MIT Future of Manufacturing Lit Review pt3

The Future of U.S Manufacturing – A Literature Analysis (Part III) 2012 Kathryn Hewitt – Intern, MIT Washington Office, Spring 2012 (with additional entries from Queenie Chan - Intern, MIT Washington Office, Summer 2012) Table of Contents Foreword Reports Summarized: National Science and Technology Council – A National Strategic Plan for Advanced Manufacturing (February 2012) 4-6 Susan Helper, Timothy Krueger, and Howard Wial, Metropolitan Policy Program at BROOKINGS – Why Does Manufacturing Matter? Which Manufacturing Matters? A Policy Framework (February 2012) 7-10 David Autor, David Dorn, Gordon Hanson - The China Syndrome: Labor Market Effects of Import Competition in the United States (MIT Economics paper August 2011) 12-13 Connect Innovation Institute – Two Systems of Innovation: Recommendations for Policy Changes to Support Innovation, Production and Job Creation (February 2012) 14-15 Council on Competitiveness – U.S Manufacturing Competitiveness Initiative: Make an American Manufacturing Movement (December 2011) .16-19 Information Technology and Innovation Foundation – Worse than the Great Depression: What the Experts are Missing about American Manufacturing Decline (March 2012) 20-24 Institute for Defense Analyses – Emerging Global Trends in Advanced Manufacturing (March 2012) 25-27 Gregory Tassey, “Beyond the Business Cycle: The Need for a Technology-Based Growth Strategy” (NIST working paper Feb 2012)……………………………………………………………………….28-31 Susan Houseman, Christopher Kurz, Paul Lengermann, and Benjamin Mandel 2010 "Offshoring and the State of American Manufacturing." Upjohn Institute Working Paper No 10166 (Kalamazoo, MI: W.E Upjohn Institute)…………………………………………………………… 32-33 Jonas Nahm and Edward S Steinfeld, Scale-Up Nation: Chinese Specialization in Innovative Manufacturing (MIT working paper March 12, 2012)…………………………………………………….34-37 U.S Department of Commerce, Economics and Statistics Administration, The Benefits of Manufacturing Jobs (May 9, 2012).………………………………………………………………………………….38-39 Steering Committee for the Advanced Manufacturing Partnership (for PCAST), Capturing Domestic Competitive Advantage in Advanced Manufacturing (July 17, 2012)……………… 40-42 Additional Suggested Reports to Review 43 Foreword The following is a summary and analysis of reports issued by various institutions looking at the topic of advanced manufacturing and its future in the United States At this pivotal point in America’s manufacturing history, decisions are being made as a result of several study findings The following analysis looks at both studies and their findings along with policy recommendations There is heavy attention given the critical, emerging trends in advanced manufacturing, how they align with the investment and growth interests of nations around the world, and what the industry is expected to look like several decades down the road The end of the report contains a page with several suggested further reports to review This summary was prepared by Kathryn Hewitt, Intern, MIT Washington Office, Spring 2012; it was supplemented with additional summaries by Queenie Chan, MIT’13, Intern, MIT Washington Office, Summer 2012 This summary is preceded by two similar reports issued earlier by MIT Washington Office: Future of U.S Manufacturing – A Literature Review, Parts I and II Link to these previous MIT Washington Office summaries: http://web.mit.edu/dc/policy.html (available under “Policy Resources” - “Manufacturing”) National Science and Technology Council - A National Strategic Plan for Advanced Manufacturing (February 2012)(interagency group including NIST, NSF, DOD, DOE) (http://www.whitehouse.gov/sites/default/files/microsites/ostp/iam_advancedmanuf acturing_strategicplan_2012.pdf) The National Science and Technology Council (NSTC) issued a plan documenting “the fundamental importance of advanced manufacturing” to the nation’s competitiveness and security and setting forth key objectives and priorities for federal policy in this area The acceleration of innovation for advanced manufacturing requires bridging a number of gaps in the present U.S innovation system, particularly the gap between research and development (R&D) activities and the development of technologies innovation in domestic production of goods This strategic plan “lays out a robust innovation policy that would help to close these gaps and address the full lifecycle of technology.” It also incorporates intensive engagement among industry, labor, academia, and government at the national, state and regional levels Partnerships among diverse stakeholders, varying by location and objective, are a keystone of the strategy Manufacturing as a percentage of total GVA (Source: OECD, Industry and Services, STAN database, 2008) The strategy seeks to achieve five objectives These objectives are interconnected; progress on any one will make progress in the other seems easier A large number of Federal agencies, coordinated through the NSTC, have important roles to play in the implementation of the strategy Objective 1: Accelerate investment in advanced manufacturing