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President's Science Advisory Council Will Recommend A $500-Million Advanced Manufacturing Initiative
By Richard McCormack
President Obama's scientific advisory panel will soon unveil a strategy aimed at reviving the U.S. manufacturing sector. The key feature of the recommendation from the President's Council of Advisors on Science and Technology (PCAST) is the creation of a $500-million Advanced Manufacturing Initiative run by the Commerce Department and involving other federal agencies. The program would fund "generic" industrial technology commercialization projects that would have widespread economic impact and create jobs. The effort would grow to $1 billion a year over four years.
On May 19, PCAST approved release of the strategy that was initially scheduled to be completed last August.
"We were quite shocked to see how quickly jobs have disappeared because of globalization," said manufacturing panel co-chair Eric Schmidt, executive chairman and former CEO of Google. "Unless we do something, this current loss of manufacturing jobs will continue apace."
Not many previous PCAST manufacturing recommendations have been adopted, however. In 2003, a similar PCAST panel on "Information Technology, Manufacturing and Competitiveness" recommended the creation of a similar "Bell Labs" type of government/industry/university research partnership aimed at keeping the United States at the forefront of high-tech electronics manufacturing. PCAST panelists at the time expressed concern that the U.S. innovation system was being compromised by the loss of manufacturing. "As manufacturing goes, so too will design and R&D," they said. No such Bell Labs type of organization was created or even considered.
Now a new PCAST study on manufacturing has concluded the same thing. "We have been losing ground not just overall but in the production of high-tech products including those that have resulted in many cases from U.S. innovation and innovations and associated R&D linked to manufacturing," said manufacturing panel chair Shirley Ann Jackson, president of Rensselaer Polytechnic Institute. "What we have discovered is that the benefit of co-locating manufacturing and manufacturing R&D and that split that people had thought about in the past [between innovation and production] does not have the kind of benefit one would think. We came to the conclusion that a very strong advanced manufacturing sector is essential to national security," Jackson told the May 19 PCAST meeting.
The PCAST manufacturing study committee found "structural market failures" in the U.S. economy that prohibit the commercialization and production of new technologies. For instance, within the area of nanotechnology, the United States is making significant investments that will impact numerous industries from energy to materials to pharmaceuticals. "But we don't have the infrastructure developed to transition these from the basic research discoveries to companies that are ultimately viable and can develop them commercially and build the economy of tomorrow," said PCAST member Chad Mirkin, professor of chemistry at Northwestern University. "We need to create ways of moving these discoveries past the Valley of Death. They look very promising but the structure we have in place now is not suitable to get them across the Valley of Death. Some of the ideas in this plan will help that process."
PCAST members who were involved in developing the recommendations were quick to note that they were not advocating an "industrial policy." Economist Rick Levin, president of Yale University, said it is not the government's place to be "picking winners and losers." But in the case of manufacturing American inventions, there is no platform for different companies within an industry to work together on the underlying technologies and market development necessary for large-scale commercialization and production. "That is what we are talking about here," said Levin. "There are areas of new technology where work on various kinds of pre-commercial generic approaches could benefit many firms that could then go on and utilize the results. It's no single firm that would undertake [that applied research] because they would not gain all of the benefits." He cited Sematech as a model for the new initiative.
There are programs within the federal government that might have a similar mission, but they are all scattered, said Schmidt. "People who might want to get help don't know who to talk to." It is important to have a central program within the government so that companies wanting to work together and with government and academic researchers "have somebody to go to who understands this and is your friend in the government," Schmidt added. "That could make a big difference in terms of people trying to put together these public/private partnerships -- trying to build these shared facilities and build the pre-competitive infrastructure."
PCAST also recommended lowering the corporate tax rate from 35 percent to at least the 27 percent average of other OECD countries, and improving and making the R&D tax credit permanent. "Tax policies really do matter and [companies] really do make plant location decisions and hiring based on tax and other incentives," said Schmidt. The U.S. tax code should also be changed to encourage the repatriation of overseas corporate profits on the conditions that they be invested in U.S. production.
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