Racial Equity in America’s New Industrial Transformation

The U.S. is on the cusp of a groundbreaking moment. Three pieces of federal legislation enacted in 2021 and 2022—the Infrastructure Investment and Jobs Act (IIJA), CHIPS and Science Act (CHIPS Act), and Inflation Reduction Act (IRA)— collectively authorize nearly $1.5 trillion in an effort to reshape America’s industrial landscape while meeting the nation’s critical infrastructure, high technology, and clean energy needs. They can also create a once-in-a-lifetime opportunity to close the nation’s racial wealth gaps, but their ability to do so depends on the extent to which members of historically disadvantaged groups own businesses in the manufacturing supply chains that the legislation is designed to support.

Racial Equity in America’s New Industrial Transformation uncovers a deeply concerning reality: Black-owned and Hispanic-owned manufacturers account for only 0.5% and 0.8%, respectively, of all manufacturers across 13 critical supply chains supported by the three pieces of legislation. By mapping the current landscape and proposing actionable strategies, this study aims to significantly influence America’s industrial renewal to ensure equitable benefits. The report finds that:

  • Black and Hispanic owners are highly underrepresented in the 13 supply chains we examined.
  • Black- and Hispanic-owned manufacturers are larger than white-owned manufacturers in the 13 supply chains.
  • In the larger supply chains, the top states for Black- and Hispanic-owned manufacturers are similar to those for white-owned manufacturers, with California and Texas being especially important for Black- and Hispanic-owned firms.

Read the Report

Recommendations

Government agencies, OEMs, lenders and investors, technical assistance providers, and philanthropic foundations can support increased participation of Black and Hispanic business owners in these supply chains by taking the following steps:

  • Increasing capital access for Black- and Hispanic-owned businesses to stimulate growth and innovation.
  • Improving the flexibility and competitiveness of minority-owned suppliers with technical assistance and training.
  • Identifying and removing barriers in the advanced manufacturing STEM education pipeline, crucial for nurturing startup companies.
  • Reforming the procurement practices of large purchasers to increase opportunities for Black- and Hispanic-owned companies in manufacturing.
  • Collecting and disseminating data about supply chains in advanced manufacturing.
  • Taking advantage of opportunities Black- and Hispanic-owned manufacturers may have to operate at lower tiers of their supply chains and hire residents of under-resourced communities.

Despite the small numbers of Black- and Hispanic-owned OEMs and first-tier suppliers in the 13 supply chains included in this report, there is considerable opportunity for Black- and Hispanic-owned firms to participate in the transformation that the IIJA, CHIPS Act, and IRA are creating. With the help of the right policies, existing Black- and Hispanic-owned firms can expand and new ones can be established in supply chains supported by the legislation, including lower tiers of supply chains covered in this report as well as supply chains not included here. As a result, Black and Hispanic communities can gain jobs, income, and wealth. Although federal agencies have already begun to distribute funding under the three pieces of industrial policy legislation, there is still time to create a more racially and ethnically inclusive industrial future in the U.S.

Read the Report


Racial Equity in America’s New Industrial Transformation is the inaugural research supported by ICIC’s Michael E. Porter Research Fund. ICIC created the fund in honor of its founder, Dr. Michael Porter. The Fund’s purpose is to continue to position ICIC as the leading and most trusted resource on under-resourced communities and their economies. It will allow ICIC to deepen our focus on the most significant challenges these communities face, including systemic racism, concentrated poverty, access to capital, and gentrification.


ICIC Icon

ICIC drives inclusive economic prosperity in under-resourced communities through innovative research and programs to create jobs, income, and wealth for local residents.

Contact

PO Box 191297
Roxbury MA 02119
Phone: 617-238-1740

Stay Connected

Sign up for our mailings and stay up-to-date on all research, commentary, and news related to ICIC as we continue to drive inclusive economic prosperity in America’s under-resourced communities.

Sign Up

© 2024 ICIC. All rights reserved.

Terms of Use    Privacy Policy