CREC Project News and Updates

Manufacturing: Federal-State Economic Development Collaborations

December 9, 2015
  • Topic Overview

Manufacturing is a critical priority for almost every state because it serves as the foundation for the economy and provides a broad array of opportunities for American workers to find family-sustaining jobs. Manufacturing contributes to the economy in other important ways as well:

  • Jobs: The U.S. manufacturing sector today employs 12 million Americans. Furthermore, the number of jobs are growing. Since February 2010, manufacturers have added 877,000 jobs—the sector’s first sustained period of job growth since the 1990s.
  • Wages: The manufacturing sector is also a particularly important provider of high wage jobs for adults without a four-year college degree. Increasingly, those jobs, however, require post-secondary credentials, including associates degrees, licenses, and industry-recognized certifications.
  • Economic Output: Manufacturing is the most important sector of the U.S. economy in terms of total economic activity and exports.
  • Innovation: Manufacturing companies account for nearly 70 percent of U.S. industrial research and development investment. They employ nearly two-thirds of all U.S. scientists and engineers. A strong manufacturing base is a critical part of America’s innovation ecosystem.
  • National Security: Large-scale domestic industries also are vital to national defense. Not only does the military need secure supplies of critical components such as semiconductors and sensors, but scale production also is necessary for controlling costs.
  • Federal Role & Priorities

By using its unique innovation assets, the federal government can help small manufacturers in accessing state-of-the-art research, engineering expertise, and equipment that normally would be out of reach for a small company. Government can also convene consortia to develop new technologies, and can highlight best practices.

In achieving these goals, federal investments can help not only individual firms through technical assistance and support but help in developing entire industry supply chains, their talent pools, and stronger innovation ecosystems.

  • Major Federal Programs & Activities

The Hollings Manufacturing Extension Partnership (MEP), part of the National Institute of Standards and Technology (NIST) under the Department of Commerce, is a network of 60 centers (with at least one in every state) and 1,200 manufacturing experts across the country. A state-federal partnership, the NIST MEP co-invests with state economic development agencies to help small manufacturers compete. Since it was founded in 1988, MEP has worked with nearly 80,000 manufacturers, leading to $88 billion in increased sales and $14 billion in cost savings, and helping small manufacturers create more than 729,000 new jobs.

Investing in Manufacturing Communities Partnership (IMCP): This Administration-wide initiative, coordinated by the U.S. Department of Commerce, brings together eleven federal agencies. Regions receive designation with no funding guaranteed, but the designations helps regions gain priority consideration for a variety of federal programs. The IMCP seeks to enhance the way states and regions leverage federal economic development funds to encourage American communities to focus beyond individual transactions to transforming their communities as globally competitive manufacturing hubs.  The 24 IMCP designees involve regional partners including local community colleges, and many state universities. Each is focused on a regionally important industry or technical area. For example, the IMCP in the Salt Lake City area focuses on composites for use by companies making aerospace, outdoor recreation, and transportation equipment.

Advanced Manufacturing Jobs and Innovation Accelerator Challenge (AMJIAC): The Obama Administration funded several rounds of Jobs and Innovation Accelerator grants with AMJIAC serving as the last one with funding for 10 site. The objectives of the AMJIAC awards are to grow and strengthen a region’s capacity by creating high quality sustainable jobs, developing a skilled and diverse advanced manufacturing workforce, and accelerating technology innovation. AMJIAC funders include: U.S. Economic Development Administration (EDA); NIST MEP; U.S. Department of Energy’s Advanced Manufacturing Office (AMO); U.S. Employment and Training Administration (ETA); and the Small Business Administration (SBA). While IMCP is now the preferred approach to encouraging multi-agency collaboration for regions, unlike the JIAC funding rounds, no funding is guaranteed through IMCP.

  • State Role                       

Congress has created a number of federal programs that are designed support economic development and emphasize assistance to manufacturing. While some of these initiatives are unique to the Obama Administration and may evolve over the next two years, the challenge grants (like AMJIAC) are ending this year while IMCP’s long-term fate is uncertain, especially in a new Administration.

Meanwhile, NIST MEP has launched a series of state re-competitions for its national network of state-based MEP centers. Initiated in August 2014, this full system-wide competition process is scheduled to conclude by December 2016. Under these new MEP center agreements, NIST MEP is providing Centers with flexibility and incentives to align more closely with state economic development priorities and serve a broader array of manufacturing clients, including smaller and more rural SMEs. In FY14, MEP’s Federal budget was $128 million, with the total budget for the system reaching nearly $300 million when accounting for state, industry, and other investors. The re-competitions are creating opportunities for states to re-think manufacturing strategies and deepen partnerships.

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About the Client

Appalachian Regional Commission

The Appalachian Regional Commission (ARC) is a regional economic development agency that represents a partnership of federal, state, and local government. Established by an act of Congress in 1965, ARC is composed of the governors of the 13 Appalachian states and a federal co-chair, who is appointed by the president. Local participation is provided through multi-county local development districts.