Focus on Innovation is Key to Strengthening U.S. Manufacturing
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At Marlin Steel Wire Products, a robot (yellow) removes parts from another robot and performs operations such as welding, threading, and punching
Photo courtesy of Marlin Steel Wire Procucts
As U.S. manufacturing gets molded by the current administration's policy initiatives and the political rhetoric of presidential candidates, one thing remains clear: U.S. manufacturing needs to globally dominate if the United States is to remain an economic force. Although the U.S. is the world's largest manufacturing economy, with about 21 percent of global manufactured goods produced here, that foothold is being threatened by its own policies on taxes, energy, and trade. Many have fingered innovation as a target for strengthening U.S. manufacturing and keeping it globally competitive.
While Republican presidential hopefuls debate the best course to strengthen U.S. manufacturing, the Obama administration has also focused on manufacturing growth, putting forth policies to energize innovation and bring jobs back from overseas. And the National Association of Manufacturers (NAM) has established four major goals for economic growth and jobs through the strengthening of U.S. manufacturing. Along with goals to attract foreign direct investment, expand access to global markets, and expand the workforce, is the goal to become the world's leading innovators.
Just as innovation was cited as key in the re-shoring movement in a recent report by the Boston Consulting Group, NAM ranks innovation as the major reason the U.S. was propelled to its global leadership position in manufacturing—a title the country struggles to hold on to. Other nations are eager to take America's place and are establishing R&D incentives that are far more attractive than those offered by the U.S., according to NAM's "Manufacturing Renaissance" report.
The report makes three recommendations for retaining manufacturing strength through innovation. The first is to increase the current simplified R&D credit to 20 percent and make it a permanent part of the tax code. If this were done, then by 2019 the GDP would rise by 1.2 percent (or $206.3 billion) and 316,000 manufacturing jobs would be created, according to The Milken Institute's "Jobs for America" analysis. The second recommendation is to put a continued focus by the federal government on basic R&D, thereby expanding the knowledge base and spurring private-sector R&D as well as commercial development. The third recommendation is to support the modernization of the IP system by giving the U.S. Patent and Trademark Office (USPTO) the resources to process patent applications efficiently and promptly. With U.S. IP worth more than $5 trillion, strengthening the Office of IP Enforcement is critical. The continuing global trade in counterfeit products results in the loss of hundreds of thousands of U.S. jobs annually, according to the NAM report.
Last June, President Obama met with top academic and business leaders, known as the President's Council of Advisors on Science and Technology (PCAST), to issue a report that recognizes that investing in manufacturing innovation leads to overall economic strength for the country. The report recommends that $500 million be spent to promote innovation in advanced manufacturing. It also calls for a partnership between government, industry, and academia to identify the most pressing challenges and transformative opportunities to improve the technologies, processes, and products across multiple manufacturing industries.
On the recommendation of PCAST, the President launched the Advanced Manufacturing Partnership (AMP), a collaborative national effort aimed at "bringing together industry, universities, and the federal government to invest in the emerging technologies that will create high quality manufacturing jobs and enhance the nation's global competitiveness."
It's anticipated that investing in technologies, such as information technology, biotechnology, and nanotechnology, will support the creation of jobs by helping U.S. manufacturers reduce costs, improve quality, and accelerate product development, according to the report. Investments are being made in the following areas: building manufacturing capabilities in critical national security industries; reducing the time needed to make advanced materials used in manufacturing products; establishing U.S. leadership in next-generation robotics; increasing the energy efficiency of manufacturing processes; and developing new technologies that will dramatically reduce the time required to design, build, and test manufactured goods.
A recent report by global manufacturing consulting firm Booz & Company noted that currently, U.S. manufacturers provide about 75 percent of the products Americans consume, but that number could soar to 95 percent within a few years if business and government leaders take the right action, such as attracting skilled talent, simplifying and streamlining the tax and regulatory structure, and on-shoring production.
"If U.S. companies rush toward emerging economies without continuing to invest in their own country, American manufacturing could fall woefully behind in new plant and production technology, losing its innovation edge and making revival more difficult," warned Tom Mayor, senior executive for Booz & company, in a statement. "Fortunately, the U.S. has a strong base to build on, and manufacturing can reach long-term competitiveness by focusing on the right priorities."
