In testimony before the Senate Finance Committee, Stephen Ezell analyzed the current challenges facing America’s manufacturing economy and offered several policy recommendations designed to bolster global competitiveness.
Government R&D and Manufacturing Competitiveness
For the United States to regain its lost manufacturing prowess, it must dramatically increase government investment in research, development and technology transfer. The private sector cannot do this alone, as businesses have been shown to underinvest in new technologies, while foreign governments have invested significantly in their own manufacturing sectors. A focus on industrially relevant applied research can pay major dividends for the U.S. economy and help us compete in the increasingly globally race for innovation advantage.
Where Do New Products Come From? Insights From a New Study of Innovation in Manufacturing
A recent survey examining manufacturing innovation found that less than half of manufacturers innovated in the previous 3 years, and those that did were more likely to introduce a product imitation than an entirely new product. It also found that the largest amount of innovations come from customer ideas, although those innovations are less valuable to firms than innovations originating from technology specialists.
American Manufacturing Needs an Updated High Tech Trade Agreement
While the Information Technology Agreement (ITA) has played a critical role in promoting IT trade and investment, which in turn has boosted productivity, increased employment, and accelerated U.S. industrial growth, the product scope needs to be expanded. With negotiations on a revised agreement currently stalled—due primarily to reticence from Chinese negotiators to conclude a comprehensive expansion—the U.S. manufacturing community should lend its voice to amplifying calls to complete a robust agreement.
If Manufacturing Employment is Dead Then Take a Look at China’s Zombie Apocalypse
A number of prominent economists have used job losses in China's manufacturing sector as justification for abandoning hope for U.S. manufacturing. But these "job losses" never really existed: they were due to statistical changes and the massive restructuring and privatization of China's economy. Recent data indicate that employment in China's manufacturing sector is growing, not shrinking.
While America Sleeps Other Nations Bolster Manufacturing Sector
In recent years, many U.S. competitors have established strategic, well-funded advanced manufacturing support systems that have proven vital to expanding technology creation, supporting the development of innovative new products, improving manufacturing productivity, and bettering trade performance. From Germany and Japan to the United Kingdom, a focus of these strategies has been support for investments in public-private partnerships focused on industrially relevant applied R&D activities. Their goal is to ensure that research discoveries or inventions made in their countries’ universities and national laboratories are commercialized into products that are manufactured at scale by local industry. The United States has not kept pace. But legislation working its way through Congress now via the Revitalize American Manufacturing and Innovation Act could help rectify this situation and revitalize U.S. industrial competitiveness by establishing a National Network for Manufacturing Innovation (NNMI)—a network of 15 Institutes of Manufacturing Innovation focused on innovation in advanced manufacturing product and process technologies.
Spurring a Manufacturing Renaissance: Increasing Competitiveness through Energy Efficiency
The Job Creation through Energy Efficient Manufacturing Act is a necessary component in building a robust manufacturing innovation ecosystem. The bill would spur the development and implementation of energy efficient technologies in the manufacturing sector, improving the productivity and competitiveness of American firms, while also reducing production costs and enhancing environmental quality.
Manufacturing Innovation is Key to Boosting Growth
The Senate Commerce Committee took an important step towards boosting manufacturing competitiveness and innovation last week with the mark-up of the Revitalize American Manufacturing and Innovation Act (RAMI). The bipartisan bill, cosponsored by Senators Sherrod Brown (D-OH) and Roy Blunt (R-MO), would create the National Network for Manufacturing Innovation (NNMI), which would be comprised of up to 15 public-private, manufacturing innovation hubs. These centers would accelerate manufacturing innovation in technologies with commercial applications by bridging the gap between basic research performed at U.S. universities and research laboratories and product development by U.S. manufacturers.