From "Invented in America" to "Made in America"

Note: This post originally appeared on the White House blog. It is authored by Jason Miller, Deputy Assistant to the President and the Deputy Director of the National Economic Council.

Summary: We applaud new legislation that's helping startups scale up production in the United States. 

The story of American manufacturing is one of grit and resilience. But it’s also the result of investments across the public and private sectors in skills and cutting-edge technologies to lay the foundation for a new period of manufacturing growth and resurgence. Over the past five years, we’ve added nearly 900,000 new manufacturing jobs, the fastest rate of growth in decades. Manufacturing production has increased by almost a third since the recession, and the number of factories operating in the United States is growing for the first time since the 1990s.

Right now is a moment of opportunity for American manufacturing that we cannot allow to pass us by. North America is becoming the epicenter of energy. We have the greatest research universities. And we have a legal system that adjudicates claims fairly and protects intellectual property.

But there is more work to be done to help our small manufacturers, makers, and entrepreneurs grow.

As countries around the globe compete for the advanced manufacturing technologies and industries that will lay the foundation for future innovations — it is vital that the U.S. nurture a business environment wherein young companies, and manufacturing startups, are able to scale up production capacity for first-of-a-kind technologies.

That’s why today we applaud new legislation in the Senate that would help novel manufacturing startups open their first factories in the USA by creating a public-private Manufacturing Scale Up Investment Fund. The Scale-Up Manufacturing Investment Company (SUMIC) Act of 2015 would establish a fund, administered by the Small Business Administration, to offer federal loan guarantees to investors looking to invest in novel manufacturing startups looking to make their products in the United States. The legislation builds out a proposal from the President’s FY16 Budget that was first recommended by the President’s Advanced Manufacturing Partnership, a council of 19 manufacturing CEOs and University presidents co-chaired by Dow and MIT.

Technology-intensive manufacturing startups often face a unique challenge as they seek to grow: accessing the capital and capabilities that they need to usher their products to market swiftly, and scale their enterprises successfully. The capital intensity of these scale-up investments — which can range from about $40 million to $200 million — and the lengthy maturities required to bring new manufacturing capabilities online make these investments falls between the cracks of the traditional venture capitalists and private equity investors; they are too big for funds that take many small, high-risk bets and too risky for funds that make just a few sizeable investments..  

As a result, two valleys of death stand between taking ideas from invented in America to Made in America — the first, when raising the funding to build a workable hardware prototype; the second, even after demonstrating a viable product, when raising the capital and partnerships needed to build the first factory to make it here. 

Other countries like China, Germany, and Russia have recognized the value of products and services invented in the USA and put resources behind luring U.S. startups to their shores. As a result, as research from Dr. Elizabeth Reynolds at MIT demonstrates, more home-grown inventions are being scaled up overseas, often with the help of public capital, than right here at home, undermining the foundations for the future of U.S. manufacturing.

To survive in today’s increasingly competitive economy, entrepreneurs often must expand quickly, growing on their own or in collaboration with larger firms to help scale up their innovations into commercialized products, which often require highly complex, advanced manufacturing capabilities that demand more time and capital to scale than nonproduction firms.

That’s why in addition to supporting the Manufacturing Scale-Up Fund, the Administration has continued to make targeted investments in advanced manufacturing — including initiatives to build U.S. leadership in cutting-edge manufacturing technologies through the National Network for Manufacturing Innovation; linking small businesses to capabilities they need to compete through the White House Supply Chain Innovation Initiative; and linking manufacturers to opportunities to bring production back to the United States through the Manufacturing Extension Partnership’s American Supplier Scouting Initiative.

Giving workers and businesses the tools they need to get ahead in this new economy. Investing in the capabilities and technologies that drive growth and competitiveness. That’s what middle-class economics offers, that’s how we continue to fuel America’s manufacturing resurgence, and that’s how we move our country forward.