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Learn about our use of cookies, and collaboration with select social media and trusted analytics partners here Learn more about cookies, Opens in new tab. US manufacturing is not what it was a generation ago. Its contraction has been felt by firms, suppliers, workers, and entire communities. But the decline has played out unevenly.

In the past two decades, output growth in US manufacturing has been concentrated in only a few industries, including pharmaceuticals, electronics, and aerospace. Most other manufacturing industries have experienced slower growth or real declines in value added. The largest US manufacturers have managed to thrive despite growing headwinds, while small and midsize firms have been hit hard. Large firms have a stake in addressing this issue, since they face more risk without a healthy ecosystem of domestic suppliers to provide more agility and opportunities for collaboration.

Today the prevailing narrative says that nothing can be done to stop the ongoing decline of US manufacturing at the hands of globalization and technology. But continued losses are not a foregone conclusion. The decade ahead will reshape global manufacturing as demand grows, technology unlocks productivity gains, and companies find growth in new parts of the value chain—all of which creates an opening for US manufacturing to turn things around.

Given the importance of manufacturing to the broader economy, capturing these opportunities should be a national priority. Rather than attempting to re-create the past or preserve the status quo, the United States will need to focus on positioning its manufacturing sector to compete in the future.

Manufacturing is being reshaped by three major trends: rising demand, the convergence of multiple new technologies, and shifting global value chains. One fundamental advantage for US manufacturing remains unchanged: the United States is still one of the most lucrative markets in the world.

While consumer demand may be muted by lackluster income growth , access to the US market remains a powerful lure for domestic and foreign manufacturers alike. US demand for heavy machinery, equipment, and building materials could also increase if public investment revives from its year lows.

But the US market is not the same familiar ground it was in the past. The uneven nature of regional income growth translates into wide market variations. US consumers are more diverse and tech-savvy than in the past—and they have high expectations for quality, low prices, and variety. One global food manufacturer reports that the SKU count of its North American business unit rose by 66 percent in just three years. Beyond the domestic market, demand is soaring in emerging economies around the world.

Over the next decade, another one billion urban residents will begin earning enough discretionary income to make significant purchases of goods and services. But tapping into demand growth in emerging economies requires knowing exactly where and how to compete. Markets such as Africa, Brazil, China, and India represent an enormous prize, but they have dizzying regional, ethnic, linguistic, and income diversity.

All of this means that manufacturers must navigate greater complexity than ever before. They are being challenged to produce a wider range of product models with differing features, price points, and marketing approaches. From fast fashion to new car models, products now have shorter life cycles, and customers are beginning to demand more choice and customization.

The US manufacturing sector needs an injection of productivity, and companies cannot capture the demand opportunities described above unless they step up their game. New technologies will play a large role in determining whether they can compete. Today multiple technology advances are converging. This new wave , referred to as Industry 4.

Such complementary technologies can run smart, cost-efficient, and automated plants that produce large volumes—or, conversely, plants that turn out highly customized products. These technologies touch on every aspect of manufacturing see the interactive. One aircraft manufacturer that implemented a rapid-simulation platform has reduced design time, cut design rework by 20 percent, and boosted engineering productivity.

Internet of Things sensors can feed real-time data into analytics systems, which can adjust machinery remotely to minimize defects, improve yield, and reduce downtime and waste. Collaborative robots can handle dangerous tasks and eliminate safety risks, while 3-D printing can now produce intricate, multimaterial components and final goods. Beyond the factory floor, new applications for coordinating distributed supplier networks improve the flow and tracking of raw materials and manufactured parts.

Manufacturing involves market research, demand forecasting, product development, distribution, and services—activities that may take place in multiple locations or involve outside providers. Companies will soon be able to connect their entire value chain, including customers, with a seamless flow of data.

All of these investments—and more—can be explicitly funded through the ARP. Similarly, post-incarceration reentry programs are explicitly listed in a White House fact sheet on safety strategies as a key investment governments can make using ARP funds to promote public safety by increasing access to housing, employment, and other services to people leaving jails and prisons. Responses to behavioral health crises that focus on public health instead of law enforcement can be funded through an 85 percent federal Medicaid match created by the Act, as well as through state and local recovery funds—again, explicitly named in the final rule.

Pretrial release programs keep people away from congregate settings that can spread COVID and thus are fundable as support for prevention, mitigation, or other services in congregate living facilities. In some cases, rather than using ARP to directly fund new initiatives, cities and counties are using ARP dollars to replace shortfalls in revenue and thereby free up local dollars for these new investments.

With intentional investments in CVIs, behavioral health support and diversion, and pretrial release and post-incarceration reentry services, jurisdictions can use ARP dollars to catalyze a more equitable recovery for communities most harmed by the pandemic. Changing the ways police operate in communities is integral to dismantling systemic racism. Local budgets disproportionately fund police departments over other public services that would promote public safety, including housing, employment support, education, and public health.

Using police and punitive approaches as the primary tools to address he For too long, addressing our toughest problems—whether mental health crises, substance use, homelessness And as a result, some policymakers enacted measures that advocates have long urged.



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