Senators Propose U.S.-owned Industrial Finance Corporation to Invest in Innovative American Manufacturing
Denver –– U.S. Senators Michael Bennet (D-Colo.), Chris Coons (D-Del.), Amy Klobuchar (D-Minn.), Chris Van Hollen (D-Md.), Raphael Warnock (D-Ga.), Gary Peters (D-Mich.), and Mark Warner (D-Va.) introduced the Industrial Finance Corporation Act, new legislation which would establish the Industrial Finance Corporation of the United States (IFCUS). The corporation would use a one-time appropriation from Congress to finance investments in high-tech manufacturing—helping to promote innovation and create good jobs through domestic production.
Though the United States has historically led the world in research and development with a combination of government-funded research and private capital, U.S. manufacturers today lack access to the funds needed to deploy advanced manufacturing technologies and build the factories of the future. The supply chain weaknesses exposed by the Coronavirus Disease 2019 (COVID-19) pandemic are just one symptom of these investment gaps, which also result in the offshoring of good manufacturing jobs and expose our overreliance on production in rival nations. The uncertainty that accompanies investments at the technological frontier—combined with their large upfront investment costs—makes them too risky for many private investors. IFCUS would provide strategic, patient investments to U.S. manufacturing projects with a positive return-on-investment for workers, local economies, and our national security.
“Manufacturing is critical to American security and prosperity, yet our national approach for supporting this sector has failed to keep pace with innovation," said Bennet. "The new Industrial Finance Corporation created by our legislation will provide much-needed capital to boost manufacturing at home, create good-paying jobs, and secure our supply chains."
“This new investment in U.S. manufacturing will help create good jobs, rebuild key industries, and allow manufacturers to overcome barriers to funding so they can continue to lead the world in innovation,” said Coons. “By establishing the Industrial Finance Corporation, we will address gaps in our supply chain that have resulted in the offshoring of high-paying manufacturing jobs. Our international competitors—particularly China—have invested heavily in capturing the commercialization of the next generation of critical technology. This bill responds by deploying strategic investments that amplify our own economy’s strengths and serve American workers.”
“In an increasingly crowded global market, I’m committed to supporting America’s manufacturing industry and workers and will continue pushing for policies that ensure our long-term economic vitality,” said Klobuchar. “This legislation will help our country stay competitive by supporting resilient supply chains and promoting strong environmental and labor standards."
“The security of our country and the strength of our economy depends on our ability to manufacture certain strategic products here at home,” said Van Hollen. “To foster growth in key manufacturing sectors, we must address supply chain disruptions and create new pathways for innovation. The Industrial Finance Corporation Act will strengthen the resiliency of our critical supply chains, promote the development of advanced technologies, and provide support for commercialization by increasing access to capital. This legislation will help to ensure our country remains competitive on the global stage while also strengthening domestic manufacturing and generating good paying jobs.”
“Our international competitors know something I’ve repeatedly said: you cannot be a great country if you don’t make things,” said Peters. “We need to continue making investments in domestic manufacturing to strengthen our manufacturing capabilities, address vulnerabilities in our supply chain and bring jobs back to Michigan and the U.S., and this legislation would help boost our manufacturers and economic competitiveness.”
“I am glad to join my colleagues in introducing this measure, which if passed will bring more focus and resources to our efforts to bring more crucial manufacturing back to the U.S. and create the highly-skilled, good paying jobs that go with it,” said Warner. “I look forward to working on this further to help execute a key part of President Biden’s Build Back Better agenda.”
The legislation has been endorsed by: The Information Technology and Innovation Foundation (ITIF), the Niskanen Center, the Berggruen Institute, MForesight, The Engine, and the National Defense Industrial Association.
“ITIF fully endorses the Industrial Finance Corporation Act, which would establish an Industrial Finance Corporation for the United States providing a much-needed alternative source of (non-market-competing) capital helping U.S. manufacturers needing capital scale expanded operations, invest in upgraded plant and capital equipment, pursue R&D and innovation efforts, and strengthen domestically sourced supply chains across a range of advanced technology industries, from biotechnology and semiconductors to green manufacturing,” said Stephen Ezell, Vice President of Global Innovation Policy at ITIF. “Competitors such as Germany have long benefitted from similar entities providing a source of industrial capital, and introducing a similar facility in the United States represents an important step in revitalizing America’s industrial competitiveness.”
“Public support for manufacturing was core to America's national economic development,” said Samuel Hammond, Director of Poverty and Welfare Policy at the Niskanen Center. “As that tradition was lost, deindustrialization, stagnant wages, and rising inequality ensued. The Industrial Finance Corporation Act is a bold proposal to begin to reverse these trends. With a nimble and dynamic governance model, a new Industrial Finance Corporation is just we need to level-up America's economy, respond swiftly in the face of crisis, and make the patient investments required to secure U.S. technological leadership in the 21st century and beyond.”
"This bill addresses a critical gap in our innovation ecosystem by providing patient capital to assure that what is invented in the U.S. is actually manufactured in the U.S.," said Sridhar Kota, Director of MForesight: Alliance for Manufacturing Foresight.
“For startups scaling up to commercial deployment wherein technical risk has been removed but economic validation at scale has not yet occurred, currently the private capital market is failing,” said Katie Rae, Managing Partner and CEO of The Engine. “Without project finance or traditional private debt at this very critical stage, many of these companies will fail, or worse, be forced to go overseas for capital. IFCUS could fill this void without stepping on or being redundant to currently available private capital. As investors in Tough Tech startups with the potential to be the future anchor companies for the 21st century economy, we support this as a viable way to enable company growth all the way from lab to full commercialization.”
“The Berggruen Institute strongly believes that the creation of new sources of public financing is critical to building a more equitable and productive capitalism for the twenty-first century—for this reason, we are proud to support the creation of the Industrial Finance Corporation of the United States as a crucial pathway to create the technological capacity necessary to revitalize our industrial base,” said Dr. Yakov Feygin, Associate Director of the Future of Capitalism program at the Berggruen Institute. “It and other new forms of public financing are necessary to ensure that technical innovation benefits the American people through the creation of high paying jobs and a strong public stake in the future direction of the economy.”
“IFCUS provides an opportunity for long-range investments to support innovative small businesses manufacturing critical technologies,” said Wes Hallman, Senior Vice President of Strategy and Policy of the National Defense Industrial Association. “The formation of the corporation provides the potential to help mitigate adversarial capital challenges small companies may encounter, particularly in the defense industry, thereby supporting national security through secure government investments.”