Public funds help manufacturers go digital

If you are a small manufacturer coping with labor shortages, absenteeism, inflation, and delayed supplies, the recent buzz about digital manufacturing may seem beside the point. Even if you realize that Industrial Internet of Things (IIoT) networks, smart robots, video analytics, or other Industry 4.0 solutions could help address your challenges, what is the point of dreaming when you are struggling to make payroll?

The good news for small and medium-sized manufacturers (SMMs) in the US is that the federal government and a growing number of states are stepping up their investments in digital manufacturing. According to Iowa-based CPA firm MHCS, over $80 billion dollars are available in federal, state, and local funds that SMMs can use to help automate their operations. 

In this report we survey the landscape of programs that aim to help smaller manufacturers transition to Industry 4.0 with grants, loans, training, and consulting programs. We focus primarily on state grant programs for IT purchases. 

Here at Leela AI, we compiled this report to help inform potential SMM customers about funding opportunities for trials of our Leela Video Intelligence Platform for improving manufacturing productivity. It appears that Leela and many other IIoT solutions would likely qualify for nine of the 10 state grant programs we found: California, Colorado, Connecticut, Indiana, Iowa, Maryland, Massachusetts, Michigan, and New York. There are also hardware-only grant programs in Hawaii and New Jersey that might help fund camera purchases. All eleven would likely support purchases of other digital manufacturing solutions such as IIoT sensor analytics gateways. (See farther below for more details.) 

The increase in public funding piggybacks a similar boost in private investments in US manufacturing. The motivations for onshoring include supply chain problems, trade wars, and the market entry opportunities provided by newer industries such as clean energy, EVs, novel materials, and additive manufacturing. 

The digital manufacturing revolution itself can motivate investment. Technological breakthroughs are offering opportunities for startups and other SMMs to leapfrog the competition. And despite the rising cost of overseas labor – yet another impetus to “make in America” – our wages are still high enough that we need all the technological help we can get to compete globally.

Governments are taking a more active role in helping manufacturers upgrade to Industry 4.0.
Governments are taking a more active role in helping manufacturers upgrade to Industry 4.0. (image created with Stable Diffusion)

The many colors of free money

Most manufacturing grants are for R&D, and usually apply only to tech purchases devoted to the development of innovative new products or processes. On the federal level, the chief R&D program for manufacturers is the Small Business Innovation Research (SBIR). There is also a similar Small Business Technology Transfer (STTR) program that requires collaboration with a university or research center. 

Many states also offer R&D investment programs, some of which require prior funding from SBIR. About one in five offer more open-ended grants for tech purchases by manufacturers.

Some state governments are hesitant to launch such grant programs in the belief that automation could lead to layoffs. Yet, a recent Conexus Indiana study measuring the impact of Indiana’s $138.9 million Manufacturing Readiness Grants program indicates the opposite is true. “Companies that adopted a smart manufacturing technology on average added five new positions,” reports the nonprofit Conexus. “They also anticipated wages to grow on average $196,000 per project.” Indiana´s grant program was estimated to have created a $2.5M average revenue impact to participating companies and provided a 26 percent internal rate of return for the state.

Most government grants are awarded competitively, so you will need to make a compelling case for your company’s need for the desired technology. Other requirements often include matching funds, state residency for a minimum number of years, size requirements in terms of employees, and revenue above and below certain thresholds. Typically, you will need to fill out a lot of forms, and there is even more red tape for federal grants.

Many of the state grants are offered through manufacturing innovation centers and extension programs that showcase new technologies and offer free or low-cost training or consulting. A March 2022 guide to manufacturing grants from Moldmaking Technology, notes that unlike federal grant agencies, state and local governments are not necessarily required to pre-publish upcoming grant solicitations. “So, it is easy for the solicitations to come and go without noticing unless you actively seek such information on a regular, ongoing basis,” says the story.

Other programs are not aimed specifically at digital manufacturing but could help SMMs in other ways. For example, there is a growing number of grants aimed at manufacturers of clean energy products. As the federal American Rescue Plan and Inflation Reduction Act funds filter down to the states, more will follow. Other federal programs target specific industries, including the Chips and Science Act, which aims to boost onshore semiconductor manufacturing. 

There are also many US, state, NGO, and corporate grants and loans for small businesses owned by minorities or women or located in low-income areas. Some grants and loans target manufacturing startups while others are designed to lure companies from other states and countries. There are also federal and state programs for small businesses in general, including job training and other resources.

