In his 2013 State of the Union address, President Obama reemphasized the importance of a strong U.S. manufacturing sector, one at the leading edge of innovation. "Our first priority," he said, "is making America a magnet for new jobs and manufacturing."
The President chose manufacturing for good reason. Numerous recent reports have documented how critical U.S. manufacturing is to innovation,1 productivity,2 jobs,3 the economy,4 exports,5,6 and national security.7 He has initiated a set of actions designed to make our manufacturing sector more competitive and to encourage more investment here, in the United States. Together, these actions encompass sound tax policies, enforcement of trade laws, and investments in innovation, advanced technology, education, and infrastructure.
According to the non-partisan Council on Competitiveness, "U.S. manufacturing is more important now than ever." While not dismissing serious challenges posed by low-cost competitors and rivals that are fast advancing in technological capabilities, the council maintains that "enormous opportunities to increase production and grow exports" lie ahead for U.S. manufacturers. "The digital, biotechnology, and nanotechnology revolutions," it reports, "are unleashing vast opportunities for innovation and manufacturing."8
To seize these opportunities, the President has launched a major initiative focused on strengthening the innovation performance, competitiveness, and job-creating power of U.S. manufacturing: the National Network for Manufacturing Innovation (NNMI). The network will help to address a damaging inconsistency in U.S. economic and innovation policies.
Unlike other industrialized countries, the federal government does very little to address the high risk activity of taking fundamental discoveries and inventions and transforming them into manufacturable products. Underpinning this wealth-creating transformation to commercialization are new production processes that often are needed by entire industries, but usually are too risky for an individual company to develop alone.
In his budget for fiscal year 2014, the President proposes creating a network of up to 15 regional Institutes for Manufacturing Innovation (IMIs). Funded by a proposed one-time, $1 billion investment, this network—the NNMI—responds to a crucial competitiveness challenge and threat to future prosperity: Closing the gap between research and development (R&D) activities and the deployment of technological innovations in domestic production of goods.9
To jumpstart the NNMI in 2013, he used existing funds from four federal agencies to launch a pilot institute: the National Additive Manufacturing Institute (NAMII), headquartered in Youngstown, Ohio. Building on NAMII's fast-start—in less than a year the pilot attracted 76 members and co-funded seven collaborative projects—the President tasked the Departments of Defense and Energy to initiate competitions for three IMIs, again with existing funds.
At the same time, he asked Congress "to help create a network of 15 of these hubs and guarantee that the next revolution in manufacturing is made right here in America." And in July 2013, as part of a set of initiatives to revitalize the nation’s aging infrastructure, the President set the goal of building 45 IMIs over the next 10 years.
In the meantime, the interagency Advanced Manufacturing National Program Office has conducted an extensive outreach campaign to solicit input from manufacturers, universities and community colleges, and government bodies at all levels. After canvassing the nation for good ideas and hearing from some 900 individual and organizations, the office completed its National Network for Manufacturing Innovation: A Preliminary Design, a report issued by the White House National Science and Technology Council on Jan. 16, 2013.
In addition to ideas from manufacturing stakeholders, the NNMI proposal implements recommendations made by the President's Council of Advisors on Science and Technology (composed of independent non-federal industry and university advisors), the Advanced Manufacturing Partnership, and a wide range of other experts and organizations.10,11,12,13 It addresses the reality that the substantial federal investment in basic research isn’t enough to make sure that a new technology crosses the bridge all the way from invention to product development and process prototyping to manufacturing at scale and commercializing, the stages of wealth and job creation.
Together, industry partners, state and local agencies, foundations, and others will co-invest with the federal government in each IMI. A strong partnership between industry and local or regional stakeholders is required for federal efforts to serve as a catalyst for advanced manufacturing.
The President recognizes that a dynamic, globally competitive manufacturing sector has a major role to play in building future prosperity.
Manufacturing plays a disproportionately large—and valuable—role with respect to the nation's innovation capacity. It accounts for about 12 percent of the nation’s gross domestic product, but performs 70 percent of domestic industry R&D and accounts for 70 percent of patents awarded to U.S. entities. Thus, manufacturing remains the essential core of the U.S. economy's innovation infrastructure. The rapidly growing high-tech service sector gets most of its technology from manufacturing firms.
Still, many technologies rooted in U.S. research fail to mature to full scale-up and commercialization in domestic factories. As documented by the National Science and Technology Council, "A gap exists between R&D activities and the deployment of technological innovations in domestic production of goods," contributing significantly, for example, to the disturbing and still-growing trade deficit in advanced technology products.
In 2012, the U.S. ran a $91 billion deficit in trade of advanced technology products.14 Since 2001, when the U.S. posted its first deficit in advanced technology product, the total cumulative deficit has topped $600 billion. Over roughly the same span, the U.S. has lost 687,000 high-technology manufacturing jobs.
Other nations have long recognized the strong links between manufacturing, innovation, and prosperity. Many are making investments to strengthen the links. Currently, Germany, Korea, and Japan each have more R&D-intensive manufacturing sectors than the United States, have positive balances in trade of goods, and have made substantial investments in manufacturing, similar to the funding proposed for the NNMI.
Accelerating innovation and implementation of advanced manufacturing capabilities requires bridging a number of gaps in the present U.S. innovation system. "Market failures" are a major deterrent to private-sector investment to advance and refine new, cutting-edge technologies with the ultimate goal of realizing their transformative potential. Time horizons typically exceed investor expectations for realizing returns, and technical and commercial risks are greater.
