MIT’s new Initiative for New Manufacturing offers a blueprint for addressing the systemic challenges plaguing American industry.

The Poor State of U.S. Manufacturing

Domestic manufacturing remains a cornerstone of the US economy. The United States continues to manufacture a diverse array of goods, including automobiles, electronics, machinery, and pharmaceuticals, which are vital to economic stability and national security. US manufacturing generates significant value across a wide range of domestic industries, supporting millions of jobs and driving innovation.

As the second largest manufacturing nation in the world, the US manufacturing sector holds a critical role in driving the country’s economic growth, accounting for nearly 10% of total employment and contributing approximately 12% to global manufacturing output.

However, the sector faces mounting challenges from global competition, supply chain disruptions, and technological change. To remain competitive, US manufacturers must invest in advanced techniques and new technologies. Expanding and modernizing domestic production is essential to ensure that American manufacturing capacity can meet future demands and support sustainable economic growth.

Manufacturing employment has declined steadily over recent decades, while input costs continue to rise and competition from other countries intensifies.

The stark reality facing US manufacturing today was captured perfectly in a recent assessment by MIT researcher Suzanne Berger:

American manufacturing is in pretty bad shape.

After decades of productivity slowdowns, globalization pressures, and a persistent “low-end trap” characterized by outdated technology and stagnant wages, the industry finds itself at a critical crossroads.

That's why the Massachusetts Institute of Technology presents a plan to address the long-standing problems in American industry and launches the Initiative for New Manufacturing.

Initiative for New Manufacturing: The Path to Sustainable Manufacturing

The ambitious program at the Massachusetts Institute of Technology aims to revitalize American industrial production for decades by introducing innovative solutions. It's backed by major industry players including GE Vernova, Siemens, PTC, and Sanofi. The key partnering companies will support the innovative projects focusing on AI in manufacturing.

The key driver behind MIT's vision is boosting productivity in domestic manufacturing through cutting-edge technologies. The expected outcome is to strengthen economic sectors and foster job creation.

As MIT President Sally Kornbluth noted:

Helping America build a future of new manufacturing is a perfect job for MIT—and I'm convinced that there is no more important work we can do to meet the moment and serve the nation now.

A 2023 MIT study underscores a significant technology gap in American manufacturing: less than 10% of U.S. manufacturers have adopted robots on their production floors, largely due to high costs and persistent workforce challenges.

Suzanne Berger, MIT Professor and co-director of the Initiative for New Manufacturing, points out that

this slow pace of automation highlights a broader need for integrating advanced AI to truly modernize manufacturing processes.

Combining research, practical training, and collaboration with partners, the university in Cambridge, Massachusetts, plans to bring in the top tools and talents that will contribute to shaping more sustainable future for manufacturing.

MIT's Vision: A Comprehensive Approach to Manufacturing Transformation

MIT's New Manufacturing Initiative has created several education and industry partnership programs. The plan involves partnering with community colleges via the TechAmp program, creating new labs, and organizing a "factory observation" program that allows students to visit production facilities.

The initiative addresses the main industrial challenges, organized around four core pillars:

1. Reimagining Manufacturing Technologies and Systems

Breakthrough technologies and system-level approaches across energy production, healthcare, computing, transportation, and defense sectors. This isn't just about adding robots to existing processes—it's about fundamentally rethinking how manufacturing systems operate. Technological innovation plays a crucial role in this transformation, enabling new methods and tools that drive greater efficiency and productivity.

2. Elevating Productivity and Human Experience

Rather than viewing automation as a replacement for human workers, MIT's approach emphasizes developing digitally-driven methods that amplify productivity while improving the human experience of manufacturing work.

3. Scaling New Manufacturing

The aim is to accelerate the scaling of manufacturing companies and transform supply chains to maximize efficiency and resilience, fostering both product innovation and business growth.

4. Transforming the Manufacturing Base

With a focus on sustainability and economic opportunity, particularly in the United States, the initiative seeks to create compelling opportunities for workers while building a more resilient global manufacturing ecosystem.

Peter Koerte, Siemens’ CTO and CSO, stated that:

As American industry encounters increasing challenges, there is a critical need for technologies capable of real-time response.

He emphasized that the collaboration with MIT combines advanced tools with practical implementation.

The Manufacturing Modernization Gap: Addressing the Challenge of Technology Adoption

However, the reality is that many manufacturers—particularly small and medium-sized enterprises (SMEs)—are struggling to adopt these technologies effectively. The challenge isn't just technological—it's systematic. Current applications of artificial intelligence in factories are limited, primarily focusing on machine vision for quality control and predictive maintenance. What's more, the adoption rate for these technologies remains very low.

As MIT President Sally Kornbluth noted:

We want to work with firms big and small, in cities, small towns and everywhere in between, to help them adopt new approaches for increased productivity.

The challenges of adopting new technologies vary depending on different sectors, and individual companies. For instance, semiconductor makers may seek workers who can operate advanced machine learning equipment. Meanwhile, other factories are focused on adopting more basic technologies and are struggling with low rates of automation.

Example:

Metal fabrication companies in Cleveland, Ohio, are seeking to hire workers skilled in operating traditional milling machines, some of which have been in use since the 1940s. As these workshops have not integrated modern technologies like robotics or 3D printing, there is a specific need for technicians who can manage the existing equipment. The offered compensation for these roles is $13 per hour.