technologies, especially by small and medium-sized manufacturing enterprises, by fostering more effective use of Federal capabilities and facilities, including early procurement by Federal agencies of cutting-edge products Objective 2: Expand the number of workers who have the skills needed by a growing advanced manufacturing sector and make the education and training system more responsive to the demand for skills Objective 3: Create and support national and regional public-private, government-industry-academic partnerships to accelerate investment in and deployment of advanced manufacturing technologies Objective 4: Optimize the Federal government’s advanced manufacturing investment by taking a portfolio perspective across agencies and adjusting accordingly Objective 5: Increase total U.S public and private investments in advanced manufacturing R&D Of particular interest are four categories of investment that “help to position promising, nascent technologies for broad adoption and commercialization”: Advanced Materials Production Technology Platforms Advanced Manufacturing Processes Data and Design Infrastructure The appendix of the strategy also contains a skills competency model framework for Advanced Manufacturing The model was developed through collaborating efforts of the DOL Employment and Training Administration (ETA) and other industry organizations The updated model was completed in 2010 and has acquired new information on Sustainable and Green manufacturing with an update in key behaviors in several competency areas Susan Helper, Timothy Krueger, and Howard Wial - Metropolitan Policy Program at BROOKINGS - Why Does Manufacturing Matter? Which Manufacturing Matters? A Policy Framework (February 2012) (http://www.google.com/url? sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CC4QFjAA&url=http%3A%2F %2Fwww.brookings.edu%2F~%2Fmedia%2FFiles%2Frc%2Fpapers %2F2012%2F0222_manufacturing_helper_krueger_wial %2F0222_manufacturing_helper_krueger_wial.pdf&ei=t12ET4yHYbc9ASuyI3XCA&usg=AFQjCNHwbtm6hOGAFROI2mamWo2v8gCDvw) Summary Manufacturing matters to the United States because it provides high-wage jobs, commercial innovation (the nation’s largest source), a key to trade deficit reduction, and a disproportionately large contribution to environmental sustainability The manufacturing industries and firms that make the greatest contribution to these four objectives are also that that have the greatest potential to maintain or expand employment in the United States Computers and electronics, chemicals (including pharmaceuticals), transportation equipment (including aerospace and motor vehicle and parts), and machinery are especially important Productivity and wages vary greatly within as well as between industries In any industry, manufacturers that are not already at the top have room to improve their performance by adopting “high-road” production, in which skilled workers make innovative products that provide value for consumers and profits for owners Analysis In asking the main question: Why does manufacturing matter? A few data points are helpful to understand the answer • • • • • Manufacturing today accounts for 12 percent of the U.S economy and about 11 percent of private-sector workforce Manufacturing provides high-wage jobs Manufacturing is the major source of commercial innovations and is essential for innovation in the service sector Manufacturing can make a major contribution to reducing the nation’s trade deficit Manufacturing makes a disproportionately large contribution to environmental sustainability From a policy development perspective it is useful to identify the major factors that seem to determine which industrial cities are likely to make a successful transition away from their manufacturing foundation, while still acknowledging these economic “roots” And in reading the papers above and others, these factors seem to coalesce around the following: • • • • Education/training: those industrial cities that have outperformed their peers have done a better job of identifying and developing the skills required by employers; Taking a regional perspective: those cities that have performed better than average have looked beyond their city limits for solutions to their problems; this willingness to engage in active, positive collaboration with other cities and towns in the same “economic region” seems to have paid dividends for all of the participants; Access to Capital: “resurgent” and “resilient cities in general, have done a better job of identifying and developing multiple sources of economic development capital including private investment and philanthropic sources of capital; Leadership: while difficult to measure, the impact of effective leadership was easy to see in terms of the performance of resurgent cities This leadership can originate in the public or private sector and is very often a combination of both centers of influence Many thought the U.S was losing manufacturing jobs because of increased manufacturing productivity This study contends, however, that the historical pattern of productivity gains leading to job growth not contraction