Significant growth potential is attainable for companies that supply technology and training of employees aimed at increasing productivity, flexibility, and efficiency, which will in turn lower costs and make manufacturing competitive globally. In order for U.S. manufacturing to remain competitive, factories must make extensive use of automation, something that advanced, high-wage countries like Germany and Japan have been doing and the U.S. needs to get better at.
The cost of industrial robotics is dropping, and, according to the International Federation of Robotics (IFR), factories that make extensive use of automation are smarter from a productivity standpoint and a technology standpoint. According to IFR's data, the cost of industrial robots has dropped from $100k to just above $20k since 1990. Robotic installations continue to grow, especially in the automotive industry, which continues to implement new technologies and use new materials that will require new manufacturing lines. The use of robotics in other industries, such as food and beverage, pharmaceutical, and alternative energy, as with the production of solar cells, is also growing. As robotics safety and accuracy improvements continue, robotics will open up into new markets, even making its way into small companies who wish to stay competitive, according to the IFR.
Robotics orders continue to climb, according to the Robotic Industries Association (RIA), with the automotive OEM and component suppliers as the biggest customers, accounting for 53 percent of new orders. In 2011, metalworking and general industry were up significantly, with semiconductor/electronics/photonics segments up as well. The biggest application gains in 2011 were in assembly (97 percent), coating and dispensing (71 percent), arc welding (66 percent), spot welding (47 percent), and material handling (28 percent).
"The long-term outlook for robotics in North America remains very strong as more and more companies in all industries become aware of the positive impact robots have on productivity, quality, manufacturing costs, and time to market," said John Dulchinos, chair of RIA's statistics committee and president and CEO of Adept Technology, in a statement. The RIA estimates that about 210,000 robots are now used in U.S. factories, placing the U.S. second only to Japan in robot use. Only about 10 percent of U.S. companies that could benefit from robotics have installed any so far, according to RIA president Jeff Burnstein.
Marlin Steel Wire Products(www.marlinwire.com), a rising manufacturer of custom wire baskets and sheet metal fabrications in Baltimore, Maryland, is set to spend $5 million during the next several years on new robotics, said company president Drew Greenblatt. Since 2005, the company has grown 118 percent and robotics have played a big role in that growth, he said. "We've been non-stop putting the petal to the metal on investments and buying new equipment so that our guys have the best stuff so that when people come to us, we can say, 'yes,' every time," he said.
Instead of going into contraction mode and conserving cash, Greenblatt is committed to taking advantage of low-cost robotics with low financing rates and re-investing in his company's technology (see High-Tech Global Exporter Focuses on Quality, Engineering, and Quick Delivery). "I can really differentiate myself now from everyone that's out there already because they're not investing," Greenblatt said.
Building on Obama's expressed commitment to support innovation and American companies, his administration's Startup America Initiative—aimed at easing the way for high-growth entrepreneurs across the country—recently announced the winning startup companies of the "America's Next Top Energy Innovator" challenge.
Three winners were announced out of 14 participating companies. Iowa Power Atomization Technologies (IPAT), a startup company based in Nevada, Iowa, was among the three winning companies, and is run by materials science and engineering graduates and postdoc research associates Joel Rieken and Andy Heidloff. The company is using gas atomization technology developed at Ames Laboratory to make titanium powder with processes that are ten times more efficient than traditional powder-making methods, significantly lowering the cost of the powder to manufacturers. The powder form of titanium is easier to work with than having to cast the metal in molds, particularly given titanium's tendency to react with the materials used to form molds. Titanium's strength, light weight, biocompatibility, and resistance to corrosion make it ideal for use in a wide variety of parts—from components for artificial limbs, to military vehicle components, biomedical implants, aerospace fasteners, and chemical plant valves.
Another winner of note is Vorbeck Materials Corp., a start-up company based in Jessup, Maryland, that partnered with Pacific Northwest National Labs (PNNL) and Princeton University to commercialize the next generation of lithium batteries incorporating graphene technology. According to the company, this new innovation would realize major improvements in the performance of the batteries, enabling faster-charging, higher-powered batteries for transportation and consumer electronics. Batteries using graphene have significantly faster recharge rates than current rechargeable batteries, and smartphones powered by these batteries will be able to charge in 10 minutes and last for 24 hours of active use. Electric cars with a current range of 100 miles after 10-to-12 hours of recharge will have a range of 400 miles. Vorbeck is partnering with Hardwire LLC to integrate the new batteries into hybrid military vehicles and is currently collaborating with companies to incorporate the new technology in toys, tools, and commercial vehicles.
