On Friday, August 27, the Manufacturing Reinvestment Corporation Act was introduced in the U.S. House of Representatives by Congresswoman Jan Schakowsky (IL-D), who is chair of the Subcommittee on Consumer Protection and Commerce of the Energy and Commerce Committee. This act would establish a Manufacturing Reinvestment Corporation to create local “manufacturing renaissance councils,” organizations which would develop a strategic plan to promote growth and inclusion. The corporation would be funded with $20 billion to develop a national strategy for these councils, and provide grant funding to help designated communities create a strong labor–community partnership and implement economic and workforce development programs. The bill represents a daring approach to rebuild manufacturing, one that centers attention on people of color and distressed communities, to open up new pathways to good-paying manufacturing careers, including owning and developing new companies for the green economy.
There has been growing attention in the national conversation on manufacturing’s place in our economy. In response to the COVID-19 crisis, the federal government revisited the World War II Defense Production Act to turn the nation’s remaining manufacturing capacity toward producing the millions of pieces of medical and personal protective equipment (PPE) necessary to deal with the pandemic. Moreover, the need to tackle climate change provides new opportunities, necessitating the growth of sustainable industries for electric cars, solar panels, and energy efficient materials; manufacturing will be a key part of these efforts, and is already the largest source of green jobs for the private economy. Furthermore, recently, the manufacturing sector has seen positive trends, adding back nearly 1 million jobs since the worst of the pandemic, and as of early 2021, manufacturers have improved their growth more than at any other time in the past three years.
This attention on the power and necessity of the sector is overdue. Manufacturing is an essential industry for the middle class and the American economy, and its erosion has been devastating to the economic security of workers, families, and struggling communities. The largest loss of manufacturing jobs and disruption to communities happened in the last two decades, and today, the manufacturing workforce is 26 percent smaller than it was in 2000. Ironically, as manufacturing has rebounded with the help of new bipartisan policy actions and investment, this recovery has been hobbled by the hangovers from deindustrialization, including weakened supply chains. For example, the legacy of industrial layoffs has made it harder for companies to find the talent they need to remain competitive in the global economy, and our research found there were 58,000 jobs going unfilled in the Chicago region alone even as Black and Latinx youth are suffering a crisis of unemployment and violence.
Legacy small and medium manufacturers in urban areas and small towns are not only struggling to find workers: many also have aging owners and, if they are unable to find successors, the manufacturing revitalization happening in America today may be cut off even before it can gain momentum. These firms are ripe for ownership by women and entrepreneurs of color, or by workers themselves. But venture capital goes predominantly to software companies and to coastal areas rather than to the Midwest, where a significant share of industry is still concentrated, or to manufacturing communities in general. Like the recently introduced proposal by Senator Coons and colleagues to create an industrial investment bank, the Manufacturing Reinvestment Corporation Act would give communities resources to inject capital into existing and new manufacturing companies, especially as they relate to the green economy.
Like the recently introduced proposal by Senator Coons and colleagues to create an industrial investment bank, the Manufacturing Reinvestment Corporation Act would give communities resources to inject capital into existing and new manufacturing companies, especially as they relate to the green economy.
Manufacturing companies will need to recruit more than 2 million workers over the next ten years in order to replace a rapidly aging workforce. The manufacturing industry will not be able to accomplish this goal unless it can reflect on its past and adequately address their severe racial and gender disparities and work towards equity. Manufacturing is currently 67 percent white and non-hispanic and 70 percent male. Firm ownership is even more disproportionately white: a past TCF report outlined how in Illinois, “82.6 percent of manufacturing firm owners were white (non-Hispanic or Latino) and 0.5 percent were black (non-Hispanic or Latino) despite being 14.2 percent of the population.”
While these job recruitment challenges are long-standing, what’s new is the level of activity in communities to overcome them. The Century Foundation and the Urban Manufacturing Alliance has brought together organizations in cities like Chicago, Baltimore, Cleveland, Detroit, Milwaukee and Buffalo who, by forging partnerships between communities and companies, are creating new educational and job training pipelines into manufacturing. The Century Foundation worked closely with Chicago-based Manufacturing Renaissance to develop the project and to promote the ideas embodied in this important new legislation. As described in our report, “Industry and Inclusion: A Blueprint for Action,” these communities have embraced manufacturing as a key strategy for economic inclusion and have put together impressive initiatives that are getting residents jobs and moving companies towards cultural competency.
The Manufacturing Reinvestment Corporation Act represents a bold plan to rebuild manufacturing while pursuing inclusive economic development. Building off the Biden administration’s proposal for a $20 billion community revitalization fund, it would put resources in the hands of community, industry, and labor leaders who can make capital and programmatic investments that their local communities need.
Manufacturing Reinvestment Corporation Act In Detail
This act would establish a new Manufacturing Reinvestment Corporation in the Department of Commerce to “develop and monitor a national manufacturing strategy, to identify and address supply chain weaknesses, and align manufacturing with strategic opportunities” through the creation of manufacturing renaissance councils. The bill would allocate $5 billion per year from 2022 to 2025 to these efforts.
Similar to the Neighborhood Reinvestment Corporation that transformed communities through community development and housing organizations, the Manufacturing Reinvestment Corporation would provide financial assistance and training for strategic and inclusive manufacturing revitalization efforts. The corporation would develop a national manufacturing strategy for the United States no later than December 21, 2021 and for every four years thereafter. The bill would also set national manufacturing goals with a focus on equity and inclusion in the manufacturing industry, including the following targets:
- Manufacturing represents 20 percent of gross domestic product by 2035.
- Net-zero greenhouse gas emissions sector-wide by 2030.