remains in effect American manufacturing will not realize its potential automatically While U.S manufacturing performs well in wages and productivity compared to the rest of the U.S economy, it performs poorly compared to manufacturing output in certain other high-wage countries American manufacturing needs strengthening in four key areas Research and development Lifelong training of workers at all levels Improved access to finance An increased role for workers and communities in creating and sharing in the gains from innovative manufacturing These problems can be solved with the help of public policies that the following: • • • Promote high-road production Include a mix of policies that operate at the level of the entire economy, individual industries, and individual manufacturers Encourage workers, employers, unions and government to share responsibility for improving the nation’s manufacturing base and to share in the gains from such improvements This study does not necessarily suggest the U.S manufacturing will dominate the global economy the way that it once did, but manufacturing remains a segment of our economy that is of critical importance and deserving of focus David Autor, David Dorn, Gordon Hanson - The China Syndrome: Local Labor Market Effects of Import Competition in the United States (MIT Economics 10 tax credit is now only 27th in the world in terms of incentive value] Some important factors for successful recovery are an increase in R&D levels that can be invested with the increase in national investment, and increased productivity and efficiency in economic assets as technology quickly accelerates the world’s economy Tassey explains that these necessary structural changes are unlikely to happen automatically because of the “installed wisdom,” illustrated above, where traditional neoclassical economists retain growth policies that are proving inadequate, and the “installed-base” effect, where owners of accumulated economic assets face high risk in writing off old assets and switching to new assets and therefore prefer to keep the viability of their assets by lobbying for relief from taxes and regulations In order to successfully recover from the recession, policies should focus on addressing these structural problems of the U.S economy The core structural problem that Tassey focuses on in his proposed model is the lack of investment in technology for long-term economic growth As mentioned above, technology drives productivity, and in the competitive global economy, investmentdriven recovery should focus its efforts on developing productivity-enhancing technologies Tassey suggests this to be done through a new system involving publicprivate processes for developing and assimilating technology to increase productivity and ensure long-term economic growth This new model takes into account the evolution of technology from a tool developed and commercialized by large firms to a dynamically evolving asset developed by public-private partnerships and commercialized by both large and small firms If economic growth is to be achieved, policymakers should work to increase the multifactor productivity, which requires investments in input factors such as technology, education, capital formation, and industry infrastructure To improve technology, the U.S needs to make a larger investment in R&D – the American Recovery and Reinvestment Act (ARRA) in 2009 provided $787 billion to stimulate the economy; however, as noted, less than 2% of this money was allocated to support scientific research, despite the history of American innovation being the main driver of economic growth However, in addition to the amount of R&D invested, the composition and efficiency of R&D is critical to successfully compete in a global economy with shrinking R&D cycle times With such limited funds in the present day, investment in R&D has to be optimally allocated to maximize the impact of sparse funding The composition of R&D investment, therefore, is an important consideration Traditionally, the government has focused on mission-oriented research (national defense, health, and space exploration, etc.) rather than on economic growth, which has yielded technology that spins off into private industries for commercial application However, the spinoff process is lengthy, and, in light of shorter technology life cycles, this approach to technology R&D is no longer competitive Other countries have recognized and acted on this need to spur breakthrough technology research by funding universities, research organizations, and private industries in developing new technology 29 platforms and industries To address the efficiency of R&D investment, Tassey’s proposal utilizes more players in the technology field He predicts a high rate of success in economic growth through joint efforts between government and industry (both small and large firms) to cooperate in supply, development, and deployment The organizational format, termed the “regional innovation cluster,” directs technology-based economic growth through regional co-location of public and private R&D assets Clusters would increase