A New Book
On Lean Manufacturing
From Manufacturing &
Technology News
SECTION ONE (of three): Edited Transcript From The Public Session Of The Federal Government Sponsored "Competitiveness Summit" Held Dec. 6, 2005, In Washington, D.C.
David Sampson, Deputy Secretary of Commerce: I am worried about a growing risk aversion in our economy. Too often Washington creates a culture that demonizes failure. Would today's political environment sustain high-risk programs over an extended period of time such as the Apollo Program? I believe that as long as we incentivize risk-takers, we'll be okay. We must create an environment where failure is not fatal.
ŠI say, never bet against America. If you're looking for a safe bet, continue to bet on American entrepreneurs, bet on our 200-year history of innovators. Americans can compete with any nation the way we always have, as long as we are on the frontier of innovation. And there are compelling reasons to believe that the American economy continues to lead the way in innovation in the 21st century....
Rich Templeton, President and CEO, Texas Instruments: ...We've had a lot of reports published, it's time to translate a lot of the reports to actions. When we look at the challenge as a company, we really break the call to action down into three very simple areas. First is increased federal investment into universities for basic research, specifically for physical sciences and engineering, an area that has lagged for 30 years now. Second is an improvement in math, science and engineering education. And then lastly in the areas of immigration policies, if we are going to compete on a global basis, we need to attract and retain the best minds in the world.
My best specific example of the power of research and why you will hear us talk consistently about the importance of investment into research is that several years ago we had a choice to make of where to invest in a next-generation wafer manufacturing plant. In our industry that is likely to be a $3 billion if not a $4 billion decision when we get done equipping that facility. If you look around the world there are many countries from Singapore to China to other nations that are very aggressive in the financial rewards and tax incentives that would encourage us top locate on those countries. We chose a suburb of Dallas for really a very simple word and that's "research." Research in this particular case means access to our researchers from a time-to-market perspective, and secondarily that we had great leadership out of the state of Texas to invest $300 million into the University of Texas at Dallas to be able to build the long-term innovation ecosystem that we need to have around the communities that we operate in. That is a very tangible example of the power of research. We need our people here; We need the great leaders here.
James Berges, retired president of Emerson Electric and Summit Co-chair: ...My interest lies in the area of expanding this innovation talent pool. It's alarming to me to realize that 50 percent of our scientists, engineers and mathematicians who studied those disciplines as baby boomers are going to retire in the next 10 or 12 years or so, and we are not replacing them at a fast-enough rate. Our graduation rates of bachelor's degrees in those disciplines are just too low. Only 11 percent of our undergraduate degrees are in these technical areas, compared to 23 percent for the rest of the world and 50 percent of the undergraduate degrees that are awarded in China annually. This is a serious issue that we're going to be facing in the next few years. We can't have the innovation that we expect to have if we don't have the scientists and engineers in place to do it.
I think the biggest issue that we face relative to that is not necessarily our capacity to train these folks, but to get young people interested in careers in science and engineering. Business Week reported several weeks ago on a survey that Raytheon had actually done of middle-school students and found that 84 percent of these students would prefer to take out the garbage, clean their room, eat their vegetables or go to the dentist rather than sit down and do their math homework. That's a pretty telling statistic.
Young people today view manufacturing, which is really where the engine of our innovation in this country is, in terms of the four D's: you know, dirty, dark, dull and dangerous. We need to get them interested.
I think the National Association of Manufacturers has hit on something. They've got a terrific program called "The Dream It, Do It Careers Campaign" that is a private-public sector cooperation on a regional basis to try to interest young people in careers in science and in engineering. There's a pilot program going on in Kansas City right now. There are edgy advertisements that attract teenagers, that drive them to Web sites where they can see exciting careers in manufacturing and in science. They can see postings of real jobs on Monster.com in their areas so they can get a flavor for the kind of money they can make and the kind of careers they can have if they focus in these areas.