- Measures in place that ensure the diversity of owners in manufacturing sectors is representative of the relevant local areas by 2030.
- Measures are implemented that effectively balance geographic diversity, community stability, and racial equity for locating and planning new manufacturing capacity.
- Employee ownership and participatory management practices are promoted and incentivized across the manufacturing sector.
- Identified skills gaps in the manufacturing sector are closed to zero.
Manufacturing Renaissance Councils
Manufacturing renaissance councils (MRCs) are a vital part of the act, which mandates that the corporation establish thirty such organizations within the first ten years after the bill is enacted. MRCs will be tasked with designing and implementing programs to support and advance the manufacturing sector within their local area, including by assessing regional manufacturing needs, developing and implementing a comprehensive manufacturing plan, and facilitating the coordination of local stakeholders. They will also coordinate with other MRCs and with the national-level corporation. Together, the corporation and the councils will ensure that a revitalized manufacturing sector can create the products, processes, and transition opportunities that are necessary to address the climate crisis, embrace inclusion, and empower non-traditional manufacturing populations.
MRCs will be tasked with designing and implementing programs to support and advance the manufacturing sector within their local area, including by assessing regional manufacturing needs, developing and implementing a comprehensive manufacturing plan, and facilitating the coordination of local stakeholders.
The process for developing the MRCs themselves will have equity aspects as well. While applying, a technical assistance grant program will be available to help applicants with the process. The application will look closely at the populations the MRC will serve, including whether it is a manufacturing community (i.e., a community with a history of manufacturing capacity, or one that has a local manufacturing industry above the national average) and/or is located in a community of color with a higher proportion of residents of color than that which exists in the state as a whole. Application review will also consider whether the applicant will serve an economically distressed community (where job growth was less than 80 percent of the national rate of growth over the past forty years) or a community that has at least one minority-serving education institution.
Each local MRC will work to create a bottom-up economic development strategy, including objectives and provisions for labor, community, industry, and the public sector in governance. The goal is for diverse stakeholders, including labor and the community, to have a direct say in where funds are invested. Each manufacturing council must have a governing board of at least nine members, including a representation from community stakeholder organizations (labor, workforce training, faith-based or environmental organizations), public and educational organizations (minority-serving institutions, local governments, and other institutions of higher education, especially community colleges) and industry (requiring the inclusion of manufacturing companies, a majority of which have 100 employees or less).
MRC funds will be appropriated to design and implement the following programs, as appropriate to their communities.
- Capital Access and Economic Development. MRCs will facilitate the development of publicly owned financial institutions, including publicly owned banks, holding companies, investment and asset management firms, revolving loan funds, and insurance pools by providing funds for capitalization and the other forms of start-up assistance necessary to create these services. They will also work with community development financial institutions and other local lenders to serve small and medium manufacturers, as well as provide grants and loans for commercial real estate development for business incubators and industrial parks.
- Ownership Succession. MRCs would develop acquisition and ownership succession programs for aging firms, firms that will be sold or relocated, and other important firms, focusing on ownership by Black, Indigenous, and people of color (BIPOC) and women. These strategies will include training of minority and women business entrepreneurs, financial assistance for employee ownership provisions, and the recruitment of private investment capital, with the program serving as a liaison between firms and potential buyers.
- Educational Infrastructure to Close the Skills Gap. MCRs will provide resources and training for pre-K through twelfth grade and beyond, including career education, pre-apprenticeship, and community college programs focusing especially on creating pathways for people of color and women to prepare them for careers at all levels in manufacturing.
- Training Services. MRCs will fund and promote workforce pipeline activities, including occupational development, skill upgrading and retraining, and work-based learning, as well as adult education and literacy activities, including English-language acquisition as needed to succeed in manufacturing.
- Wraparound Services. Wraparound services would be a key part of any training activity. Services would include direct support programs like child care, transportation, and mental health and substance use disorder treatment, along with career pathway navigation and case management services, in order to help companies retain workers.
- Diversity, Equity, and Inclusion (DEI). There would also be a prioritization of (DEI) practices to provide leaderships programs for non-traditional manufacturing populations (BIPOC and women), free or low-cost DEI trainings, diversity audits for manufacturing firms, and the evaluation and promotion of activities that emphasize social inclusion and reinvestment in education along with innovation and productivity.
- Early Warning Systems. This would include proactive outreach and assistance for companies facing closure risks, as well as early identification of the needs of firms at risk of layoffs, feasibility studies to determine options for a company to minimize layoffs, analysis of the suppliers of an affected company to assess their risks as a result of a shift in production of their major customer, and identification of opportunities for economic transition in growing sectors or businesses.
- Anchor Institutions. MRCs would provide technical assistance to place-based public or nonprofit anchor institutions (e.g., universities and hospitals) that can use their purchasing power to incubate employee-owned and sustainable enterprises.
The Renaissance Begins Now
It is clear that a national manufacturing strategy that puts equal emphasis on job creation, inclusivity, and climate change is necessary to build back a stronger and more resilient manufacturing sector. The Manufacturing Reinvestment Corporation Act will provide for a brighter future in manufacturing by building relationships among labor, community, and industry partners through manufacturing renaissance councils. This bill will allow MRCs to meet the needs of workers and further bring non-traditional manufacturing communities from the margins to the center by providing them a pathway to leadership. This act shows a commitment to more inclusive policy, which has long been called for by manufacturing workers and communities. We hope this will be one of the major pieces of legislation moving through Congress this year.
header photo: Stellantis workers install doors on a 2021 Jeep Grand Cherokee L at the Stellantis Detroit Assembly Complex-Mack in Detroit, Michigan.