productivity in R&D, allow for risk pooling and co-funding, and facilitate effective management of intellectual property Manufacturing industries in particular can play a major role in directing long-term economic growth in a technologically advanced economy The manufacturing sector is responsible for a 67% share of domestic industry R&D and 57% employment of R&D personnel However, the intensity of U.S investment in R&D (R&D as a percent of GDP), and hence growth rate in R&D, is drastically lower than other countries, as can be seen below If U.S manufacturing moves overseas, the nation’s R&D capacity will be crippled, along with its economy, innovation, and potential to recover economically To improve the economy, the focus should be on innovative research to develop manufacturing processes that can make quality products that are cost-competitive in the global marketplace One of the challenges with these manufacturing technologies now is the change in focus from mass-producing homogenous products to a wider scope of semi-customized products that can serve a variety of submarkets – for example alternative energy technologies are looking for the capability to convert waste and cellulosic feedstock into a different types of fuels and chemicals The same manufacturing process has to be able to produce different products that still fit the 30 relevant standards To take advantage of technology, Tassey recommends investing in research and development by providing a competitive R&D tax incentive, ensuring an adequate supply of skilled R&D workers in the technology fields, and implementing a new public-private research infrastructure via regional technology-based clusters If the U.S wants to rescue its economy and continue being a world leader, investment in technology R&D needs to increase (Source: Queenie Chan, MIT ’13) 31 Houseman, Susan, Christopher Kurz, Paul Lengermann, and Benjamin Mandel, "Offshoring and the State of American Manufacturing." Upjohn Institute Working Paper No 10-166 (Kalamazoo, MI: W.E Upjohn Institute, June 2010) (http://research.upjohn.org/up_workingpapers/166) Houseman and colleagues Kurz, Lengermann and Mandel examine the effects of offshoring on the manufacturing industry and provide a bias correction for an output assumption they find to be misreported Their correction affects statistics in input cost and import price indexes, which are affected by moving from more expensive domestic suppliers to low-cost foreign suppliers They find that the growth in the U.S manufacturing output from 1997-07 is overstated, specifically that when bias from offshoring is factored in, the official output data overstates a fifth to half of the growth in the non-computer/electronic manufacturing industry The emerging trend of offshoring has led to trade deficits, where the cost of imports to make the product exceeds the value from exporting the good It has also raised questions about the impact of offshoring on manufacturing From 1997 to 2007, the U.S manufacturing sector lost more than 20 percent of its employment, spurring discussions as to whether or not this arose as a result of offshoring Unlike other studies, this paper distinguishes between imported and domestic material inputs in its analyses, which makes a major difference in assessing output They found that the contribution from imported materials was the largest percentage out of all the inputs, and that it comes to more than twice the contribution from capital They also found a negative contribution from domestic materials and labor An interesting trend in the manufacturing industry, that many experts have explained by assuming high productivity growth, is the disparity between employment and output As employment steeply declined in the past decade, the outputs of the manufacturing industry appeared to be strong, leading to an assumption of high productivity gains Houseman, et al, posit that this perspective is incorrect when the output data is re-evaluated One of the reasons they evaluate is the apparent massive growth seen in one sector of manufacturing, the computer and electronic products industry Computers and electronics accounted for about 90 percent of manufacturing value added, and when taken out of the calculation of average annual growth rate, this rate dropped to less than a third of the published growth rate for all manufacturing The aggregate 32 manufacturing production output numbers, then, are not indicative of the entire field of manufacturing, but rather highly skewed by the results for the computer and electronics industry The second reason for the disparity between employment and production is that the price indexes not capture the manufacturer’s lower cost when shifting from domestic suppliers to lower-cost foreign suppliers U.S producers and importers cannot report the price drops that buyers experience when shifting their purchases from domestic to foreign suppliers, but if price indexes did reflect these drops, one would find that import prices increase more slowly than domestic prices The bias to value added from offshoring results from Houseman, et al’s, finding that the