The Manufacturing Paradox: Fewer Jobs, Greater Output

Manufacturing jobs peaked in 1979 at 19.4 million, according to the Bureau of Labor Statistics, and by 1987 had fallen to 17.6 million. The Great Recession had a profound impact on manufacturing productivity and employment, resulting in a challenging recovery period and contributing to stagnant productivity growth.

• Manufacturing employment fell by 18% or 2.5 million jobs during the Great Recession (2007-2010);

• Labor productivity in manufacturing grew at an average of 3.4% per year from 1987 to 2007, but measured growth was -0.5% from 2010 to 2019.

  
  

Despite having fewer workers, manufacturing output and value have remained strong. This is because capital investment and productivity improvements allow the manufacturing industry to produce more. Understanding the true manufacturing value—output minus input costs—is key to creating effective economic policies.

💡 Good to know:

Most Americans are unaware that while manufacturing jobs declined, manufacturing output has grown - only 35% know that manufacturing output has risen over the past three decades.

Economic Headwinds: How Global Factors Shape Domestic Manufacturing

The US manufacturing sector is tied to global supply chains, making it vulnerable to disruptions.

Tariffs and trade policies have increased input costs for US manufacturers, reducing their competitiveness and raising production expenses. As a result, it can discourage investment in new manufacturing facilities and machinery. Imported manufactured goods are essential business inputs for US manufacturers, and higher tariffs on these goods can negatively impact productivity and output.

Additionally, the tax code and tax incentives, including those provided by the Jobs Act, shape manufacturing investment, modernization, and productivity by influencing the financial decisions of manufacturers.

Economic pressures from the Federal Reserve Bank's interest rate policies and the tax code also impact investment and growth for manufacturing firms, including those in major subsectors like computer and electronic products and transportation equipment.

The American Manufacturing Crisis by the Numbers

The scale of the challenges facing US manufacturing becomes clear when examining the data. Manufacturing employment has fallen to roughly 13 million today, with each recession bringing further losses that never fully recovered.

US Manufacturing Productivity Decline (2011-2024)

The productivity stagnation isn’t just a statistical curiosity—it represents a fundamental breakdown in the industry’s ability to innovate and compete. As the MIT researcher noted:

We have low tech, low skill, low wages, low productivity, and you can’t really fix any one of these pieces without trying to really pull this ‘knot’ apart”.

These pressures are compounded by the increasing complexity of global supply chains, which demand greater agility and resilience from US manufacturers. To remain competitive, the US manufacturing sector must embrace advanced manufacturing techniques and invest in key technologies such as artificial intelligence, automation, and digitalization. Strategic collaboration with other industries and government entities will be essential to strengthen domestic manufacturing, enhance supply chain resilience, and unlock new opportunities for growth and innovation.

What’s Next for U.S. Manufacturing?

MIT’s Initiative for New Manufacturing represents far more than just a push for new technology—it’s a comprehensive call to reimagine the entire foundation of American manufacturing. The initiative is built on several key pillars:

• Reinvigorating Productivity: Through cutting-edge research, practical training, and robust industry partnerships, MIT is working to create a manufacturing sector that is not only more productive but also resilient and sustainable for the long term.

  
  

• Human-Centered Innovation: Central to the initiative is the commitment to design high-quality jobs and empower the workforce. By equipping employees with advanced tools and skills, the program aims to make manufacturing careers more attractive and impactful.

  
  

• AI and Automation: Early projects within the initiative are focused on accelerating the integration of AI and automation in manufacturing. With strong backing from industry leaders, these efforts are designed to help manufacturers overcome adoption barriers and realize the full potential of digital transformation.

  
  

MIT’s approach signals a new era for U.S. manufacturing—one that blends technological advancement with workforce empowerment and strategic collaboration to drive lasting competitiveness and growth.

The success of this initiative will depend on manufacturers' ability to embrace the new production technologies.

Workforce Development and Talent Acquisition: Building the Next Generation of Makers

As the US manufacturing sector evolves, the need for a skilled and adaptable workforce has never been greater. The rapid adoption of advanced manufacturing technologies and the integration of digital tools are reshaping the industry, creating new opportunities but also highlighting a significant talent gap.

According to the National Institute of Standards and Technology, the US manufacturing sector will need to fill approximately 3.8 million jobs by 2033, with nearly half of these positions requiring specialized skills and technical expertise.

To address this challenge, manufacturers must prioritize workforce development and talent acquisition. Investing in robust training programs, apprenticeships, and upskilling initiatives is essential to attract and retain top talent.

Public-private partnerships, such as those fostered by the MIT initiative, play a critical role in supporting these efforts by providing resources, expertise, and pathways for career advancement. By promoting manufacturing as a dynamic and rewarding career choice, the industry can inspire a new generation of makers—individuals equipped to drive innovation, productivity, and competitiveness in the global market.

Building a strong, skilled workforce is not just about meeting immediate labor needs; it is about ensuring the long-term vitality of the US manufacturing sector. By embracing workforce development as a strategic priority, manufacturers can position themselves for sustained growth, technological leadership, and continued economic impact.

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Sources:

1. https://www.manufacturingdive.com/news/us-manufacturing-pretty-bad-shape-mit-hopes-to-change-that-GE-Vernova-Siemens/751904

2. https://nam.org/mfgdata/facts-about-manufacturing-expanded

3. https://www.pewresearch.org/short-reads/2017/07/25/most-americans-unaware-that-as-u-s-manufacturing-jobs-have-disappeared-output-has-grown/