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Advanced Manufacturing and Innovation: Manufacturing USA and the Importance of Manufacturing Clusters State Manufacturers Policy Academy August 22, 2018

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Advanced Manufacturing and Innovation: Manufacturing USA and the Importance of Manufacturing Clusters State Manufacturers Policy Academy August 22, 2018 Advanced Manufacturing and Innovation: Manufacturing USA and the importance of Manufacturing Clusters State Manufacturers Policy Academy August 22, 2018 Mike Molnar - Advanced Manufacturing National Program Office An interagency team building partnerships with U.S. industry and academia 1 Agenda • Importance of U.S. Manufacturing • The Manufacturing USA Program • Manufacturing Innovation Hubs Why should we care about US Manufacturing? Manufacturing Economic Impact Manufacturing drives jobs throughout economy - including services 10% of Employment, average wages 24% higher 12% of gross domestic product Source: U.S. Department of Commerce, Bureau of Economic Analysis Why should we care about US Manufacturing? Manufacturing Innovation Impact U.S. manufacturers • Employ over half of all R&D personnel in domestic industry 70% of US 47% of exports 64% of scientists 66% of private & engineers R&D spend patents to US entities 1/3rd of U.S Economic Growth is due to Innovation Why Manufacturing USA Manufacturing Employment (Millions) Advanced Manufacturing plays a special role in the U.S. innovation ecosystem • Highest value manufacturing, supporting high wages • Highest economic multiplier (4x to 12x) • Greatest source of next innovation 5 Addressing National Needs The U.S. leads the world in innovation and inventions, but the manufacturing capabilities and new products get developed in other countries instead. “Embracing technological innovation and speeding adoption are critical for U.S national security and economic competitiveness.” 6 Agenda • Importance of U.S. Manufacturing • The Manufacturing USA Program • Manufacturing Innovation Hubs Revitalize American Manufacturing and Innovation Act (RAMI) ® ManufacturingStrongly bipartisan USA legislationis Broadly - enacted BiDecember-Partisan 16, 2014 Establishes National Program Office at DOC/NIST - RAMI Principal Sponsors to oversee and carry out the program (coordination, network support, and reporting) • Creates the Program and Network, with coordination & support provided by NIST Rep. Tom Reed Rep. Joe Kennedy Sen. Sherrod Brown Sen. Roy Blunt • Requires Annual Congressional Reports, Biennial R NY-23 D MA-4 D Ohio R Missouri GAO assessments & Triennial Strategic Plans • Mission agency (DOD, DOE) sponsored institutes are part of network • NIST gains authority to hold “Open topic” institute 100 Co-Sponsors 18 Co-Sponsors competitions 51 Democrats 10 Democrats 49 Republicans 7 Republicans • Link Institutes with the Manufacturing Extension 1 Independent Partnership network 8 Manufacturing USA Bridges Gaps The federal role is to create a neutral convening space for U.S. Industry and Academia to collaborate. Federal start-up investment ($70 million/institute over 5-7 years) must be at least 100% matched 9 Vision: U.S. global leadership in advanced manufacturing Mission: Connecting people, ideas, and technology to solve industry-relevant advanced manufacturing challenges, thereby enhancing industrial competitiveness and economic growth and strengthening our national security. 10 Each Institute 1. Industry-led consortium with a clear mission based on ADVANCES U.S. critical industry need MANUFACTURING 2. Effective collaboration space for pre-competitive applied R&D, solving big challenges 3. Creates value for industry participation and funding 4. Federal start-up funding must catalyze at least 100% co- investment 5. Addresses the skills gap on education and workforce skills for their technology areas 11 Manufacturing USA Institutes Today 14 institutes, $1B federal start-up investment matched by over $2B non-federal funds Digital Sustainable Integrated Regenerative Advanced Manufacturing Manufacturing Photonics Manufacturing Fibers and & Design Textiles Albany, NY Chicago, IL Rochester, NY Manchester, NH Cambridge, MA Rochester, NY Modular Flexible Hybrid Chemical Electronics Process Intensification San Jose, CA New York, NY Smart Sensors Bio- and Digital pharmaceutical Process Control Manufacturing Los Angeles, CA Newark, DE Lightweight Additive Advanced Advanced Wide Bandgap Metals Manufacturing Composites Robotics Semiconductors Detroit, MI Youngstown, OH Knoxville, TN Pittsburgh, PA Raleigh, NC El Paso, TX Detroit, MI 12 MEP Staff Embedded at all Mfg USA Institutes 13 2017 Highlights 14 Measuring Performance: