Advanced Manufacturing: Today, Tomorrow, and Beyond
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The document outlines essential principles for renewing U.S. manufacturing, emphasizing the need for enhanced competitiveness in the traded sector, a stronger engineering culture, and robust manufacturing and innovation infrastructure. It advocates for increased federal investment in research and development, the establishment of manufacturing innovation centers, and higher education reforms to produce industry-relevant skills. The conclusion highlights that effective policy measures can significantly improve innovation outcomes, as evidenced by successful practices in countries like Germany.
Advanced Manufacturing: Today, Tomorrow, and Beyond
- 2. Core Principles for U.S. Manufacturing Renewal Focus on traded sector competitiveness. Recognize that science-based innovation isn’t enough; U.S. needs to re-embrace an engineering culture. Recognize that U.S. manufacturing has not been healthy. 2
- 3. Germany Has Experienced a Fraction of U.S. Manufacturing Job Loss Percent Change in Manufacturing Jobs in Select Countries, Adjusted for Population Growth, 1997-2010 3
- 4. While Paying Over 40% More Per Labor Hour Hourly Manufacturing Compensation Costs (United States = 100), 2008 4
- 5. U.S. Manufacturing Lags in Technological Intensity Manufacturing Sector Composition by Technological Intensity 100 90 80 70 60 50 40 30 20 10 0 Australia Canada Germany Japan Korea United United States Kingdom Low-technology Medium-low technology Medium-high technology High-technology 5
- 6. U.S. Failing to Commercialize Technologies it Invents The U.S. has been the “first mover” and then lost virtually all market share in a wide range of material and product technologies, including: Semiconductor memory devices Semiconductor production equipment such as steppers Lithium-ion batteries Flat panel displays Robotics Solar cells Advanced lighting Oxide ceramics 6
- 7. Two Camps About What to Do About This 1. If we just get our costs low enough, American manufacturing will be fine 7
- 8. U.S. Manufacturing Costs Not the Problem Source: Numbers Based on Analysis of Data from on MAPI and Manufacturing Institute 2011 Report on The Structural Cost Of U.S. Manufacturing. October, 2011
- 9. Two Camps About What to Do About This 2. Put in place a robust manufacturing and innovation infrastructure. 9
- 10. What To Do: We Need a “RAFTTTT” Regulatory reform Analysis Financing Technology Tax Talent Trade 10
- 11. Technology: Increase Federal Investment in R&D The federal R&D portfolio is not optimized for economic growth: 81% goes to “mission-oriented” activities in defense and health. 75% of fed R&D $ allocated to manufacturing goes to just two industries: aerospace and instruments. Academic R&D spending in engineering and physical sciences flat. If investing as much as we did in 1983 (as a share of GDP), federal government would invest $60 billion more in R&D annually. Underinvesting in applied/translational research. 11
- 12. Lacking an Institutional Framework for Pre-competitive, Industrially Relevant Applied Research 12
- 13. Approach Being Increasingly Adopted Internationally Germany invests $2.5 billion/yr in Fraunhofer System 60 Centers and 18,000 staff for 80M Germans Japan’s New $117B Stimulus Package (1/10/13) $2 billion to promote university-industry collaboration, including $ to equip universities to conduct industrially relevant research UK Catapults (January 2013) £1bn investment in technology and innovation centers The High-Value Manufacturing Catapult will be “a catalyst that transforms brilliant manufacturing ideas into valuable products and services” Finland’s SHOKs (Strategic Centers of Science, Tech, and Inn) 13
- 14. Create a National Network for Manufacturing Innovation 15-20 Manufacturing Institutes bringing together cutting-edge research in an industrially relevant way across key sectors and manufacturing process technologies. Mission: Enhance U.S. industrial competitiveness by supporting development of technologies enabling U.S. production facilities to gain global market share. Industry should bring NNMI proposals forward and provide at least 50% funding (matched by feds and states). 14
- 15. What NNMIs Would Do Provide a platform for joint pre-competitive applied research; Develop sector & technology-specific roadmaps that identify technical hurdles and work to solve them; Provide shared facilities for rapid prototyping and demonstration; libraries & databases; and validation and testing equipment; Develop and disseminate training technologies/curricula; support credentials, certifications, and skills standards development; Help restore the industrial commons in key manufacturing product and process technologies. 15
- 16. NNMIs Could be Established Across a Range of Key Cross-Cutting Technologies Advanced Materials/Composites Additive Manufacturing Bio Manufacturing and Bioinformatics Nano-Manufacturing Flexible Electronics Manufacturing Industrial Robotics Advanced Forming/Joining/Welding Technologies Advanced Sensing, Measurement, & Process Control Visualization, Informatics and Digital Manufacturing Technologies Advanced Manufacturing & Testing Equipment Chemical Processing 16
- 17. Why America Needs an NNMI Numerous market failures afflict manufacturing innovation: ▫ Firms underinvest in risky technologies with long-term time horizons. ▫ Substantial externalities from firms’ investments in capital equipment and machinery. ▫ Complementarity between public and private R&D investment. 17
- 18. Technology: Designate 25 Manufacturing Universities Revamp engineering programs to focus on manufacturing engineering and work that is more relevant to industry. More joint industry-university research projects and student training incorporating manufacturing experiences (co-ops). Receive annual award of at least $25M from NSF plus priority on universities’ applications for NSF grants. 18
- 19. Technology: Ramp up ERC & I/UCRC programs Get more ERCs & I/UCRCs focused on manufacturing: ▫ Currently only 4 of 17 ERCs and 7 of 56 I/UCRCs are. Double funding for both programs. Require all ERCs to have at least a 40% industry match by 2017 or lose their federal funding. 19
- 20. Technology: Increase Funding for MEP Despite tremendous returns, U.S. underinvests in MEP compared to peer countries (and historical U.S. levels). Country Investment in Manufacturing Extension Services as Percent GDP 0.0350% 0.0300% 0.0250% 0.0200% 0.0150% 0.0100% 0.0050% 0.0000% Japan Germany Canada United States England 20
- 21. Tax Policies Preserve and enhance key manufacturing tax incentives (e.g., R&D tax credit; accelerated depreciation; domestic production deduction). Implement a quasi-incremental American Innovation and Investment Tax Credit. 21
- 22. Talent Policies Increase adoption of industry-recognized, nationally portable credentials, such as those produced by the MSSC. Fund engineering co-op programs between universities and industry. 22
- 23. Conclusion: Smart Policies Matter 30% of all German companies attribute their innovations “to improved research and innovation policies at the federal level.” 23
- 24. Thank You Stephen Ezell sezell@itif.org Follow ITIF: facebook.com/innovationpolicy www.innovationfiles.org www.youtube.com/techpolicy www.itif.org Twitter: @sjezell