itif.org Declining Manufacturing Births Contribute to US Manufacturing Woes TRELYSA LONG | JUNE 2026 Manufacturing start-ups, particularly in critical national economic power industries, are essential to the nation’s economic and security strength. Yet, U.S. manufacturing start-ups have declined over the last three decades. KEY TAKEAWAYS U.S. manufacturing start-ups are declining at a time when all other start-ups are growing. From 1989 to 2023, U.S. manufacturing start-ups declined 58 percent from an index of 100 to 42.5. All other start-ups grew from 100 to 104.6. Most of the decline occurred prior to 2009 and appears related to the significant drop in U.S. manufacturing competitiveness. Manufacturing start-ups have declined faster than total manufacturing firms. From 1989 to 2023, manufacturing start-ups declined from an index of 100 to 42.5, while total manufacturing firms declined from 100 to 74.8. The average manufacturing start-up is now smaller. Manufacturing start-ups’ average number of employees fell from 9.2 in 1989 to 7.7 in 2023. Dual-use, enabling, and nonstrategic industries had very similar rates of decline, ranging from 57 percent to 60 percent. In contrast, defense industries had a much smaller rate at 45 percent. The is likely due to facing much less overseas competition. Manufacturing start-ups have not declined because of growing industry concentration, as 82.3 percent of manufacturing industries saw a decline or slight increase (< 5 percent) in concentration. To avoid losing more manufacturing strength to China in economic power industries, the United States should set a national goal of at least doubling the annual number of manufacturing start-ups in its economy.
INFORMATION TECHNOLOGY & INNOVATION FOUNDATION | JUNE 2026 PAGE 2 CONTENTS Key Takeaways ................................................................................................................. 1 Introduction ..................................................................................................................... 2 Manufacturing Start-Up Firms in Decline ............................................................................. 4 Fewer Young Manufacturing Firms ...................................................................................... 7 Start-Ups’ Average Employees .......................................................................................... 10 Manufacturing Start-Ups in Defense, Dual-Use, Enabling, and Nonstrategic Subsectors .......... 11 A Likely Cause Is The Growing U.S. Trade Deficit ............................................................... 12 Industry Concentration Was Not the Cause for Manufacturing Start-Up Decline ...................... 13 Policy Recommendations ................................................................................................. 15 Conclusion .....................................................................................................
