The Importance of Small and Medium-Sized Businesses in America's Reindustrialization
August 3, 2026
Contributors: Spencer Lau, Sean Killeen, Vivian Yu
The United States is investing heavily in the industries that will shape its economic future. Growth in aerospace and defense, AI, energy, semiconductors, and other critical industries is directing capital toward new facilities and production capacity and generating demand throughout the supply chains that support them. Whether this wave of investment translates into lasting economic growth will depend on whether small- and medium-sized suppliers can capture this demand and provide the materials, components, equipment, and services these industries need.
This essay, part of Next Street's “Building America's Industrial Base” research series (read our previously published Michigan case study), examines the pressures facing these firms and what it will take for them to keep pace.
Small and medium-sized suppliers power America's industrial economy. They account for nearly nine in ten firms in key industrial sectors, making them critical to strengthening domestic supply chains.
Barriers to supplier growth vary by industry. Different sectors face different constraints, from technical capabilities and production capacity to competitiveness and market transition, requiring targeted solutions rather than one-size-fits-all approaches.
Closing the productivity gap presents a major economic opportunity. Improving supplier productivity could generate up to $292 billion in additional annual GDP while increasing wages and expanding economic opportunity.
Growth requires more than capital. Suppliers need coordinated access to management capabilities, skilled talent, and clear pathways to market opportunities, alongside capital.
Investing in suppliers strengthens America's competitiveness. Building a deeper, higher-performing supplier base will help translate today's industrial investments into long-term economic growth, innovation, and resilient domestic supply chains.
Read the Full Essay
Explore the full analysis, industry insights, and recommendations for strengthening America's supplier base and advancing the next phase of U.S. reindustrialization.