Top Level Metrics Institute Metric Category Specific Metric Units of measure Number of partner organizations with institute Total number of memberships membership agreement Impact to U.S. Innovation Large manufacturers 1) Ecosystem Small manufacturers Diversity of members Academia Other entities 2) Financial Leverage Total co-investment Cost share expended Number of projects completed, started and Number and value of active spanning FY 2016 R&D projects Technology Total institute expenditures 3) Advancement Percentage of key project technical objectives met Percentage of key milestones met Number of students participating in institute projects, internships, and training STEM activities Development of an Number of workers completing an Advanced Manufacturing institute-led certificate, apprenticeship or 4) Workforce Educator/trainer training program engagement Number of teachers or trainers participating in institute-led training 1) Impact to U.S. Innovation Ecosystem 1,291 members (FY 2017) • +50% increase in membership over 2016 • 65% from industry • 65% of manufacturers are 23% small and medium-sized Academic • 297 universities, community 65% 35% colleges, and other academic 65% Small 12% Large institutions Mfg. Mfg. Other • 150 federal, state, and local government, federal laboratories, and not-for- profits Membership breakdown of the 12 active institutes in FY 2017 16 2) Leveraging Co-Investments 1.5 to 1 investment match (FY 2017) $298,500,000 in total institute expenditures 40% • 60% of institute support came from non- federal funds 60% federal matching funds non-federal • 40% came from federal program funds funds Expenditures funded all aspects of institute operation (e.g. technology advancement projects, education and workforce training efforts, and capital equipment) 17 3) Developing an Advanced Manufacturing Workforce Nearly 200,000 people participated in workforce development training programs → 7X increase from 2016 • 185,425 students in institute research and development projects, internships, or Students in institute projects or training internships = 185,425 • 4,302 workers completed institute-led certificate, apprenticeship, or training programs • 1,299 teachers and trainers in institute-led training for instructors Students Workers Teachers and trainers 18 4) Transformational Technology Advancement 273 Major Collaborative R&D Projects in FY 2017 • High level of participation by industry + progress in meeting technical objectives are early indicators of success • Transformational technologies are best advanced though collaborative R&D 19 Project Example Partnering to Accelerate Energy Innovation 9 meter wind turbine blade is • Lighter • Less expensive • Stronger • More energy-efficient Manufacturing • Production time is reduced • Costs are reduced 11 Small Manufacturers Oak Ridge National Lab State of Colorado 20 Reports about to be released Congressionally required Annual Report on Comprehensive Annual Report covering all 14 Overall Program (Commerce Report) Manufacturing Innovation Institutes (NIST Report) 21 Agenda • Importance of U.S. Manufacturing • The Manufacturing USA Program • Economic Policy and Manufacturing 23 Free market is most efficient at allocating resources and serving a nation “As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value… By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than Adam Smith when he really intends to promote it. The Wealth of Nations (1776) 24 Federal role with Industry debated since founding of our nation “It is a truth as important, as it is agreeable, and one to which it is not easy to imagine exceptions, that everything tending to establish substantial and permanent order, in the affairs of a country, to increase the total mass of industry and opulence, is ultimately beneficial to every part of it.” Alexander Hamilton Report on Manufactures (1791) U.S. industry interests limited to the National Defense Thomas Jefferson, James Madison Emerging View of federal engagement – addressing “market failure” “In economic affairs, The Wealth of Nations (1776) popularized the "invisible hand," the idea that an individual who "intends only his own gain," is, as it were, "led by an invisible hand to promote…the public interest." “If the assumption is not correct, we need to reexamine our individual freedoms to see which ones are defensible.” “Freedom in a commons brings ruin to all.” Garrett Hardin The Tragedy of the Commons Science, December 1968 26 Examples of Market Failure • Monopoly • Public Goods – e.g. defense, “non rivalrous”, more than one entity can use the resource, and “non-excludable” – difficult/impossible to exclude anyone
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