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Report

Cut to Invest: Create a “Race to the Shop” Competition for Advanced Manufacturing

Bruce Katz and Peter Hamp

A “Race to the Shop” competition for advanced manufacturing should be initiated in order to expedite the transition toward a more innovative, productive, inclusive, and globally competitive American economy. The competition would challenge U.S. states and metropolitan areas to align their policies and investments to meet the distinct labor demands of their primary advanced manufacturing sectors and clusters. Winning applicants would not only receive resources for planning and implementation, but also increased flexibility in the use of existing federal workforce development and skills training funds.

Race to the Shop responds to one of the major barriers threatening the resurgence of U.S. manufacturing: the lack of educated workers with the skills necessary for today’s advanced industry.

Background
In the years preceding the Great Recession, the United States pursued a post-industrial economic growth model, prioritizing consumption and real estate speculation over investments in innovation and production—the true engines of economic competitiveness and wealth generation in America. Among the few positive developments drawn from the Great Recession is that the U.S. economy is now undergoing a slow, painful transition toward a “next economy,” one where the  U.S. exports more and wastes less, innovates in what matters, produces more of what it invents, and ensures that the economy actually works for working families.

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Reviving America’s advanced manufacturing sector is obviously a critical component of building a more productive, sustainable, and inclusive economy. U.S. manufacturing is an important source of quality well-paying jobs that offer a significant wage premium—nearly 20 percent higher average weekly earnings than non-manufacturing jobs—and are more likely to provide health care and retirement benefits. The sector also accounts for the lion’s share of the country’s R&D and innovation activity. While manufacturing provides only 9 percent of all U.S. jobs and 11 percent of total GDP, it employs 35 percent of all engineers, represents 68 percent of the spending on R&D that is performed by U.S. companies, and produces 90 percent of all patents developed in the United States. Further, manufactured goods comprise about 65 percent of all U.S. trade (both imports and exports), making it a crucial component of any strategy to reduce America’s growing trade deficit. In short, a strong manufacturing sector is necessary for America to compete in the global economy.

Proposal
The Metropolitan Policy Program at Brookings proposes an annual $150 million Race to the Shop competition to reform and modernize federal investments in workforce education and skills training for advanced manufacturing in the United States.  

The Obama administration’s Race to the Top competition in the educational arena offers a model for Race to the Shop. Race to the Top is a clear example of how the carrot of a relatively small amount of federal spending can reinvent how states (and metros) carry out a critical role of government, as states undertake systemic reforms and develop new, innovative approaches to education in hopes of qualifying for federal education grants.

A Race to the Shop competition would challenge states and metropolitan areas to develop long-term plans, investment strategies, and regulatory and administrative reforms in support of their top advanced manufacturing sectors, particularly in the area of skills training and workforce development. The competition would require a cross-section of leaders from the public, university, non-profit, and private manufacturing sector in states and metro areas to organize a task force (perhaps led at the state level by the governor’s office and at the metro level by a consortium of elected officials or a leading non-profit or manufacturing intermediary) that would be charged with designing and submitting a proposal to address the manufacturing workforce and skills challenges within their state or region. The proposals would:

  • Articulate a bold economic vision for the state or metro that builds on their special assets and strengths in advanced manufacturing
  • Identify and prioritize key weaknesses or barriers (e.g., lack of strong vocational education or skills training system, absence of customized training for existing industrial firms and sectors, etc.) to successfully implementing the state or metro plan
  • Design strategies that carry out the plan through tangible projects and investments, with deep and sustainable involvement of manufacturing companies
  • Leverage other federal funds in support of these strategies
  • Reform state and/or local policies and governance in support of these strategies
  • Hold themselves accountable on a regular basis through a set of transparent performance measures

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