Washington Must Help the U.S. Regain the Lead in Manufacturing

The federal government can and should play a much bigger role in helping American companies regain the lead in manufacturing. We need to invest a commensurate amount of federal R&D dollars in advanced manufacturing technologies as we do in other areas of science, technology, and engineering.

The last administration created an assistant secretary for manufacturing in the Commerce Department, but that position really didn’t come with any significant resources, and that’s still true. There is some government investment in manufacturing R&D. For example, the National Institute of Standards and Technology has some manufacturing research centers. But most of the NIST programs are focused on remedial programs for small manufacturers and not developing game-changing technologies and getting them embedded in our whole supply chain.

By game-changing technologies, I mean new process tools like high-performance supercomputing technology for modeling and simulation, laser-based tools, and ultra-sophisticated smart materials that can self-assemble. These technologies are being pioneered by the Department of Energy’s national laboratories, in partnership with companies such as Boeing, DreamWorks, Pixar, Pratt & Whitney, Ford, and Procter & Gamble. They have the potential to transform the competitiveness of America’s manufacturing sector by radically reducing costs and increasing productivity and turbo-charging innovation.

The DOE labs and university supercomputing centers represent unique assets that no other country in the world can duplicate. But we’ve got to get these technologies in the hands of entrepreneurial firms and small manufacturing businesses — and embed advanced processes throughout the supply chain. We’ve got to have more public-private collaborations to enable U.S. companies to take advantage of these technologies and capabilities. And we have to invest more in the underlying computational science and software systems that enable continuous improvement and widespread deployment of these capabilities.

Ray Orbach, the DOE’s undersecretary for science in the Bush administration, was trying to do this, and Steve Chu, the current energy secretary, has indicated that he, too, wants to expand industry’s access to these facilities.

Washington also can make the U.S. a more attractive place for manufacturers by doing the following:

Taxes and regulation. The U.S. has the second-highest corporate tax rate in the world, which is a deterrent to where companies choose to manufacture. Complex regulations are also an issue. We have to strike a balance between having good regulations for product safety and making regulations so onerous and manipulative that they become a feeding trough for trial lawyers. We’re spending 2% of GDP on tort payoff; there’s no advanced industrial economy in the world that’s anywhere close to that.

Workforce training. The Labor Department is spending billions of dollars on workforce development, and a lot of those resources are being used to train people for the jobs that are being commoditized. Instead, the funds should be devoted to training people for the jobs of the future.

Education. In the 21st century, talent is the equivalent of oil in the 20th century. Ensuring that more American kids are proficient throughout their lives in math and science is one piece of it. The other is recognizing that our entrepreneurial culture and a lot of our talent and creativity depend on an educational system that fuses math, science, and engineering with the arts, social sciences, and humanities. The Naval Academy’s curriculum is a model. Such training will provide the American workforce with the technical and people skills &#8212l with the judgment and insights — they’ll need to operate the factories of the future.

The U.S. economy is approaching a critical juncture with long-term implications for our future prosperity. Without public-private sector collaboration and a dramatic shift in how we approach manufacturing, the United States is in danger of conceding its leadership position in the global economy.

Deborah L. Wince-Smith
President
Council on Competitiveness