Made in the USA: How Main Street is Revitalizing Domestic Manufacturing

2025-11-20

Loading video...

Summary

This meeting of the House Committee on Small Business focused on the revitalization of domestic manufacturing in the USA, exploring how Main Street businesses are contributing to this effort.[ 00:29:30-00:29:37 ]

Witnesses discussed the economic importance of small manufacturers, challenges they face, and policy recommendations to support their growth and competitiveness.[ 00:29:54-00:30:39 ] The discussion covered a range of topics including workforce development, the impact of tariffs, regulatory burdens, and the role of technology in modern manufacturing.

Themes

Domestic Manufacturing and Economic Growth

Small manufacturers are crucial drivers of local economic growth, creating jobs, and strengthening domestic supply chains across the country.[ 00:30:24 ]

The manufacturing sector contributes significantly to the U.S. economy, adding trillions in value and employing millions of Americans annually.[ 00:30:05-00:30:21 ] Revitalizing and expanding U.S. manufacturing is viewed as both an economic priority and a national imperative, with legislation like the Made in America Manufacturing Finance Act aimed at increasing access to capital for small manufacturers.[ 00:31:07-00:31:20 ] Reshoring efforts have seen a substantial increase in manufacturing and foreign direct investment jobs, rising from 11,000 in 2010 to 240,000 per year by 2023, with about half of these jobs in small businesses.

Workforce Development and Skill Gaps

A critical challenge highlighted is the shortage of a skilled American workforce, with hundreds of thousands of manufacturing job openings currently and millions projected by 2033. Small manufacturers struggle to compete with large corporations for talent due to limitations in offering comparable pay and benefits packages. Solutions proposed include robust skills training, apprenticeships, public-private partnerships, and educational efforts to promote manufacturing careers starting from middle and high school. It was also noted that policymakers need to address immigration to supplement the domestic workforce with skilled talent, including scientists, engineers, machinists, and technicians.

Tariffs and Trade Policy

The impact of tariffs on small manufacturers was a point of contention, with some witnesses highlighting the negative consequences while others noted positive effects. Ms. Modlin reported that tariffs create uncertainty, making it difficult to set prices and forcing small businesses to absorb increased costs for imported raw materials like aluminum, steel, and alloys. She noted that prices do not typically decrease once tariffs are removed and that some tariffs, like on carbide, are extremely high, impacting tooling costs. Conversely, Mr. Voss stated that his company had not seen increased costs for imported goods because foreign manufacturers absorbed the tariff burden to remain competitive, and tariffs have also led to expansion for some domestic customers due to reduced foreign competition. There was a consensus that tariffs should not apply to capital equipment needed for reshoring, as these machines are often not made in the U.S. and tariffs on them hinder investment and productivity growth.[ 01:16:25 ]

Regulations and Red Tape

Excessive federal regulations were identified as a significant burden for small manufacturers, costing them approximately $50,000 per employee annually, which is double the cost for large manufacturers. These costs divert resources from productive activities like R&D, hiring, and capital investment, hindering growth and innovation. Permitting reform, including reducing timelines, streamlining processes, and increasing coordination among agencies, was suggested as essential to accelerate project approvals and investment.

Healthcare Costs and Access

The rising cost of healthcare is a major concern for manufacturers, directly impacting their ability to attract and retain talent. Small businesses often cannot afford group health policies and rely on employees accessing the ACA Marketplace or offering reimbursement programs.[ 01:30:47 ]

Some argued that the current healthcare system is "broken" and that continuing to subsidize it through tax credits is not a sustainable solution.[ 01:53:40 ] The high healthcare costs in the U.S., compared to other countries, contribute to higher manufacturing costs and reduce competitiveness.

Impact of Tax Policy

The recently passed tax bill, referred to as the "One Big Beautiful Bill Act," was praised for laying a strong foundation for reshoring and domestic manufacturing growth.[ 01:21:20-01:21:32 ]

Key provisions, such as permanent bonus depreciation, the 20% small business deduction (199A), and immediate R&D expensing, were highlighted as crucial for incentivizing investment, job creation, and wage growth.[ 01:21:54-01:21:57 ] The 199A deduction is particularly significant as 96% of manufacturers are organized as pass-throughs, benefiting from a lower effective tax rate that allows them to reinvest in their businesses and communities.

Technology in Manufacturing

Manufacturers are increasingly adopting advanced tools like automation and AI to remain competitive, modernize the industry, and attract a new generation of workers. AI technology is transforming the shop floor by increasing worker productivity, improving supply chain efficiency, and enhancing safety. A key hurdle for small businesses in adopting AI is the potential for one-size-fits-all regulations that might stifle innovation, as well as the significant power demands associated with these technologies.[ 02:15:16 ]

Tone of the Meeting

The tone of the meeting was largely serious and focused, reflecting the importance of the topic to the nation's economy and security.[ 00:30:05 ]

There was a general bipartisan agreement on the goal of supporting and expanding U.S. manufacturing, though specific policy approaches, particularly regarding tariffs, generated some debate and differing perspectives. Witnesses expressed a mix of optimism about the potential for growth and concern over persistent challenges such as workforce shortages, regulatory burdens, and healthcare costs. The exchanges were respectful, with members frequently thanking witnesses and acknowledging the complexity of the issues at hand.[ 01:08:35 ]