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Title page 1

Contents 2

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 15

METHODOLOGY 16

ENDNOTES 17

Figures 3

Figure 1. Industrial power scale 3

Figure 2. New manufacturing start-ups (less than 1 year old), 1989-2023 4

Figure 3. Start-ups in the U.S. economy, 1989-2023 (indexed) 5

Figure 4. Manufacturing start-ups (less than 1 year old), not including food and beverage subsectors, versus nonmanufacturing start-ups,... 6

Figure 5. Manufacturing start-ups versus total manufacturing firms, 1989-2023 (indexed) 6

Figure 6. Total manufacturing firms, manufacturing start-ups (less than 1 year old), and young manufacturing firms (1-4 years old),... 7

Figure 7. Total number of manufacturing firms versus start-ups and young manufacturing firms (less than 4 years old), 1989-2023 8

Figure 8. Exit rates of one-year-old and five-year-old manufacturing firms, 1989-2023 9

Figure 9. Employees per manufacturing start-up, 1989-2023 10

Figure 10. Number of manufacturing start-ups in defense, dual-use, enabling, and nonstrategic subsectors, 1989-2023 11

Figure 11. Manufacturing start-ups in defense, dual-use, enabling, and nonstrategic subsectors, 1989-2023 (indexed) 12

Figure 12. Manufacturing start-ups versus the U.S. trade deficit in goods as a share of GDP, 1989-2023 (indexed) 13

Figure 13. Numbers of manufacturing industries grouped by percentage-point change in C4 concentration levels, 2017-2022 14

Figure 14. Average number of employees in U.S. manufacturing firms, 1978-2023 14

Boxes 3

Box 1. Defining National Economic Power Industries 3

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