Obama uses Ohio visit to announce new manufacturing assistance package

US President Barack Obama. Image courtesy of Flickr - Nick Knupffer

US President Barack Obama yesterday announced a new program of spending to help strengthen the country’s ailing manufacturing sector.

Speaking at a rally in Cleveland, Ohio, President Obama announced a $500m package with targeted initiatives aimed at job creation and industry support.

The US manufacturing sector was battered in the lead up to and during the Global Financial Crisis, however has recently rebounded, with nearly 900,000 new jobs created in the sector since February 2010. Yesterday’s announcement included a funding program that will seek to build on this momentum, and help America win back yet more jobs.

New textile institute

One of the major announcements of the manufacturing support package was the funding of a new $150m institute to research and develop new fibers for the textile industry.

The US textile industry has suffered massive losses in the last few decades, following large-scale outsourcing to Asia.

Given that the US is unable to compete with Asia’s low wage rates, the new institute will instead focus on research into advanced textiles. These include high tech fabrics being worn by fire-fighters and military personnel, as well as electronically networked ‘smart clothes’.

The new institute will be associated with the US Department of Defense and be funded as part of a public-private partnership, with the government contributing $75m and the private sector the same amount.

The funding for the institute will be decided through a competition led by the Department of Defense which will invite leading manufacturers, universities, and non-profits to form the new manufacturing hub focused on revolutionary fibers and textiles technologies.

This is the ninth competition for a National Network for Manufacturing Innovation institute, and the first of eight new institutes that the President’s budget proposes to fund by the end of 2016.

Support for smaller manufacturers

The other major announcement was the funding of an additional $320m for the Manufacturing Extension Program (MEP).

This program works on a non-profit basis to help smaller manufacturers afford the specialized, high-tech equipment that would enable them to keep up with larger and better-funded competitors. This equipment includes new manufacturing breakthroughs such as digital design and 3D printing.

Small manufacturers currently make up 42% of the total manufacturing jobs in the US, and thus the government believes support for these businesses is critical for further job creation.

Funding uncertainty

While this package announced yesterday could aid US manufacturing, it is at risk of being blocked by a hostile Republican-controlled House of Representatives.

Republicans contend that the US is already overspending and that it can ill-afford to continue funding new industry support programs.

They believe that fiscal prudence will help the economy and in the long run create more jobs.