Manufacturing

Technology is Not the Problem — It Is the Solution

April 25, 2013
| Blogs & Op-eds

While productivity-enhancing technologies sometimes result in short-term job loss, rather than make misguided arguments, pundits should embrace technology-led productivity, while at the same time promoting policies that can assist workers in adjusting to the changing environment. This includes stronger investments in retraining and applied technology programs and reforms to our current unemployment safety net, which is full of holes. Fundamentally, the continued expansion of technology and innovation is necessary for the growth and expansion of 21st century society. By embracing the machine we are all better off.

Robots Are Good for Us: Really, They Are!

April 19, 2013
| Blogs & Op-eds

The widely held belief that automation is responsible for manufacturing decline is false, and it's time to recognize that these claims are being held up by nothing more than neoclassical economic thought 

What’s the Right Path for Manufacturing?

April 16, 2013
| Blogs & Op-eds

Any effective manufacturing strategy has to include a robust “tech and talent” initiative, which would include a fully funded NNMI, a new system of “manufacturing universities” that promote training and applied research, stronger tax incentives for companies to invest in R&D, workforce training and new machinery and equipment.

Congress should direct NSF to establish stronger university entrepreneurship metrics and use them to provide stronger incentives for universities to commercialize research.

Congress should direct the National Science Foundation, working in partnership with National Institute of Standards and Technology, to develop a metric by which universities report entrepreneurship and commercialization information annually. The reports should include data on faculty new business starts, spin-offs of new companies from universities, license agreements and patenting, and industrial funding of research. Congress should further direct all major federal research funding agencies to factor these performance metrics into their decisions to award research funds to a university or university researcher. Applicants from universities that successfully promote entrepreneurial spin-offs/start-ups or that receive more in industry research funding would be more likely to have their principal investigator grants funded.

Congress should create an “Innovation Voucher” program operated by NIST.

Almost a dozen countries—including Austria, Canada, Belgium, Denmark, Germany, the Netherlands, Ireland, and Sweden—use innovation vouchers (ranging in value from $5,000 to $30,000) to spur R&D, new product development, and innovation activity in traded-sector SME firms by enabling them to “buy” expertise from universities, national laboratories, or public research institutes for assistance with preparatory studies, analysis of technology transfer, analysis of the innovation potential of a new technology, etc. The vouchers both spur innovation in SMEs and stimulate knowledge transfer from universities and research institutions to SMEs. In the United States, innovation vouchers could be introduced at either the federal or state level, but Congress should facilitate their introduction by authorizing $20 million to NIST to fund a pilot program operated by select states that agree to match the funding dollar for dollar. As a potential source of funds to keep this option revenue-neutral, one option would be to take 0.5 percent of the current allocation to national laboratories to fund the vouchers.

Congress should authorize the creation of a National Network for Manufacturing Innovation (NNMI) and allocate at least $500 million to support the initial deployment of at least 15 and as many as 25 Institutes of Manufacturing Innovation.

Unlike leading manufacturing nations such as Germany or even the United Kingdom, the United States lacks an integrated, well-funded national network of large-scale, industry-led manufacturing innovation centers that can accelerate technology deployment, operate demonstration facilities and test beds, support education and training, and perform applied research on new manufacturing processes. Accordingly, the United States should develop a National Network for Manufacturing Innovation (NNMI) that would establish at least 15 Institutes of Manufacturing Innovation (IMIs) that would bring together industry, universities, community colleges, federal agencies, and states to accelerate innovation by investing in industrially relevant manufacturing technologies with broad applications. The network would help bridge the gap between basic research and product development, provide shared assets to help companies (including SMEs) access cutting-edge capabilities and equipment, and create a compelling environment in which to educate and train students and workers in advanced manufacturing skills. Manufacturers would lead the development of IMI proposals, defining the scope and focus of the Institutes, and provide at least 50 percent of the resources for each IMI, with that contribution growing over time. But Congress should act initially to authorize the creation of the National Network for Manufacturing Innovation and allocate at least $500 million—which would be matched 1:1 by industry and state/regional governments—to establish a $1 billion fund to support deployment at least 15 and as many as 25 manufacturing institutes.

Congress and NSF can work together to eliminate the requirement that new proposals for Engineering Research Centers (ERCs) include an international partner.

Current regulations perversely require that proposals for new ERCs include an international partner. This is in part a reflection of the NSF culture which views its mission as advocacy of science—because science is internationalized, NSF wants to fund international collaborations. While certainly policy should not prohibit ERCs from including international partners, NSF should eliminate the requirement that an international partner must be involved, since the ERCs’ main goal should be to strengthen U.S. engineering and manufacturing.

Revitalizing U.S. Manufacturing: What’s It Going To Take?

April 9, 2013
| Presentations

ITIF president Rob Atkinson presented the keynote address "Revitalizing U.S. Manufacturing: What’s It Going To Take?" at the 2013 NACFAM conference. 

Congress and the SBA should assist SMEs in traded sectors in obtaining access to credit, in part by creating a 95 percent loan guarantee program.

Particularly in the wake of the recession, small manufacturers are having a difficult time accessing credit from financial institutions, and several policies could help remedy this. First, to help small manufacturers that have work orders in hand get credit, Congress should enact a 95 percent loan guarantee program for small manufacturers under the SBA 7(a) guarantee program. Second, the Federal Reserve should consider relaxing some of the stringent guidelines it has placed on local banks with regard to the liquidity ratios SME manufacturers must meet to be eligible for commercial loans. This would allow local banks to better understand and service SMEs’ capital requirements, given their particular cash flow constraints.

Congress should direct the Small Business Administration to shift its focus toward traded sector firms.

The U.S. Small Business Administration should focus more on traded-sector firms through its financing programs, including its 7(a) loan guarantee program. However, the SBA does not appear to give any special priority to traded sector firms, treating all industries alike in its funding priorities, in large part because this is SBA’s charge from Congress. But there are significant differences for U.S. job creation and prosperity between a small manufacturer and a small retail firm, for example. The former plays a significantly more important role in driving economic growth and—through the multiplier effect—jobs. Moreover, the United States will anyway have all the retail firms it needs (e.g., that the market demands), since the sector is not traded. As such, Congress should require the SBA to develop a report for Congress within six months on two items: an analysis of all SBA financing by sector (e.g., how much financing went to manufacturing, retail trade, personal services, information, etc.) and a plan for how SBA can significantly increase the share of SBA financing going to firms in traded sectors. Congress should then require that a significant share of SBA lending—both guarantee and direct lending—go to fund scale-up activities for SMEs in traded sectors.