Advanced Manufacturing in New England

Advanced Manufacturing in New England StrategiesStrategies iStockphoto for Tapping the Potential In when a fledgling United States was beginning to gain its global identity as an economic powerhouse, there was little question as to what was the driving that distinction. The New England region was the economic engine of the country, and the exponentially expanding need for manu- 1800s, factured goods fueled that engine. The demand for shoes, textiles, and other mass-produced goods seemed endless, and the manufacturing industry in New England flourished. by James Brett Nothing is constant, times change. Even though the high-yield and Mike Reopel manufacturing industry has shown longevity, very few people believe that the future of manufacturing in New England lies in producing low-tech goods in high volumes. Traditional manufacturing has been on the decline for years, and to remain competitive, a strategic approach is necessary, one that capitalizes on New England’s strengths. A mix of highly skilled and educated workers, engineers, business developers, and financiers makes the region uniquely suited to excel in advanced manufacturing.1 6 Fall 2010 A Position of Strength capitalize on economies of scale. By collab- Challenges Advanced manufacturing is character- orating in a network to design the prototype Five major factors have so far kept the ized by innovative approaches that create to a lower cost, the innovation clusters also advanced-manufacturing industry in New complex products and devices with a high can help solve the “first unit” problem (man- England from reaching its potential. standard of operational excellence. Rather ufacturing cost is highest for the production First, according to the study, is skill than profitability derived from the sheer of the first unit). Large volumes would level. Many advanced manufacturers report number of goods produced, advanced man- not be needed for the product to become difficulties filling well-paying jobs because ufacturing relies on technical expertise for cost-competitive because the starting point of the lack of a qualified and skilled labor profit, with production volumes typically would be more competitive. Essentially, force. In fact, the researchers found that quite low when compared with standard approximately 3,000 to 4,000 advanced- manufacturing. Perhaps more than manufacturing positions in New England Important to New England’s efforts were left unfilled in recent years. Residents’ to foster a strong economic outlook, the any other area in the need for employment is there. What is lack- advanced-manufacturing sector offers not country, New England ing is, in part, the training and tracking of only highly skilled jobs but also well-pay- the workforce into these high-paying jobs. ing ones. In turn, these jobs in specialized has an infrastructure To an unfortunate degree, the shortage industries strengthen the overall economy rich in knowledge of skilled labor in the advanced-manufac- and create new employment opportunities turing industry stems from perception. across a whole range of social strata. and talent. When people hear the word “manufac- In New England, it is estimated that turing,” many immediately think of the nearly 60 percent of manufacturing jobs can joint problem solving and shared efficien- “Four Ds”—dirty, dark, dangerous, and be classified as advanced manufacturing, cies allow advanced-manufacturing players declining. Parents and teachers tend not to meaning that advanced manufacturing has to do less and profit more. advocate careers in manufacturing. They now outpaced its traditional counterpart. A recent study commissioned by the fail to emphasize how a solid backing in Among the companies that host the jobs New England Council and conducted by mathematics and applied sciences can give are the multinational Raytheon, headquar- Deloitte Consulting LLP, provided strat- students a leading edge for the high-paying tered in Waltham, Massachusetts. Others egies for growth within New England’s jobs in advanced manufacturing. Also, most are smaller, emerging companies, such as advanced-manufacturing sector. And it pro- schools do not prioritize hands-on learning, Insight Tech-Gear, which is headquartered jected that, if a concerted effort to promote and that reduces opportunities for work- in Londonderry, New Hampshire, and is a and support the sector were made, approxi- force development in the sector. leading supplier of optical instruments to mately 8,000 new jobs with average salaries Second, advanced manufacturers them- the military. Between the scope and size of of $80,000 could be created in the region selves do not collaborate enough to develop these two businesses lie hundreds of similar each year. their employment base. They need to part- companies that contribute mightily to the ner more extensively with schools to do a New England economy. Perhaps more than any other area in the country, New England has an infrastructure rich in knowledge and talent. Few regions can come close to the depth or diversity. Advanced manufacturing