February 28, 2012    Volume 19, No. 3

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Obama Will Unveil $1-Billion National Manufacturing Innovation Network Initiative Based On Germany's Fraunhofer Institute

By Richard A. McCormack

Tucked deep -- very deep -- within the Obama administration's Fiscal Year 2013 budget submission to Congress is a proposal to create a new $1 billion private-public partnership program aimed at commercializing and manufacturing U.S. developed technologies. The National Network for Manufacturing Innovation (NNMI), modeled after the German Fraunhofer Institutes, would be a joint effort between the Departments of Defense and Energy, the National Science Foundation the Commerce Department's National Institute of Standards and Technology. Its goal would be to "revitalize U.S. manufacturing. . . through a network of institutes where researchers, companies and entrepreneurs can come together to develop new manufacturing technologies with broad applications," according to the budget submission.

Each of the institutes "would have a unique technology focus." They would support the ecosystem of local manufacturers, develop skilled workers and focus on technology commercialization "by helping to bridge the gap from the laboratory to the market and address core gaps in scaling manufacturing process technologies," according to page 236 of the NIST budget request.

The proposal springs from this past summer's President's Council of Advisors on Science and Technology's (PCAST) recommendation that the United States launch an advanced manufacturing initiative that would be a "whole-of-government effort." The program would focus on partnerships "to support academia and industry on applied research on new technologies and design methodologies through precompetitive consortia that tackle major cross-cutting challenges." It was the first policy recommendation in PCAST's "Report to the President on Ensuring American Leadership in Advanced Manufacturing." It called for a program of between $500 million and $1 billion over four years. President Obama is expected to unveil the legislative proposal within the next three weeks.

The growing inability of the United States to transfer new technologies developed with federal R&D funds into commercial production that generates new innovation, jobs and wealth (taxes) is a growing and pressing concern.

The Department of Defense's involvement is also an essential part of the initiative, say those involved, since many of the most important advanced military technologies are no longer produced in the United States. A study released on February 22 by President Obama's National Science and Technology Council describes major gaps in U.S. military industrial capabilities. The study, "A National Strategic Plan for Advanced Manufacturing," lists a "sampling" of important defense technologies the U.S. is vulnerable to losing, including aircraft landing gear, large rotor disks for turbines, rocket engine parts, missile launch systems, unmanned aerial and ground vehicles, nuclear power components, fuselages, orbital vehicles, network routing and switching, optical data transport, advanced power electronics, composites and transmission conductors. The U.S. military is now completely dependent on foreign production for every phone, laptop and computer that it buys.

NNMI sponsors are considering whether to structure the program with incentives for companies to manufacture in the United States products that are generated from publicly funded R&D. High royalties or fees could be assessed on companies that move the manufacturing of such products offshore. There is also interest in making sure the program has active support from the Departments of Defense and Energy in order to build a strong management structure and have the political clout to get the program approved by Congress.

NIST spokeswoman Gail Porter said the program "would be hosted at NIST and would be a collaboration with NSF, DOD and DOE." The appropriation would be "a one-time investment crucial to revitalizing manufacturing. The idea is to establish a program of sufficient size that it can have real impact but not require ongoing appropriations in the way discretionary programs generally do," Porter added.

The budget request notes that other countries are "increasingly adept at technology transfer and scaling to production. They have focused on creating a more structured technology development process by partnering with industry. Partnerships that bring diverse organizations together to accelerate innovation for advanced manufacturing create a stronger innovation system and link those innovations more directly to domestic production capabilities."

The United States is suffering from a "market failure" in advanced manufacturing, according to the budget submission. "U.S. manufacturers individually are challenged to fund these technology development functions, and small manufacturers especially struggle with individually investing in prototyping and scale up of new technologies and potential products. This initiative would help provide the critical mass and knowledge base necessary to address these challenges."

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