There were 44% fewer manufacturing jobs in our state last year than in 1990. Some of the decline was automation, some of it was due to competition from low-wage countries like China. American consumers benefited, but many North Carolina towns didn’t.
But far-flung logistics are risky. Our military is preparing for war with China, even though we bought $500 billion in goods from the Chinese last year. The semiconductor factories in Taiwan are vulnerable. There are concerns about the ability of our industrial base to supply a war in the Western Pacific.
So policymakers are more interested in U.S. manufacturing. There is a growing realization, perhaps, that outsourcing production kept inflation low but had drawbacks.
That was the backdrop for a visit last week to the Triangle by representatives of the American Manufacturing Communities Collaborative. This nonprofit has been designated by the federal government to work with regions across the country that are working on revitalizing manufacturing. The AMCC is seeing what’s working and spreading good ideas.
In every state, there are organizations working in loose coalitions to boost manufacturing. The fact that AMCC was doing a roadshow here is because there was a network of organizations to visit. There were groups to talk with over three days, in meetings at the NC State College of Engineering and the Institute for Emerging Issues at Centennial Campus, and at RTI International in Research Triangle Park.
That, in itself, is encouraging because 20 and 30 years ago, when the state was being battered by waves of plant shutdowns, it was hard to discuss the future of manufacturing.
Bottom-up approach
Unless you have spent a lot of time in Washington, it is hard to follow economic policy set by Congress or the White House. There are many programs and agencies, and things keep changing. Last week, I listened to Matt Bogoshian, AMCC executive director, explain it.
Bogoshian had a background as a prosecutor in California, and a coordinator of state environmental policy in Sacramento before working as a senior official in the U.S. Environmental Protection Agency.
After the Great Recession, the federal government got focused on manufacturing. Around 5 million U.S. manufacturing jobs vanished between 2001 and 2011, the continuation of a decades-long trend. One response was a pilot program called Investing in Manufacturing Communities Partnership. The goal was to share “bottom-up” regional solutions, with help from federal agencies. Over two years, 24 regions got the IMCP designation. The program ended, but participants kept collaborating, holding weekly national calls.
In 2018, the regions convened a summit in Washington and asked the feds for two things. The first was a national non-profit to more formally connect their efforts, which became the AMCC. Second, they wanted more federal programs that trusted regional leaders to self-organize and lead those initiatives, and they wanted them funded.
The timing was right, because the Department of Defense came out with a study about weaknesses in the military’s industrial base. The AMCC joined this discussion with congressional briefings by the regional organizations, and this led to the Defense Manufacturing Community Support Program.
This was significant for North Carolina. Despite blue-collar job losses, North Carolina is still a top 10 manufacturing state by number of employees. As home to two of the largest concentrations of Army soldiers and Marines, we have the 4th largest DOD footprint among the states.
We also had the ability to win DMCSP grants because of the Industry Expansion Solutions program at N.C. State. IES was created in 1955, so it has been working with manufacturers for nearly 70 years. IES landed a $5 million DMCSP grant two years ago to focus on helping North Carolina textile companies, particularly in advanced materials and wearables – sectors of significant interest to the military.
IES has enlisted a lot of partners in this effort, and a number of these partners were at the meetings with Bogoshian last week, part of the ecosystem working on boosting and transforming manufacturing in our state and spurring innovation: RTI International, First Flight Venture Center, the North Carolina Military Business Center, the North Carolina Biotechnology Center, the North Carolina Defense Technology Transition Office, the Manufacturing Solutions Center, North Carolina A&T, State’s Wilson College of Textiles, the North Carolina Board of Science, Technology & Innovation, the Defense Alliance of North Carolina, and the Textile Technology Center at Gaston College, to name a few.
Since 2020, Washington has stepped up spending that is sending more money down the pipeline.
“The great news for manufacturing in the United States is that four big bills got passed in the last couple of years: The American Rescue Plan, the Bipartisan Infrastructure Act, the CHIPS and Science Act, and the Inflation Reduction Act.”
“Many of those dollars are going into those bottom-up efforts,” says Bogoshian. “But you know what? Our muscles are kind of atrophied. So, we had to strengthen our public-private partnership muscles.”
The American Rescue Plan, for example, created entities called “communities of practice” under the U.S. Department of Commerce, to work with these regional ecosystems. And Bogoshian’s organization, the AMCC, was designated the “community of practice” for manufacturing. And that provided funding for things like last week’s series of meetings, the AMCC roadshow at RTI and Centennial Campus.
In fact, RTI has a “community of practice” role in the Build Back Better regional challenge launched by the U.S. Economic Development Administration as part of the ARP.
There’s a flurry of activity still unfolding. Congress passed a bunch of bills to send hundreds of billions of dollars down the pipe, but it takes time to set up the programs and get the money to the only place it can be spent, which is at the state and local level.
Last week, around a half-dozen organizations around North Carolina were submitting their applications to EDA by the Tuesday deadline to get funding as Tech Hubs. That’s part of the CHIPS and Science Act signed into law more than a year ago. NC Commerce was helping to coordinate this at the state level. Another CHIPS Act program may send National Science Foundation money to Wake Forest University School of Medicine for a “Central Carolina Engine for Innovation in Regenerative Medicine Clinical Manufacturing,” and to The Industrial Commons in Morganton, a proposal to help create “a Modern, Green and Inclusive Textile Sector.”
Bogoshian made reference to how things have changed. “The Senate, you know, said that the Tech Hub was IMCP, this bottom-up model, but with $10 billion.”
So these regional manufacturing ecosystems that have been working for years, without a ton of funding, are starting to get resources. The challenge now, for AMCC, is to basically go from state to state and weave them into a national network, more or less focusing on the same priorities and metrics. The regional folks are listening to AMCC because it is well-connected in Washington, and has credibility with the big funders, like EDA and other agencies, and congressional leaders, like the House Manufacturing Caucus.
What Bogoshian wants the regional folks, in North Carolina, Mississippi, Utah and elsewhere, to focus on are key industries such as defense, energy and transportation and specific needs in each manufacturing sector.
He talks about the “Big Six” that are needed for a manufacturing community to thrive, attributes that surfaced as important in the IMCP era: Workforce and training, research and innovation, infrastructure and site development, supply chain support, trade and international investment, and operational improvement and capital access. None of these are surprising, but not all of them have state or regional plans, and it takes a lot of energy to push forward on plans that do exist.
“Every region can be a part of the national ecosystem,” says Bogoshian. “We can have a whole group of public and private stakeholders trying to look at how we build a national open-source playbook for regions to self-assess the strengths and weaknesses of their manufacturing ecosystems.”