differences in the price deflators for imported and domestic semiconductors were not incorporated in the output data The price for imported semiconductors fell less rapidly than the domestic counterparts, and, after adjusting for offshoring, the multifactor productivity growth is 0.1 to 0.2 percentage points lower and the average annual productivity growth is reduced to between and 14 percent The findings from this study bring to light flaws in previous evaluations of growth in the manufacturing industry The reduction in input cost for manufacturing does not, in fact, result from greater efficiency and productivity, but rather from loss of jobs via offshoring Growth of imports has been understated, and consequently productivity gains based on import growth statistics have also been misstated The U.S manufacturing industry is not nearly as well off as previous studies have indicated, and as offshoring becomes more common, new economic models that incorporate the effect of low-cost imports on output and the economy are needed (Source: Queenie Chan, MIT ’13) 33 Jonas Nahm and Edward S Steinfeld, Scale-Up Nation: Chinese Specialization in Innovative Manufacturing (MIT working paper March 12, 2012)(working draft of research paper available through MIT Production in the Innovation Economy study) In this paper, Nahm and Steinfeld examine what makes China so successful in the manufacturing industry China went from 5.7% of the global manufacturing output in 2000 to an impressive 19.8% in 2011, the highest in the world While many attribute this extraordinary growth to the low cost of production in China (with cheap labor and cheap parts), Nahm and Steinfeld assess the importance of innovation in this growth as well The many theories behind why global manufacturing concentrates in China have two underlying themes: (1) that manufacturing naturally migrates to the lowest cost environment, and (2) that the knowledge required for manufacturing is trivial One common opinion is that China has developed product know-how because of its strong position within manufacturing as a location for outsourcing, and that knowledge flows unidirectionally from outside into China to support related innovation A second opinion is that the information technology revolution allowed the process of manufacturing to separate from the innovation processes of R&D, product definition, design, branding, and marketing Neither of these link innovation and manufacturing, however, which Nahm and Steinfeld argue is the key factor to China’s rapid advancement in manufacturing “Innovative manufacturing” takes into account the possibility of proprietary knowhow and specialization (innovation) being embedded in the fabrication and assembly process itself (manufacturing) China’s particular form of innovative manufacturing specializes in rapid scale-up and cost reduction, with globally unparalleled skills in simultaneous management of tempo, production volume, and cost Consequently, production is able to scale up quickly and with drastic reductions in unit cost This has enabled the nation to expand even in industries that are highly automated or not on governmental priority lists, despite virtually no labor cost advantage or government subsidies, respectively Nahm and Steinfeld take these unexpected growth areas to show that costs and government support are not sufficient to explain China’s success in manufacturing 34 Chinese firms have acquired unique skills for marching down and redefining cost curves, as seen in the graph above They also have managed to further develop production processes that were previously considered fully mature and impervious to further cost reductions or technological improvements Nahm and Steinfeld attribute this to the accumulation of firm-specific expertise in manufacturing via extensive, multidirectional inter-firm learning in an international dimension The scale-up effect of Chinese manufacturing can be examined through the wind turbine sector, the solar photovoltaics (PV) sector, and the consumer electronics sectors, which vary across several dimensions Wind turbine manufacturing has extensive government support and a large domestic market, and crystalline silicon solar PV panel production had no domestic market In both, however, China excelled and drove costs down – wind turbines by producing in China and selling to the domestic market, and solar PVs by exporting to countries with high demand, lowering solar PV module prices from $2.75/watt in 2009 to $1.10/watt in 2012 Another sector that illustrates the uniqueness of Chinese manufacturing is consumer electronics fabrication and assembly Multinational corporations like Foxconn, Quanta, and Delta handle all fabrication and assembly in their China-based factories and have been found able to scale-up rapidly, accommodate late-stage design changes, and take on additional design responsibilities while still driving down prices Chinese firms’ exhibit different patterns of behavior associated with the knowledgeintensive scale-up model, including: Backward design 35 Chinese firms find a huge cost advantage in their system of backward design