thrives in a network, or “talent cluster,” consisting of scientists, researchers, precision machin- ists, engineers, business developers, and entrepreneurs. That kind of atmosphere results in enhanced innovation and problem solving and reduces learning curves that might otherwise impact the profitability of what is relatively low-volume production. Specific areas ripe with these concentrat- ed talent clusters include Merrimac Valley (Massachusetts)/Southern New Hampshire; the section stretching from New London, Connecticut, to New Bedford, Massachu- setts; and the Connecticut River Valley. Advanced manufacturing relies on a tight learning curve, innovation, and the ability of information and expertise to flow freely among stakeholders. Talent clusters and the centralized expertise in New England enhance that learning curve and iStockphoto Communities & Banking 7 better job of moving students into dynamic A Shared Solution advanced-manufacturing industry through- manufacturing careers. Hosting educational At a time when many people take a cau- out the region to capitalize on some of the site visits and participating more in career tious, and sometimes even cynical, view of untapped potential in the industry and to seminars would go a long way toward targeted government investment, the New advance the shared goal of job creation. rebranding advanced manufacturing as a England Council/Deloitte report is unique New England must not only protect its vibrant industry with good, challenging in its holistic recommendations. It advo- base when it comes to advanced manufac- jobs. The effort to track students into these cates for involving numerous stakeholders, turing, but it also must take steps to ensure jobs will not bear fruit overnight. A shift in not just the public sector. A comprehen- the industry’s enhancement and long-term mind-set has to come first. sive solution requires the private sector to health. The high-paying regional jobs at Third, state governments are failing to undertake proactive educational outreach, stake—both existing and potential—speak make even relatively modest investments to an investment of time and resources, and to the importance of a concerted effort to spur the advanced-manufacturing sector. rebranding. Selected tax incentives and a ensure that the full viability of the sector can Many state manufacturing tax incentives relatively modest loan program are only one be achieved. were created in the 1950s and have not part of a larger effort to create a substantial kept up with the times. A concerted effort James Brett is the president and CEO of is needed to determine best practices, help the New England Council. Mike Reopel is leverage targeted financial assistance from Cross-border a principal at Deloitte Consulting LLP. They the federal government, and identify which collaboration needs are based in Boston. tax policies will allow advanced manufacturing to create and retain high-quality jobs. strengthening. New Endnote Fourth, loans can be hard to get for England state 1 This article is based on the 2009 study, “Reexamining businesses trying to expand. Advanced advanced manufacturing in a networked world: manufacturers, particularly smaller ones, are governments need to Prospects for a resurgence in New England,” http:// often hampered by limited access to capital. do more to work www.newenglandcouncil.com/reports.php. Sector-specific small business loan programs could help advanced manufacturers reach together across their full potential on a faster track, creat- state lines. ing job opportunities in a still-struggling economy. infusion of jobs—advanced-manufactur- Finally, cross-border collaboration ing jobs and others— into the economy. needs strengthening. New England state To the report’s authors, that is the essence governments need to do more to work of “smart government”—a strategic invest- together across state lines. They should have ment in an underutilized industry of high their economic development departments potential and collaboration with the private create an inventory of advanced manufac- sector to leverage the greatest number of turers to facilitate partnership-building jobs possible. efforts throughout the region. The New In the new economic reality, New England states need to start viewing their England must take a thoughtful and cal- neighbors as manufacturing partners, not culated inventory of assets—educational, as competitors. Individual states will be financial, engineering, and knowledge-based stronger as part of a clearly identified, col- assets—and leverage those assets to achieve laborative, advanced-manufacturing region a strategic objective. The New Eng- than if they go it alone. land Council plans to continue its work with elected officials and leaders in the This Communities & Banking article is copyrighted by the Federal Reserve Bank of Boston. The views expressed are not necessarily those of the Bank or the Federal Reserve System. Copies of articles may be downloaded without cost at www.bos.frb.org/commdev/c&b/index.htm. 8 Fall 2010.

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