Many universities offer collaborative programs with manufacturers, often drawing upon federal funding. For example, Housatonic Community College (HCC) in Bridgeport, Connecticut, recently received a $1 million grant from the US Congress to fund the college’s Advanced Manufacturing Technology Center.

The US is not alone in helping manufacturers retool for the digital age. Here is a 2021 Manufacturing Automation report on the Canadian funding scene.

US federal grants and loans for manufacturers

The following is a summary of websites that are related to federal funding and other services for manufacturers, followed by a state-by-state list of grants and other resources for SMMs, and a list of third-party guides and resources for SMMs.

The US Chamber of Commerce’s Economic Development Administration (EDA) offers a variety of programs that release funds from the American Rescue Plan (Build Back Better). These include a Build Back Better Regional Challenge, which awards $1 billion to 21 regional coalitions to focus on the development of selected industries, including manufacturing. Wichita State University recently received $51.4M from this fund to develop emerging smart manufacturing technologies for South Kansas.

The EDA also oversees American Rescue Plan programs, including an Economic Adjustment Assistance program with $500M awarded to 256 projects. Some of these have been directed to digital manufacturing programs, such as a recent $2M grant to Kansas State University’s Technology Development Institute.

The Chamber of Commerce publishes a guide to grants, loans, and other resources for small businesses. You can also search for information on specific grants and check out for an overview of federal programs.

SBIR and STTR are the major federal R&D grant programs.

The National Institute of Standards and Technology (NIST) sponsors a Manufacturing USA organization that comprises 16 regional centers that assist 2,300 member organizations, 63% of which are manufacturing firms, and 72% of which are small manufacturers. Manufacturing USA collaborates on over 700 major technology and workforce R&D projects, engages over 90,000 people in advanced manufacturing training, and invests $480M in these activities from state, industry, and federal funds. In May 2022, NIST announced a $2.08M grant to seven organizations in six states to develop manufacturing technology roadmaps to strengthen U.S. innovation and productivity across specified industry sectors.

Manufacturing Extension Partnership (MEP) is another NIST-hosted organization. This public-private partnership for SMMs hosts MEP Centers in all 50 states and Puerto Rico. In 2021, MEP Centers were said to have interacted with 34,307 manufacturers, leading to $14.4 billion in sales, $1.5B in cost savings, and $5.2B in new client investments, and helped create or retain 125,746 jobs. A MEP white paper cites a 2018 NIST study that found that SMMs produced 2.5 times more innovations per employee than large firms. In 2016, another NIST study found there were 246K SMMs (500 or fewer employees) in the US, accounting for 98.5% of the nation’s manufacturing enterprises and employing approximately 5.1M people.

The Department of Defense sponsors an innovation center for manufacturers called MxD. The website lists no grants, but MxD provides “partnerships” with 300 companies.

State manufacturing resources

Here are the states we found that specifically provide assistance to SMMs. Note that the funding landscape changes frequently. New programs are coming online as others run through their budgets and await new funding. 

California – California offers numerous state and university-associated programs for manufacturers, most of which fall under the umbrella of CMTC (California Manufacturing Technology Consulting) and its CMN (California´s Manufacturing Network). CMTC is primarily a consultant, helping manufacturers transition to smart and lean manufacturing processes. The organization provides an Advanced Manufacturing Technology Services – Technology Assistance Services (AMTS – TAS) program that funds pilot programs for Industry 4.0 technology adoption. The grants are currently limited to the CNC, food and beverage, and plastic injection molding industries. Also under the CMTC’s overview is the California Network for Manufacturing Innovation (CNMI) program for SMMs.

Colorado – The Advanced Industries Accelerator Programs includes an Early-Stage Capital and Retention Grant for up to $250K, as well as other programs designed to “support job creation and innovation” for advanced industries, including “advanced manufacturing.” 

Connecticut — The Nutmeg State provides a $75M Manufacturing Innovation Fund that includes matching funds for federal R&D grants and training services. (A recent overview of the fund may be found at the CBIA website.) There is also an Industry 4.0 IoT Integration Voucher Program (IVP), which is administered by an innovation center called the Connecticut Center for Advanced Technology, Inc. (CCAT) that offers consulting, training, and technology demonstrations. CCAT provides matching grants up to $20K for hardware, sensors, platforms, and related third-party integration services in Industry 4.0 areas including IIoT, big data and analytics, additive manufacturing, and automation.