They take existing products and create alternatives that may be more simple, with cheaper materials, and easier to manufacture, which make them easier to scale at low cost and higher speed Here, the cost curve drives product selection even if quality and performance are sacrificed The process can be either in collaboration with other firms to develop the most cost-effective model, or in direct competition with another firm’s product archetype Even though foreign firms have attempted to replicate this strategy of costdriven design, the speed of Chinese firms’ process of backward design gives them an edge in competitive markets In one case, a European turbine firm ran into issues with lengthy negotiation and approval processes involving its headquarters, and by the time they were ready to sell their product, the Chinese market had already moved on to larger turbine sizes Foreign design and Chinese manufacturing: Partnership Some foreign companies have realized the power Chinese firms have in manufacturing and have partnered to use this to their advantage With the foreign firm providing the design and the Chinese firm figuring out how to make it commercially viable through cost effective manufacturing, the two firms together can surge ahead in the market This type of partnership is an example of multidirectional learning While foreign firms provide the design concept, Chinese firms provide their vast expertise in replacing, redesigning, and substituting parts for reducing the cost of manufacturing the product In a real case with a European engineering firm’s turbine design concept, both sides acknowledged the learning benefits from this type of partnership The European firm had no manufacturing capacity and involvement in this cooperation helped them maintain competitiveness and innovation capacity The Chinese firm gained a commercial advantage in a highly competitive market environment Rapidly scaled product innovation Chinese firms use their understanding of scaled-up manufacturing to commercialize their own new products by being able to see commercial potential in products that have been discarded because they were deemed to costly or risky to develop Here, the product innovation has already taken place and been thrown away, but these Chinese firms pick it up and bring it to life with their ability to tweak and use existing production lines to rapidly scale the product with modified materials Technology Absorption and Collaborative Development Another business pattern Nahm and Steinfeld observed with Chinese companies involves the Chinese firm producing a product that is incorporated as a component of an international innovator’s technology This type of cooperation goes beyond a simple commercial transaction to a process of co-development of 36 the technology Chinese firms’ involvement in products that can be incorporated leads to a wide market; for example, a Chinese firm’s liquid nanomaterial can be used in flat panel displays, solar panels, or LED lighting, and offering the nanomaterial as a part for integration into these large-scale products provides an instant market This, too, is an example of multidirectional learning, where both parties bring knowledge to the table However, in this business model, the Chinese product platform determines the features and markets of these new technologies, rather than the foreign firm providing the design Nahm and Steinfeld’s findings indicate that the success of manufacturing in China is not just a model of the global best practice but a redefinition of the global standard Also, learning may not be, as previously believed, a result of an oligopolistic environment but rather driven by intense competition between many companies A large number of international commercial partnerships and knowledge flows also contributed largely to China’s learning process Nahm and Steinfeld illustrate that learning is centered around the creativity of entrepreneurs and multidirectional flows of knowledge across linked, cross-border networks rather than on political hierarchies The Chinese place at the top of the global manufacturing charts indicate that the U.S should pay attention to their method for success Nahm and Steinfeld’s research points to the importance of multidirectional learning and Chinese firms’ talent for innovative manufacturing Some foreign firms have already benefited and learned from the Chinese approach of prioritizing speed and flexibility over fixed corporate rules and procedures The paper suggests that global firms will have to either form partnerships with Chinese companies or learn how to mimic their scale-up knowhow to successfully compete in commercializing future technology (Source: Queenie Chan, MIT ‘13) 37 U.S Department of Commerce, Economics and Statistics Administration, The Benefits of Manufacturing Jobs (May 9, 2012) http://www.esa.doc.gov/Reports/benefits-manufacturing-jobs The U.S Commerce Department’s Economics and Statistics Administration (ESA) has released a new report, “The Benefits of Manufacturing Jobs,” an analysis of wages and benefits of manufacturing workers, which finds that total hourly