In the decade of the 2000s, US manufacturing employment fell by one-third, 64 000 factories closed, manufacturing capital investment and output suffered, and productivity growth dropped. The US had been systematically shifting production abroad, and studies suggested that the decline in its production capability was affecting its innovation capacity, which had long been viewed as the country’s core economic strength. This chapter reviews the origins of the policy response to this dilemma, which came to be called “advanced manufacturing”. The chapter traces the way the foundational concepts were developed in a series of reports; explores how a new innovation system response was developed to strengthen the production system; examines the key new policy mechanism, the manufacturing innovation institutes, which is a complex public-private collaborative model to develop new production technologies and processes, combined with workforce education; and, reviews how the new institutes are working, lessons learned as they have started up, and possible enhancements that could expand their policy reach. These new approaches – an advanced manufacturing programme – if implemented, could play a role in strengthening the US manufacturing sector. They could also play a role in moderating the serious social disruption created by the decline in manufacturing.