The Executive Office of the President

Despite Detroit's legacy as an icon of American industry and innovation, the Motor City found itself grappling with substantial and long-simmering problems when President Obama took office. Its famous auto industry was in crisis and had largely left the city proper, its population had declined for half a century, vital city services were not being delivered, and the City government was hurtling towards bankruptcy. People worried about Detroit's future. President Obama committed the federal government to the region's recovery within weeks of taking office, demonstrating his confidence in the American worker-and the City of Detroit-by providing temporary federal assistance to rescue the auto industry. This assistance paid off: The industry avoided catastrophic failure, returned to profitability, and added over 646,000 US jobs.

U. S. manufacturing is in the midst of a potential resurgence. Since February 2010, manufacturers have added 877,000 jobs" the sectors first sustained job growth since the 1990s. Americas 230,000 small manufacturing firms have played a key role in this resurgence, adding the majority of new manufacturing jobs every year, while forming the backbone of U. S. supply chains. Dense networks of these small manufacturers are vital to the process of taking a product from concept to market, and the exchange of manufacturing know-how across suppliers is essential for the diffusion of the new technologies and innovative processes that give U. S. manufacturing its cutting edge. However, these networks are under stress. From 2000 to 2010, manufacturing output and investment stagnated as companies offshored production previously done domestically. The U. S. supplier base weakened, raising doubts about the future of manufacturing's contribution to American innovation. Small manufacturers then and now face steep barriers to innovation - from invention, to commercialization, to the diffusion of new technology. For example, small manufacturers contribute less than one-third of all manufacturing R&D, despite making up 98 percent of manufacturing firms and as a general rule, small firms are one-seventh as likely as large firms to conduct R&D. As a result, small manufacturers are often in the positon of having to adopt technologies invented by others. Small manufacturers also face unique barriers in accessing the capital and expertise to take on the risk of new technologies. In part because of the challenges they face in adopting new technologies and processes, small manufacturers are only 60 percent as productive as large manufacturers. Strengthening America's supply chains and the small manufacturers at their core is essential to the long-term competitiveness of U. S. manufacturers both large and small. Manufacturers spend on average 60 percent of the price of their final product on purchased inputs, so differences in the quality and nimbleness of their supply chains can make or break a manufacturer's ability to compete.

The United States is an increasingly attractive location for business investment from global companies. In AT Kearney's 2013 FDI Confidence Index, the United States surged past countries like China, Brazil and India to become the country with the top FDI prospects globally, as ranked by 302 companies representing 28 countries and multiple industry sectors. This marks the first time that the US occupied the #1 spot in the survey since 2001. In a survey of U. S. manufacturers with production abroad late last year, BCG found that the majority (54 percent) are looking at re-shoring to the United States, up from 37 percent in 2012. More and more companies are choosing to locate here after weighing the United States' competitive advantages, including our: Skills and productivity: The U. S. workforce is among the most skilled and productive globally -more than 30 percent more productive than Germany's and nearly twice as productive as South Korea's. Innovation: The United States is the global leader in patents, producing nearly 30 percent of all patents worldwide, and has 15 of the top 25 leading research universities. Not surprisingly, the United States also has over a third of the world's total R&D investment, more than any other country. Energy: With a century of reserves, natural gas costs one third as much here as it does in Asia and our low energy costs overall are estimated to save U. S. manufacturers nearly $130 billion annually compared to Europe. Access to markets: Locating in the United States provides unparalleled access to the largest consumer market in the world and rapid access to global markets, with the United States having free trade agreements with 20 other countries and the most rapid export clearances of the 185 countries surveyed by the World Bank. As the United States becomes increasingly competitive for investment, more global companies, including companies that are foreign-owned, are investing in and creating jobs in America. Business fixed investment from companies choosing to grow and invest in the United States accounts for more than 20 percent of the rebound in real GDP since mid-2009. While the precise amount of re-shoring from U. S. companies is difficult to track, all signs are that it is growing. And more measureable data on investments and jobs created by foreign companies in the United States provides a powerful proxy for the overall trend of re-shoring and growing U. S. competitiveness for business investment.