Workforce Education and Advanced Manufacturing

This chapter explores the manufacturing workforce. Data indicates a growing need to upgrade the manufacturing workforce to higher levels of skills, which appears to be a prerequisite for advanced manufacturing. Indeed, the Advanced Manufacturing Partnership (AMP) reports placed much stress on workforce training and education, at both the skilled worker and engineering levels. The manufacturing institutes appear to be positioned to help fill the gap in U.S. labor markets for high-skill training. The Lightweight Innovations for Tomorrow (LIFT) institute in particular appears to be developing models for workforce training, systematically engaging state governments and firms in its core states in new training program elements, with programs linked to secondary schools, community colleges, participating employers, and area universities. LIFT sees that workforce training programs are critical for advanced manufacturing technology dissemination, not only training for the sake of training. It is a key way the institutes can scale their new technology developments.

The Backdrop: Manufacturing’s Economic History

This chapter provides an overview of the critical developments in U.S. production history. It begins with the lessons from James Watt's famous “walk on the Green” of Glasgow. The chapter then turns to the nineteenth-century interchangeable machine-made parts paradigm in the United States, nurtured through early War Department technology policy. This technology advance escalates through the nineteenth century into the snowstorm of true mass production, leveraging the scale advantage of the world's first continent-sized market. The story then turns to the defense innovation system. The defense innovation system subsequently birthed the foundational technologies behind the information technology innovation wave that evolved through the second half of the twentieth century. Importantly, this defense innovation role, which had its roots in production, by the mid-twentieth century had shifted almost exclusively to technologies, not the production systems behind them. This innovation/production disconnect had dramatic subsequent effects on U.S. manufacturing.

Introduction: Social Disruption, Legacy Barriers, and Innovation Challenges in U.S. Manufacturing

This introductory chapter describes how the manufacturing sector in the United States experienced significant disruption in the first decade of the twenty-first century. The number of manufacturing jobs in the United States declined by 5.8 million between 2000 and 2010. This economic disruption resulted in growing social disruption and income inequality. Given these new realities, an effort across industry, federal and state governments, and universities materialized in the wake of the Great Recession. This effort sought to bring strong innovation back to U.S. manufacturing. Known under the broad brand of “advanced manufacturing,” it is the focus of this book. There are five basic models for the dynamics that drive innovation in different settings: the innovation pipeline, induced innovation, the extended pipeline, manufacturing-led innovation, and innovation organization. These provide a framework for approaching the twin issues in U.S. manufacturing of furthering innovation and creating jobs.

Start-up Scale-up: Addressing the Manufacturing Challenge for Start-ups

This chapter looks at a new but related problem: start-up scale-up. There is an additional and compounding innovation gap problem affecting start-ups that need to manufacture their products. While the advanced manufacturing institute model detailed in the previous chapter addresses innovation at large, midsize, and small manufacturing firms, to date it has largely focused on existing firms and has not encompassed new entrepreneurial start-ups. These start-up firms face not only an early-stage technology development gap, but also a production scale-up gap. Start-up scale-up is a problem in general, and particularly for manufacturing start-ups. This third category of firms, then, comprises the start-up and entrepreneurial firms that manufacture products based on their own new innovative technologies, typically emerging from university research centers.

Economic Perspectives on Manufacturing

This chapter examines manufacturing in the early foundations of economics before moving into a relatively short, but admittedly complex, application of both economics and trade theory to the manufacturing sector. The review focuses first on growth theory, including New Growth Theory and its efforts to better model growth. Because these models remain imperfect, manufacturing's role is still not adequately understood. The discussion then turns to trade theory. New Trade Theory has led to a focus on the innovative and competitive capabilities of firms; the weaknesses of smaller firms in developing innovation capability have affected the manufacturing sector overall. However, these developments in growth, productivity, and trade theory and their application to manufacturing have been largely missed by mainstream economics. The analysis then turns to a discussion of some of the shortcomings of mainstream economics as it has applied to manufacturing.

International Competition and the Decline of U.S. Manufacturing

This chapter reviews the U.S. manufacturing decline in the first decade of the twenty-first century, examining this from a series of dimensions, including the critical relationship between the production stage and the other parts of its innovation system. The profound challenge to U.S. production in the 1970s and 1980s from Japan's quality manufacturing model and its accompanying technology and process advances, which dramatically disrupted U.S. production practices, is the first issue that must be understood. The chapter then explores the rise of China's manufacturing economy; its innovative new production scale-up approaches knocked the United States into second place in world manufacturing output in a remarkably short period. Accompanying that rise was a parallel and related rise in distributed production by U.S. firms, with outsourcing of production stages and corresponding issues of “innovate here/produce there,” which could lead to “produce there/innovate there.”

Conclusion: Manufacturing Matters More Than Ever

This concluding chapter argues that the larger issue facing the United States is that the social disruption will not just fade away. The decline of manufacturing was a wild card factor that spelled growing social disappointment and corresponding social disruption. The outcome of the 2016 presidential election brought this reality home to all—it was in significant part a postindustrial backlash. The United States can ignore manufacturing and allow it to continue to erode, but the consequences to U.S. innovation capability and therefore to economic growth appear to be problematic. It also now appears that there are consequences for the nation's social fabric and democratic values as well. Ultimately, a new strategy of innovation-driven advanced manufacturing offers one pathway out of America's economic problems.

The Advanced Manufacturing Innovation Institute Model

This chapter reviews the centerpiece of U.S. advanced manufacturing policies to date, the advanced manufacturing institutes. While the United States originated the advanced manufacturing approach, it is facing intense competition in this area as numerous other nations pick up the model; it needs these manufacturing institutes to avoid falling behind its industrial competitors. A key goal of the “manufacturing innovation institutes” was to fill a gap in the U.S. innovation system for manufacturing by creating a space where advanced manufacturing could evolve through a collaboration between industry (both small and large firms), universities, and government. To be successful, the institute model needs to continue to find technology areas with application across many industries and in industries with long supply chains that may be slow to take up technology advances.

Manufacturing and the Future of Work

This chapter examines a role for manufacturing in addressing the issue of “secular stagnation,” a concern about a decline in innovation, growth, the middle class, productivity rates, and related investment. Like agriculture, manufacturing has high productivity levels, so output can continue to increase even as employment falls. Historically, manufacturing has maintained high productivity gains; according to the Bureau of Economic Analysis, between 1997 and 2015, the real value added of manufacturing increased by about 40 percent. Although there were measurement problems with this estimate, it suggests the productivity scaling factor that manufacturing can provide for an economy. Moreover, a substantial investment in advanced manufacturing offers an opportunity to directly address the underlying trend driving working-class unemployment, wage problems, and prime-age worker unemployment.

Advanced Manufacturing Emerges at the Federal Level

This chapter looks at how the new policy focus on advanced manufacturing developed following the Great Recession. Barack Obama faced the Great Recession with a 10 percent unemployment rate. In particular, the auto industry had collapsed, smashing a large part of the manufacturing supplier sector. Government efforts to return to tolerable growth levels were relying almost exclusively on short-term stabilization policies. Neoclassical economists were at the helm, pressing their menu of fiscal and monetary plans to coax the price signals that could restore investment to nurture positive rates of growth. The problem was that these stabilization policies were limited in their ability to offset long-term underinvestment in the economic assets and factors that create the larger growth multipliers needed. For a significant period, this longer-term underinvestment had led to declining U.S. competitiveness and slower rates of growth. In other words, short-term stabilization was simply not enough; the problems were deeply structural and required a structural response.