The early results are very good. They've had 130,000 unique visitors to the Web site. The people are spending an average of seven minutes when they go there, so they're spending time trying to understand what's going on. And more importantly, the enrollment in technical fields in the local community college [is] up 35 percent in the first year of the campaign. There's four other regions in the country that are about to launch campaigns, and another 40 that are investigating it...
Craig Mundle, Senior VP and CTO of Advanced Strategies and Policy, Microsoft: The last five or six years I've spent a lot of time traveling around the world, particularly to places like China, India and Russia. They have a great focus and, frankly, a culture that tends to promote science and engineering education to a degree that we've lost in the United States. When you visit those places and in particular build development facilities in those places, you begin to realize not only the intensity with which those kids study and come to work but the degree that there are very large numbers of them. I think one of the things that people in the United States don't fully understand is [power] of the law of large numbers. We're the fourth-largest population as a nation, but we're dwarfed by the combination of the populations of China and India alone. To the extent that intelligence is essentially uniformly distributed in the gene pool, there's going to be a lot of people over there who are going to be high-quality engineers and scientists. Those countries are very focused now on moving from being a manufacturing economy to an invention-based economy, a knowledge-based economy. That represents a transition that will be a big challenge for the United States.
The last thing that we really have to focus on is the challenge that is facing us because the world is very uneven relative to the intellectual property regimes. A very, very large percentage of the valuation of U.S. business is now based on its ideas, and our inability to protect and to monetize those ideas on a global basis is going to become a larger and larger problem and that will require significant focus.
And the last comment I'll make is the country really has to be careful not to deceive itself in some of the basic measures we use for goodness. Back in the era of the Apollo Program, I don't know the exact numbers, but if you measured our basic R&D investment in the country as a percentage of GDP as opposed to a percentage of discretionary spending, you'd find it was a lot higher in absolute terms. We've really seen entitlement programs and other forms of spending in the last few decades eat up a lot more of the total budget, the federal budget in particular. So while we can see an increase in spending from an R&D point of view as a percentage of discretionary spending, I think if we really look to be competitive globally we're going to have to return to an absolute level of spending that is comparable to what we did when we put a man on the moon.
Norman Augustine, retired CEO of Lockheed Martin Corp. I'll have to take the broader view from the studies that I've had the privilege of working on. Several of my colleagues from the Academies study [entited "Rising Above the Gathering Storm"] are here this morning. I think the logic is quite straightforward: something profound has happened to the world, and it's been called the "death of distance." The parties to a most transaction no longer need to be in close physical proximity. The customer can be in America, but the factory could be in China, the research lab in India, the accountants in Brazil, and you can go down the line. We're not just talking about manufacturing jobs, we're talking about jobs reading X-rays; we're talking about accounting, engineering, basic research, can be done anywhere in the world. And that means that if people elsewhere in the world are willing to work for a tenth or so of what they are in the U.S. in many cases, we have to have some other edge, and that edge.
The "research" issue is so closely coupled to the "people" issue because if you don't have good people in research, you obviously don't do well in research itself. The basic story of research in the U.S. in the last five years is we have done very well at increasing our support for research in the health sciences -- in the biological sciences. In contrast, for the last 20 or 30 years we've largely neglected research in the areas of the physical sciences, essentially chemistry and physics, mathematics, computer science and engineering. We've basically been flat or disinvesting. It's in those fields, though, that we underpin much of the progress that's made in the biological sciences, and thus we've been eating our seed corn. Today of our researchers, 59 percent of the people getting Ph.D.'s in engineering at American universities are foreign students. They've made huge contributions. Fewer are coming, more are going home. We no longer can rely so heavily on that one source, although it's still an important source to us.
There's the issue of funding of basic research, in our universities primarily. That's something that's been largely done by the government in the past. The government has leveled off in the areas I've described, declined as a percentage of GDP. Industry is doing less in the area of basic research because of the pressures of the marketplace. I could tell stories, I'm sure many of us could.