compensation for manufacturing workers is 17 percent higher than for non-manufacturing workers This includes premiums in both wages and employer-provided benefits, such as health insurance and retirement plans The report finds that in addition to higher compensation for manufacturing jobs, the share of manufacturing workers with more than a high school degree has been steadily increasing, and now more than half of all manufacturing workers have at least some college education Further, manufacturing jobs are more STEM (science, technology, engineering, and math) intensive than non-manufacturing industries According to the Bureau of Labor Statistics, manufacturing employment has expanded by nearly 500,000 jobs or percent since January 2010 — the strongest cyclical rebound since the wake of the dual recessions in the early 1980s The report, then indicates manufacturing employment means higher wages and important benefits Specific findings from “The Benefits of Manufacturing Jobs” include: • On average, hourly wages and salaries for manufacturing jobs are $29.75 an hour compared to $27.47 an hour for non-manufacturing jobs Total hourly compensation, which includes employer-provided benefits, is $38.27 for workers in manufacturing jobs and $32.84 for workers in non-manufacturing jobs, a 17 percent premium • Even after controlling for demographic, geographic, and job characteristics, manufacturing jobs maintained significant wage and benefit premiums • The educational attainment of the manufacturing workforce is rising steadily In 2011, 53 percent of all manufacturing workers had at least some college education, up from 43 percent in 1994 • The innovative manufacturing sector relies more heavily on STEM education than non-manufacturing For instance, nearly out of (32 percent) collegeeducated manufacturing workers has a STEM job, compared to 10 percent in non-manufacturing • Higher educational attainment for manufacturing workers carries higher premiums and the size of the premium, including or excluding benefits, increases consistently with educational attainment • Furthermore, the compensation premium has risen over the past decade across all 38 levels of educational attainment Note: In April, the Commerce Department released “Intellectual Property and the U.S Economy: Industries in Focus,” a comprehensive report co-produced by ESA and the U.S Patent and Trademark Office (USPTO) which found that IP-intensive industries support at least 40 million jobs and contribute more than $5 trillion dollars to U.S gross domestic product (GDP) (Source: ESA webite) Advanced Manufacturing Partnership Steering Committee (for PCAST), 39 Capturing Domestic Competitive Advantage in Advanced Manufacturing (July 17, 2012) (http://1.usa.gov/PkRHqi) On July 17th, the President’s Council of Advisors on Science and Technology (PCAST) released a report to the President for revitalizing the nation’s advanced manufacturing sector The report was prepared and approved by the PCAST Advanced Manufacturing Partnership (AMP) Steering Committee chaired by Susan Hockfield, former president of MIT, and Andrew Liveris, chairman, president and CEO of The Dow Chemical Company Entitled Capturing Domestic Competitive Advantage in Advanced Manufacturing, the report identifies opportunities for investments in advanced manufacturing that have the potential to transform U.S industry More than 1,200 stakeholders representing industry, academia, and government at all levels participated in four regional meetings across the nation A diverse set of experts in advanced manufacturing technology, education, and policy issues were also consulted to build upon the ideas presented by the stakeholders One of the regional meetings was held at MIT on November 28th; video of that event can be found at: http://web.mit.edu/manufacturing/amp/event/ Others were held at Georgia Tech, Berkeley, and the University of Michigan See meetings summary at: http://www.whitehouse.gov/sites/default/files/microsites/ostp/amp_final_report_ annex_6_amp_regional_meeting_summaries_july_update.pdf The Advanced Manufacturing Partnership Steering Committee proposes that the U.S establish a national advanced manufacturing strategy This strategy will serve as a national framework that, when implemented by states and local communities, will aim to bring about a sustainable resurgence in advanced manufacturing in the United States The AMP Steering Committee developed a set of 16 recommendations around three key pillars: · Enabling innovation · Securing the talent pipeline · Improving the business climate These recommendations aim at reinventing manufacturing in a way that ensures U.S competitiveness, feeds into the nation’s innovation economy, and invigorates the domestic manufacturing base The objective is to position the nation to lead the world in new disruptive advanced manufacturing technologies that are changing the face of manufacturing The report identifies, based on industry and academic surveys, 11 such technology areas that appear especially promising for implementation The AMP Steering Committee report asserts that a number of important