Delaware – Delaware sponsors the Delaware Manufacturing Extension Partnership (DEMEP), which offers consulting and training services for “lean enterprise, quality management and top line growth.”

Georgia – The Peach State sponsors the Georgia Center of Innovation, which offers consulting and training services to manufacturers. Meanwhile, Quick Start, a division of the Technical College System of Georgia, has established a new Georgia Advanced Manufacturing Center near Savannah that provides local manufacturers with customized workforce training. There is also a state R&D tax credit that might apply to some IIoT projects. 

Illinois – This major industrial state provides R&D grants with requirements that are similar to the federal SBIR program. 

Hawaii – The Hawaii Technology Development Program (HTDP) has established an 80/80 Initiative for creating tech jobs that includes a MAP program with 20% matching grants up to 100K for manufacturers to upgrade equipment, train employees, and initiate energy efficiency projects and manufacturing feasibility studies. 80/80 also awards matching grants of up to 50% for recipients of SBIR federal R&D grants.

Indiana — The Indiana Economic Development Corp. and the state-associated, nonprofit Conexus Indiana organization offer a Manufacturing Readiness Grants program for purchasing IIoT and other digital manufacturing solutions including machine vision and cloud analytics. The program was launched in 2020 to stimulate private sector investments to modernize Indiana’s manufacturing sector. 

Iowa – Iowa provides a Manufacturing IIoT Infrastructure Investment Grant of up to $25K to purchase Industry 4.0 hardware or software to improve cybersecurity, data analytics, visualization and more.


Louisiana – The state supplies a general R&D tax credit. There are two tech innovation centers that offer consulting and training services: The Cyber Innovation Center and the LSU Innovation Park.


Maryland – The Maryland Manufacturing 4.0 grant program provides grants to Maryland SMMs to invest in Industry 4.0-related technologies, including big data and analytics, machinery and robotics, and digital business solutions. This pilot program is funded by $1M in the state’s fiscal year 2023 budget. Maryland also has an R&D tax credit and multiple tech innovation centers.


MassachusettsThe Massachusetts Manufacturing Accelerate Program (MMAP) offers consulting and training services, as well as an up to 250K per manufacturer matching grant for digital manufacturing purchases. Participants must show they are creating new jobs and “demonstrate operational improvements, efficiencies, and progression towards Industry 4.0.” It is unclear if the grant covers software purchases. In 2022, MMAP awarded more than $5.5M to 28 manufacturers. There is also a Center for Manufacturing Technology (CMT) that focuses on training.

Michigan – The Michigan Economic Development Corporation (MEDC) hosts a $3M Industry 4.0 Technology Implementation Grant matching grant program to help manufacturers adopt Industry 4.0 technologies. The grants cover up to 50 percent of purchases for eligible technologies, including additive manufacturing, artificial intelligence, cybersecurity, robotics, and automation. The program is expected to generate approximately $83M in increased revenue plus an estimated 248 jobs created and 1,130 jobs retained. There is also a Michigan Manufacturing Technology Center that offers training grants.

Minnesota – The Launch MN Innovations Grants program is not specific to manufacturers, but there are numerous manufacturers on the most recent awards list for $386K of funding. The funding program provides each participant up to $35K for business operations including R&D, direct business expenses, and technical assistance. There is a strong bias toward diversity candidates. The state also offers an R&D tax credit.

New Jersey – The recently adopted New Jersey Manufacturing Voucher Program (MVP) is administered by the New Jersey Economic Development Authority. This $20M program offers grants up to $250K for hardware purchases.

New Mexico – The Land of Enchantment offers a variety of tax credits to help high-technology research or manufacturing operations, including an investment credit, angel investment credit, alternative energy credit, and an R&D credit.


New York – The Empire State´s Center for Economic Growth (CEG) dispenses grants including National Grid’s Manufacturing Productivity Program (MPP). MPP supports lean manufacturing or manufacturing assistance projects that result in eliminating waste and increasing productivity. Recipients get a 40% reimbursement of costs up to $15K. CEG also hosts the NYSEG Manufacturing Accelerator Program (MAP). The MAP program offers matching grants up to the lesser of $15K or 40% of the costs aimed at productivity improvement projects such as Lean manufacturing, Lean office procedures, waste reduction, ISO quality programs, “and other projects that lower costs, improve quality and reduce lead times.” There are also numerous innovation centers in New York, such as the CATS automation innovation center.