We can compete, we have a great opportunity, we just have to wake up and do it. And it means investing more in research, investing more in our people, changing the environment in which we innovate. If we do those things, America can compete. If we don't, I'm not at all optimistic about jobs, national security, and the things that go with it.
Ronald Bullock, President, Bison Gear & Engineering Corp.: We're a mid-sized manufacturer, about 200 employees, and one of the things we need to do is to reduce the risk of high-risk innovation at small- and medium-sized manufacturers. President Bush has directed through Executive Order 1394, a program in the Small Business Innovation Research grants to target manufacturing. We benefited from that this year with a grant. We're developing a high-efficiency electric motor drive that could have tremendous payback, 25 percent of the energy that is consumed in the United States is electric motors, and if we could increase the efficiency by 30 percent, we figure we could shut down 50 energy-generating plants. So that program is important. We also need to be looking at hitting singles and doubles as well as home runs with programs like the Manufacturing Extension Partnership that drives productivity and focuses on processes. Without programmed 7 to 9 percent productivity improvements each year, small- and medium-sized manufacturers will be out of business.
Shirley Ann Jackson, President of the Rensselaer Polytechnic Institute: What one is seeing at research universities [is] a couple of things that validate what we've heard from the business sector. One has been a dropoff in the flow of talent from abroad, and that means we have to have an increased focus on educating our own. But from the specific perspective of basic research, the federal funding of basic research has fallen off. Even though there has been a tremendous growth in the funding in the life sciences, in fact it has leveled off. However, people do understand that many of the most important research problems are inherently interdisciplinary. That in and of itself makes the funding of research across a broad disciplinary front very important. Secondly, research requires infrastructure, so there is a need for an increased focus on supporting high-end infrastructure in universities. And third, there needs to be a continued focus for the support of graduate education in all of these fields. We ourselves have a specific focus in biotechnology, but we call it "biotechnology and interdisciplinary studies" because we see an important focus for human health and welfare, for energy progress, etc., at the nexus of the life sciences with engineering, with physical and computational sciences. And so I think that in and of itself tells us where we need to go.
Dana Mead, Moderator, chair of the Massachusetts Institute of Technology Corp.: The same thing has happened at MIT. Nearly 50 percent of our engineering faculty is involved in life sciences. There's a huge convergence here of what we think as a classical engineering and science subjects and studies with the new sciences in life sciences. Which gets me to a point of this meeting. We're asking for additional research with a focus on those classical sciences, mathematics, engineering the physical sciences. Why? Because we see not only that they're critical to the areas where they focus generally and always have, but also to supporting our competitive position in the life sciences. If you talk to the biologists, what do they want? They want computational science. So they go over to the computational science department. If you talk to the genomics guy, what do they want? They want the same from the other side of the house.
Business support of research has shifted to the development or the applied side and away from the basic research. Is that true? Or what's going on here?
Additional Comments From
- Craig Mundle, Senior Vice President and CEO of Advanced Strategies and Policy, Microsoft:
- Mark Wrighton, Chancellor of Washington Univ., St. Louis:
- Mary Sue Coleman, President, Univ. of Michigan:
- Della Williams, President and CEO of Williams-Pyro Inc.:
- Rep. Don Manzullo (R-Ill.)
- Martin Jischke, President, Purdue University:
- Kellie Johnson, President, Ace Clearwater Inc.
- Tom Vise, Vice President of Business Development for Northrop Grumman
- Thomas Cech, President, Howard Hughes Medical Institute:
- Gary Pan, President and CEO, Panacea Consulting Inc.
- Dick Wilkey, President, Fisher-Barton Inc.
- Roy Vagelos, ex-Merck CEO
- Mary Vermeer Andringa, President and CEO, Vermeer Manufacturing Co.
- Alan Merton, President, George Mason University:
- Paul Yarossi, President HNTB Companies
- Lou Anna Simon, President, Michigan State University
- Fred Keller, Chairman, President and CEO, Cascade Engineering
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