require different people, different practices, and a different culture to succeed. 

Independent funding is also necessary. To develop a portfolio of programs with the potential for high impact, an ARPA requires funding that is sufficient to achieve its programs’ objectives. ARPA programs are sized not just to generate a new result, but to convincingly demonstrate a new approach, often across a variety of circumstances, in order to prove that the method can succeed and scale. 

The agency’s chain of command and Congressional authorizers and appropriators provide important oversight. However, the ARPA organization itself must bear the responsibility for designing, selecting, managing, and transitioning its programs. A new ARPA should report directly to the cabinet secretary to maintain independence and secure the support needed to achieve its mission. 

Authorities

Give the new ARPA flexible hiring and contracting authorities to draw new and extraordinary talent to the nation’s challenges. Flexible hiring mechanisms have proven to be very valuable in allowing ARPAs to attract the rare combination of expertise, vision, and execution required in great program managers. In addition, program managers must be able to contract with exceptional people and teams in companies, universities, nonprofits, and other government entities to achieve their aggressive program goals. ARPAs have used flexible contracting mechanisms to move fast and work effectively with all kinds of organizations, not just those already designed to work with government.

Flexible hiring and contracting authorities are extremely helpful tools for an ARPA organization. It’s worth noting, though, that flexible authorities by themselves do not an ARPA make. 

Leadership

Appoint an exceptional leadership team, hold them to a high standard for impact, and create room for them to deliver on the full potential of the ARPA model. A new ARPA’s director will be responsible for building an organization with people, practices, and culture honed for the mission of creating breakthroughs. This person must bring fresh and creative ways of looking at seemingly impossible problems, a rigorous approach to managing risk, a drive to achieve outsized impact, and an ability to lead people. A strong ethical orientation is also essential for a role that will grapple with the implications of powerful new capabilities for our society. 

The person to whom the ARPA director reports also plays an essential role. This individual must actively prevent others from trying to set the agenda for the ARPA. They enable the ARPA organization to hire program managers who don’t look like other department staff, undertake programs that conventional wisdom decries, manage programs actively, and develop a culture that celebrates bold risk-taking in pursuit of a great national purpose. They hold the ARPA organization accountable for the mission of creating breakthroughs and create room for the unconventional methods needed to realize that mission. 

Note that these four recommendations about purpose, independence, authorities, and leadership are interconnected. All are necessary to build the foundation for a successful new ARPA, and cherry-picking the easy ones will not work. 

Conclusion

A total of 87 years of experience across three different ARPA organizations have provided many lessons about how to build and run an organization that creates breakthroughs for an important national purpose. In establishing any new ARPA, both Congress and the Administration must create the space and allocate the resources that will allow it to flourish and realize its mission. 

Like its programs, a new ARPA will itself be a high-risk, high-reward experiment. If our challenges were modest, or if our current innovation methods were sufficient, there would be no need to try these kinds of experiments. But the problems we face today demand powerful new approaches. Adapting the ARPA model and aiming it at the most critical challenges ahead can create breakthroughs that redefine what is possible for our future. Let’s do everything possible to start new ARPAs on the right track/

Summary

The next administration should launch national Place-Based Public-Private Partnerships for Innovation (P4I) to supercharge American innovation by leveraging the power of proximity and partnerships, and in so doing, lay the foundation for a new and more inclusive era of American prosperity.

The P4I initiative will catalyze the formation and growth of vibrant Innovation Zones (IZs), creating powerful points of convergence that weave together place-based investments with educational, research, entrepreneurship, and economic supports to advance inclusive economic development from the American heartland to the coasts. IZs will catalyze the public-private development of mixed-use innovation hubs that house and support: training programs to prepare diverse and resilient labor forces; advanced research and development (R&D) activities undertaken by partnerships between universities and industry; and, incubators, accelerators, and investor groups to incubate, grow, and retain high-tech businesses.

P4I should be implemented by an interagency committee convened by the White House Office of Science and Technology Policy (OSTP) under the auspices of the President’s Council of Advisors on Science and Technology (PCAST). An interagency initiative will be critical for success, mobilizing federal agencies that share responsibility for all aspects of innovation and economic development policy, including STEM R&D, formation and growth of U.S. innovation industries (small to large), and innovation-based economic and workforce development.

Summary

The history of the United States is replete with examples of how foundational new technologies can transform the economy and create jobs. From the automobile to the transistor to recombinant DNA, foundational technologies have enabled an expanding middle class and prosperity for millions of Americans. The federal government played a vital role in providing and enabling early market development and applications for these technologies. The United States must rededicate itself to promoting new technologies beyond the research and development phase, if it is to maintain a position of global economic leadership and successful transition to the 21st century economy. 

The U.S. government should create a Foundational Technology Development and Deployment Office within the Department of Commerce that retains flexible financing authority to support market-pull programs for early-stage commercialization of innovative firms. An annual $50 billion authorization, for five years, would spark nascent strategic industries (e.g., new energy production and distribution, advanced manufacturing, synthetic biology, materials, robotics, mobility, space exploration, and next-generation semiconductors), and would be critical to transitioning the U.S. workforce for the 21st century economy. With the success of such an office, the U.S. will cement itself as the global locus of frontier technology industries. The country could also ensure that the economic spillovers from innovation are distributed more equally across socio-economic groups, through the creation of more domestic, advanced manufacturing that creates middle-skill jobs.

Summary

The United States government needs to radically change our national approach to the commercial growth of frontier tech technology companies (e.g., new energy production and distribution, advanced manufacturing, synthetic biology, materials, robotics, mobility, space exploration, and next-generation semiconductors). Frontier tech startups can advance our nation’s future global competitive advantage, providing an opportunity to create high-tech and low-tech jobs and reshore other jobs. Coupling investment in the frontier tech innovation ecosystem with workforce training will allow the U.S. to reinvent and revitalize aspects of our declining or offshored industrial sectors and rebuild the country’s manufacturing capabilities.

The U.S. government should create a $500M fund and an administration authority that allows relevant government agencies to create public-private partnerships. This requires collaboration with private capital providers that utilizes public funding to incentivize private investment in early stage frontier tech companies. The goal is not to subsidize private investment capital in areas where the current free market system is working, but rather to identify those critical national industrial base areas where private capital is insufficiently investing and use matching grants to spur early stage private investment. This early partnership will allow increased access and collaboration between historically siloed government and venture capital innovation ecosystems. For frontier tech companies, whose growth requires both public and private capital, the U.S. must utilize our resources more efficiently to create a globally competitive future economic base.