North Carolina – The Tar Heel State provides many tax exemptions and grant programs aimed primarily at job creation, but nothing specific to manufacturing purchases. There are also two innovation centers: the textile focused Manufacturing Solutions Center and the plastics oriented Polymers Center.


Ohio – Ohio is home to a variety of manufacturing innovation centers. This major manufacturing state also offers an R&D investment loan fund up to $5M. The Innovation Ohio Loan Fund may finance up to 75% of allowable project costs, with loans typically ranging from $500K to $1.5M. Eligible projects include those related to industry, commerce, manufacturing, distribution, or research activities.


Oklahoma – The Sooner State provides more than the usual R&D spending, and it’s on the rise, but we saw nothing specific to manufacturing. There are also several tech innovation centers, mostly based in universities.


Oregon – Oregon funds an Industrial Development Bonds program for value-added manufacturing projects. There is also an OMEP (Oregon Manufacturing Extension Partnership) that hosts a tech lab and offers free consulting services focused on Lean practices.


Pennsylvania – There are various tax credits and grants for manufacturing but nothing that appears to be IT specific. The Catalyst Connection, a non-profit backed in part by NIST and the State of Pennsylvania, offers services including a Maker-to-Manufacturing Commercialization Center and a Manufacturing Technology Loan Fund (MTLF). There is also a Manufacturing PA Initiative focused primarily on training.

Rhode Island – Polaris MEP is a Providence-based, non-profit consulting and training organization that is dedicated to serve Rhode Island manufacturers. The company is a business unit of University of Rhode Island Research Foundation and an affiliate of NIST MEP (see intro). There is also a tech-oriented 401 Tech Bridge incubator and facilitator that works closely with the US Navy.

South Carolina – The state provides an R&D tax credit.


South Dakota – There are various tax credits and innovation centers for industry, but no grants.


Texas – The Lonestar State provides an R&D tax credit that applies to software and other technology used for R&D. Various tech innovation centers are located in Austin, Houston, and other cities. Texas has a variety of investment incentives, but none appear to be specific to IT spending for manufacturing.


Utah – Utah offers various state grants including an Industrial Assistance account (mostly for rural economic development) and a Utah Tech Innovation Funding for small companies developing novel tech.

Vermont – A variety of tax breaks and programs for industry include an R&D credit, which like many such state programs requires that you are first approved for federal R&D credits. Vermont hosts several innovation centers, including VMEC (Vermont Manufacturing Extension Center), which offers free or low-cost consulting and training, including lean techniques.


Virginia – Virginia provides industrial tax credits and grants including R&D tax credits and sales tax exemptions for manufacturing equipment and software. Of particular note is the Virginia Investment Partnership grant program, which awards discretionary performance incentives to manufacturing companies that are increasing productivity, modernizing, or creating, developing, or utilizing advanced technology.


Washington – The state provides a Manufacturing Machinery and Equipment sales and use tax exemption for testing operations and R&D. It appears to be for hardware only. Washington is also home to a variety of innovation centers.


West Virginia – The state provides several industrial tax credits and grant programs, but nothing specific to manufacturing IT purchases.


Wisconsin – The Wisconsin Economic Development Corporation (WEDC) hosts a Targeted Industry Project Program, as well as innovation centers, investment programs, and consulting services.


Wyoming – The Impact 307 incubator network offers a network of centers with incubator and consulting services.

Guides and reports on manufacturing grants

The best public source we found for tracking state resources for manufacturers – and the chief source for the state list above – is from the Reshoring Institute.  

California´s CMTC (California Manufacturing Technology Consulting) extension organization recently published a guide to applying to US manufacturing grants.

A Dec. 2022 Brookings report sums up the impact and dispersion of the new programs introduced during the Biden administration, especially in regard to place-based funding for underdeveloped regions.

An MForesight report from 2019 identifies federal R&D expenditures broken down by target industry.

Lakeview Consulting posted an interesting overview of state and federal manufacturing grants.

Please inform us about any major grant programs or other resources for SMMs that we may have missed on our contact page.

Leela AI is the developer of Leela Platform, a video intelligence solution designed to accelerate continuous improvement in manufacturing. Based on research done at the MIT Artificial Intelligence Lab, Leela’s hybrid causal/neural networks can improve visibility of manufacturing operations, leading to productivity enhancements with 100x less data and 10x less time-to-value than competitive solutions. Find out more about Leela AI at our website.

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