steps taken now will be critical to strengthen the nation’s innovation system for advanced manufacturing While some of the largest U.S firms have the depth and resources to 40 be ready for this challenge, a significant number of small and medium-sized U.S firms operate largely outside the present innovation system AMP found that the U.S will only lead in advanced manufacturing if all companies are able to participate in the transformations made possible through innovations in manufacturing When implemented, these recommendations will set the stage for advanced manufacturing to thrive in the United States The 16 recommendations are summarized below: Enabling Innovation · Establish a National Advanced Manufacturing Strategy: Create and maintain a national advanced manufacturing strategy by putting in place a systematic process to identify and prioritize critical cross-cutting technologies · Increase R&D Funding in Top Cross-Cutting Technologies: In addition to identifying a “starter list” of cross-cutting technologies that are vital to advanced manufacturing, establish a process for evaluating technologies for research and development (R&D) funding · Establish a National Network of Manufacturing Innovation Institutes (MIIs): Create a network of MIIs as public-private partnerships to foster regional ecosystems in advanced manufacturing technologies MIIs are one vehicle to integrate many of the Committee’s recommendations · Empower Enhanced Industry/University Collaboration in Advanced Manufacturing Research: Change the treatment of tax-free, bond-funded facilities at universities to enable greater and stronger interactions between universities and industry · Foster a More Robust Environment for Commercialization of Advanced Manufacturing Technologies: Connect manufacturers to university innovation ecosystems and create a continuum of capital access from start-up to scale-up · Establish a National Advanced Manufacturing Portal: Create a searchable database of manufacturing resources as a key mechanism to support access by small and medium-sized enterprises to enabling infrastructure Securing the Talent Pipeline · Correct Public Misconceptions About Manufacturing: Create and maintain a national advertising campaign focused on parents and students to build excitement and interest in careers in manufacturing · Tap the Talent Pool of Returning Veterans: Connect returning veterans who possess many of the key skills needed to fill the manufacturing skills gap to the manufacturing talent pipeline · Invest in Community College Level Education: Increase investment in community and technical colleges to help address manufacturers’ skill needs, following the best practices of leading innovators 41 · · · Develop Partnerships to Provide Skills Certifications and Accreditation: Establish stackable credentials to allow coordinated action by organizations that feed the advanced manufacturing talent pipeline, taking advantage of the portability and modularity of the credentialing process Enhance Advanced Manufacturing University Programs: Challenge universities to bring new focus to advanced manufacturing through the development of educational modules and courses Launch National Manufacturing Fellowships & Internships: Create national fellowships and internships in advanced manufacturing in order to provide needed resources and national recognition on manufacturing career opportunities Improving the Business Climate · Enact Tax Reform: Enact specific tax reforms that can “level the playing field” for domestic manufacturers · Streamline Regulatory Policy: Create a framework for smarter regulations relating to advanced manufacturing · Improve Trade Policy: Initiate specific actions that will to improve the nation’s trade policies · Update Energy Policy: Establish updated energy policies that address the needs of U.S manufacturers Here is a link to the Advanced Manufacturing Partnership Steering Committee report and a full set of the six annexes to the report: http://www.whitehouse.gov/administration/eop/ostp/pcast/ (Sources: AMP report, NIST, NACFAM, MIT Washington Office) 42 Suggested Additional Reports/Studies to Review: The Economist – The Third Industrial Revolution (http://www.economist.com/node/21553017) Carl Dahlman, The World Under Pressure (Stanford, CA: Stanford Univ Press 2012) A Michael Spence, The Impact of Globalization on Income and Employment: The Downside of Integrating Markets, Foreign Affairs 90, n 4, July-August 2011, 28-41, http://relooney.fatcow.com/0_New_10530.pdf 43 ... issued earlier by MIT Washington Office: Future of U.S Manufacturing – A Literature Review, Parts I and II Link to these previous MIT Washington Office summaries: http://web .mit. edu/dc/policy.html... review This summary was prepared by Kathryn Hewitt, Intern, MIT Washington Office, Spring 2012; it was supplemented with additional summaries by Queenie Chan, MIT? ??13, Intern, MIT Washington Office,... public or private sector and is very often a combination of both centers of influence Many thought the U.S was losing manufacturing jobs because of increased manufacturing productivity This study