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

1. April 9, 2013
Revitalizing U.S.
Manufacturing:
What’s It Going To
Take?
Dr. Rob Atkinson
President, ITIF
ratkinson@itif.org

2. The Information Technology and Innovation Foundation (ITIF) is a
Washington, D.C.-based think tank at the cutting edge of
designing innovation policies and exploring how innovation will
create new opportunities to boost economic growth and improve
quality of life. ITIF focuses on:
 Innovation “verticals”: energy, life sciences, telecom,
manufacturing, and Internet and IT transformation
 Innovation “horizontals”: trade, tax, talent, and tech policy
 “Innovation economics” as an alternative to mainstream
economics

3. Today’s Presentation
1 Where Are We?
2 What Should We Do?
3 How to Get it Done?
3

4. Dramatic Manufacturing Job Losses in the 2000s
4

5. Worse Than Most Competitors (1997-2010)
Source: Worse Than the Great Depression, ITIF, 2012
5

6. Because U.S. Manufacturing Value Added Fell, 2000-2010
6

7. 13 of 19 Manufacturing Industries Producing Less in 2010 Than in 2000
7

8. And Growth in Manufacturing Capital Stock Stalled
8

9. With Manufacturing’s Share of U.S. Profits Declining
9

10. As the U.S. Trade Deficit Exploded
Source: Innovation Economics, ITIF, 2012
10

11. What Reshoring Miracle?
 Manufacturing trade balance worsened by 11% between 2010 and
2012.
 Foreign capital flowing into U.S. manufacturing increased by 6%
between 2010 and 2011 while U.S. capital to foreign manufacturing
industries increased by 28%.
 Just 10% of U.S. manufacturing job growth from U.S.
manufacturing reshoring. (Harry Moser, Reshoring Initiative)
 Manufacturing jobs down 3,000 in March.
11

12. Today’s Presentation
1 Where Are We?
2 What Should We Do?
3 How to Get it Done?
12

13. Three Major Camps
1. Do Nothing Since Manufacturing
Doesn’t Matter
13

14. Three Major Camps
2. Manufacturing Matters; we just need to
get the “Business Climate” right
If we just get our costs low enough,
American manufacturing will be fine
14

15. But U.S. Manufacturing Lags in Technological Intensity
Manufacturing Sector Composition by Technological Intensity
15

16. And Manufacturing Costs Are Not Higher
Source: Numbers Based on Analysis of Data from on MAPI and Manufacturing Institute 2011 Report on The Structural Cost Of U.S. Manufacturing. October, 2011
16

17. Three Major Camps
3. Manufacturing Matters; But we need to
compete through innovation and
productivity
17

18. What To Do: We Need a “RAFTTTT”
 Regulatory reform
 Analysis
 Financing
 Technology
 Tax
 Talent
 Trade
18

19. U.S. Lacks an Institutional Framework for Pre-
Competitive, Industrially Relevant Applied Research
19

20. Approach Being Increasingly Adopted Internationally
 Germany invests $2.5 billion/yr in Fraunhofer System
 60 Centers and 18,000 staff for 80M Germans
 Japan’s New $117B Stimulus Package (1/10/13)
 $2 billion to promote university-industry collaboration, including $
to equip universities to conduct industrially relevant research
 UK Catapults (January 2013)
 £1bn investment in technology and innovation centers
 The High-Value Manufacturing Catapult will be “a catalyst that
transforms brilliant manufacturing ideas into valuable products and
services”
 Finland’s SHOKs (Strategic Centers of Science, Tech, and Innovation)
20

21. Today’s Presentation
1 Where Are We?
2 What Should We Do?
3 How to Get it Done?
21

22. We Need a National Network for Manufacturing Innovation
 15 Manufacturing Institutes accelerating innovation by
investing in industrially relevant advanced
manufacturing sectors and technologies with broad
applications.
 Mission: Enhance U.S. industrial competitiveness by
supporting development of technologies enabling U.S.
production facilities to gain global market share.
 Pilot Institute
22

23. What NNMIs Would Do
 Provide a platform for joint pre-competitive applied research;
 Develop sector & technology-specific roadmaps that identify
technical hurdles and work to solve them;
 Provide shared facilities for rapid prototyping and demonstration;
libraries & databases; and validation and testing equipment;
 Develop and disseminate training technologies/curricula; support
credentials, certifications, and skills standards development;
 Help restore the industrial commons in key manufacturing product
and process technologies.
23

24. NNMIs Could be Established Across a Range of Key
Cross-Cutting Technologies
 Advanced Materials/Composites
 Additive Manufacturing
 Bio Manufacturing and Bioinformatics
 Nano-Manufacturing
 Flexible Electronics Manufacturing
 Industrial Robotics
 Advanced Forming/Joining/Welding Technologies
 Advanced Sensing, Measurement, & Process Control
 Visualization, Informatics and Digital Manufacturing Technologies
 Advanced Manufacturing & Testing Equipment
 Chemical Processing
24

25. Technology: Designate 25 Manufacturing Universities
 Revamp engineering programs to
focus on manufacturing engineering
and work that is more relevant to
industry.
 More joint industry-university research
projects and student training
incorporating manufacturing
experiences (co-ops).
 Receive annual award of at least $25M
from NSF plus priority on universities’
applications for NSF grants.
25

26. Technology: Ramp Up ERC & I/UCRC Programs
 Get more ERCs & I/UCRCs focused on
manufacturing:
 Currently only 4 of 17 ERCs and 7 of 56
I/UCRCs are.
 Double funding for both programs.
 Require all ERCs to have at least a 40%
industry match by 2017 or lose their federal
funding.
26

27. Technology: Increase Funding for MEP
 Despite positive returns, U.S. underinvests in MEP
compared to peer countries (and historical U.S. levels).
Country Investment in Manufacturing Extension Services as Percent GDP
27

28. Talent Policies
 Increase adoption of industry-recognized,
nationally portable credentials, such as those
produced by the MSSC.
 Fund more engineering fellowships and co-op
programs between universities and industry.
28

29. Tax Policies
 Accept that Corporate Tax Reform will cost
money, at least when scored statically.
 Preserve and enhance key manufacturing tax
incentives (e.g., R&D tax credit; accelerated
depreciation; domestic production deduction).
 Implement a quasi-incremental American
Innovation and Investment Tax Credit.
29

30. Trade Policies
 Get much tougher on foreign “innovation
mercantilists.”
30


31. Conclusion: Smart Policies Matter
 30% of all German companies
attribute their innovations “to
improved research and innovation
policies at the federal level.”
31

32. Thank You
Robert D. Atkinson ratkinson@itif.org
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