As a result, companies are reluctant to invest in technology development efforts that aim beyond incremental improvements in existing products and processes.
As technologies and products become ever-more complex and their life cycles shrink, successfully mastering all the stages from lab to marketplace requires contributions from a large network of organizations—from suppliers of equipment, parts, and services to schools, colleges, and training programs to utilities and other infrastructure systems. And, as global competition to manufacture and sell high-value-added products heats up, the capabilities and performance of these so-called innovation ecosystems also must improve.
The President's proposed NNMI and the regional collaborations it catalyzes will tackle barriers to rapid and efficient development and commercialization of new advanced product and manufacturing-process innovations. The network and its individual IMIs will enable companies to collaborate and access the capabilities of our research universities and other science and technology organizations to support scaling up manufacturing and assembly processes. At the same time, the IMIs will help to meet the challenge of building the pool of high-skilled talent that advanced manufacturing requires.
The emphasis of the NNMI is on advanced manufacturing.
The network will consist of up to 15 dynamically linked regional clusters of manufacturing innovation. An IMI—each with a technology focus that leverages and expands the industrial, research, and institutional strengths of the region—will be a central element. Each IMI will be designed to catalyze collaboration and maximize shared infrastructural resources. The focus of each Institute will be unique, determined through a competitive application process, but all IMIs will concentrate on adopting, refining, and applying promising emerging technologies.
The NNMI and its regional IMIs will have a scale and focus that are unique, and they will be built upon concepts of a strong public-private partnership.
Innovation can be an endurance contest, requiring the staying power needed to realize the commercial pay-off and jobs spawned by a powerful new technological idea. A key step, usually well after a discovery or invention leaves the lab, is manufacturing scale-up. That is, advancing discoveries and "new ideas from the earliest stages of development through to prototyping, test and demonstration, pilot production, and large-scale commercialization."15 The NNMI and its institutes are designed to make scale-up happen.
Cooperatively funded and collaboratively staffed, the IMIs will close the damaging gap that separate research and development activities under way here in the U.S. from the deployment of technological innovations that result in domestic production of goods based on U.S. inventions and discoveries. If we invent here, we should make it here to reap the economic and national security benefits.
The institutes and the entire network will be industry-led. They will be designed and implemented in partnership with industry (companies large and small, established and start-up), academia, non-profit organizations, and states, with the aim of investing in and accelerating development of cutting-edge manufacturing technologies with industrially relevant applications. Over a specified period, each IMI will become a self-sustaining technical center of excellence.
The institutes will provide a critical mass of leadership in technological areas of need as defined by industry, academia and regional organizations. This cost-shared, collaborative approach reduces the cost and risk of refining, validating and commercializing manufacturing technologies that will improve the competitiveness of existing industries and spur the creation of new industries.
As nodes of a network, IMIs will complement each other's capabilities and benefit from shared approaches to such matters as intellectual property, contract research, and performance metrics. While the institutes will be regionally focused, the network will be national, integrated, and dynamic, aiming to fostering innovation and delivering new capabilities that can impact the manufacturing sector on a large scale.
The NNMI program will be managed by the interagency Advanced Manufacturing National Program Office (AMNPO). Participating agencies include the Department of Defense, Department of Energy, Department of Commerce's National Institute of Standard and Technology (NIST), NASA, the National Science Foundation, Department of Education, and other agencies.
In summary, the network of IMIs will provide the innovation infrastructure to support regional manufacturing hubs, build on American strengths, and ensure that our manufacturing sector is a key pillar in an economy that is built to last.
|1||President’s Council of Advisors on Science and Technology (2011), Report to the President on Ensuring Leadership in Advanced Manufacturing.|
|2||Bureau of Labor Statistics (2012), Industry Labor Productivity Trends from 2000 to 2010|
|3||Bureau of Labor Statistics, 2011 Employer Costs for Employee Compensation, Table 6.|
|4||Bureau of Economic Analysis, 2010 U.S. Economic Accounts by Industry, see http://www.bea.gov/industry/index.htm.|
|5||Bureau of Economic Analysis, Industry-by-Industry Total Requirements Table, see http://www.bea.gov/industry/iotables/prod/|
|6||Bureau of Economic Analysis and Census, U.S. International Trade in Goods and Services|
|7||National Science and Technology Council (2012) A National Strategic Plan for Advanced Manufacturing|
|8||Council on Competitiveness (2011), Make, An American Manufacturing Movement. Available at: http://www.compete.org/publications/detail/2064/make/|
|9||National Science and Technology Council (2012), op. cit.|
|10||President’s Council of Advisors on Science and Technology (2011), op. cit.|
|11||Brookings-Rockefeller Project on State and Metropolitan Innovation (2011), Accelerating Advanced Manufacturing with New Research Centers.|
|12||Information Technology and Innovation Foundation (2011), The Atlantic Century II: Benchmarking E.U. and U.S. Innovation and Competitiveness.|
|13||National Science and Technology Council (2012), op. cit.|
|14||U.S. Census Bureau, “Trade in Goods with Advance Technology Products,” 2012.|
|15||Massachusetts Institute of Technology, A Preview of the MIT Production in the Innovation Economy Report, 2013..|