"These innovative startup companies are leading the way in creating new businesses based on discoveries made by our world-leading national laboratories," said Energy Secretary Steven Chu in a statement. "Through this challenge and the Obama Administration's Startup America Initiative, we are unleashing startup companies to do what they do best: create new products, new industries, and new jobs."
Innovation as Main Driver
Innovation is the main ingredient for prosperity, competitiveness, and job creation, according to nearly 3,000 senior business executives from 22 countries, all with direct involvement in their companies' innovation strategy, in a newly released GE report entitled "Global Innovation Barometer."
The study, commissioned by GE and conducted by the independent research and consulting firm, StrategyOne, revealed:
- 9 of 10 executives report economic crisis negatively impacts their ability to innovate
- Most surveyed view innovation as primary driver of economic growth, jobs, and quality of life
- Pro-innovation markets produce better economic results
- New model for innovation in the 21st century validated by those surveyed
- USA, Japan, Germany, and China still perceived as most innovative
Ninety-two percent of executives surveyed said that innovation was the main driver for a more competitive national economy, and 86 percent agreed that innovation is the best way to create jobs in their country. Higher GDP growth (5.19 percent average) was reported where businesses are most satisfied with the perceived political and social environment for innovation, but only a GDP growth of 2.32 percent was reported in those markets where businesses feel anxious or threatened by policies. Internal investments in innovation, from R&D budgets to pursuit of new products or business models, went down when the business community perceives a negative shift or deterioration of government policies that support innovation.
"Investing in innovation is a critical piece of global competitiveness and it comes in many forms--from traditional R&D to new products, markets, and business models," Comstock said in a statement. "Cutbacks today will have reverberations on economic and social progress for years to come, and may seriously hinder a company's ability to compete. Governments and businesses both need to do their part to shore up the fragile innovation ecosystem."
Seventy-one percent of executives that reported an unfavorable change in external policy or government budget priorities as a result of the global financial crisis also reported cuts in their own company's R&D spending. Globally, businesses reported the least level of satisfaction (42 percent) with the efficiency and coordination of government support for innovation.
Government-Inspired Growth and Innovation
One way the federal government encourages entrepreneurs and small businesses to expand their technological and innovative potential is through the Small Business Innovation Research (SBIR) program. This highly-competitive program enables domestic small businesses to innovate using federal R&D money. Recently, Morris Technologies, Inc. (MTI), a leader in additive-metal manufacturing processes and advanced technologies, received an SBIR grant for additive manufacturing research.
"The SBIR program is fundamental to our advancing additive manufacturing technology," said Lloyd Fields, VP of MTI's Federal Business Unit, in a statement.
Based in Cincinnati, Ohio, MTI has been on the cutting edge of manufacturing technologies since 1994. The company's heavy investment in research and development has enabled them to evolve into a global leader in additive-metal manufacturing processes and advanced technologies by offering new materials and developing new hardware. MTI also specializes in end-to-end product development, from engineering to prototyping to low-volume manufacturing (see Electron Beam Melting Machine Raises R&D Bar for Additive Metal Manufacturer).
In conjunction with Tinker Air Force Base, MTI will be developing over the next nine months, methodology, processes, and analytical tools required for final machining of metallic aircraft components produced using additive metal manufacturing. The goal is to reduce qualification costs and time versus conventional manufacturing methods.
"This is an important step toward helping the USAF resolve their diminishing manufacturing sources and material shortages through the use of additive metal processes," Fields said in a statement.
Morris Technologies is partnering with TechSolve, an Edison Technology Center providing advanced manufacturing processes, system services, and productivity improvement training. TechSolve is a nationally-recognized center in machining technology that delivers federal and state manufacturing small business assistance programs.
In another recent example of government support for innovation, Oxford Performance Materials LLC (OPM) received $1.2 million in funding for the purchase of new machinery from Connecticut Innovations, the state's quasi-public authority responsible for technology-based economic development. Through its BioScience Facilities Fund, Connecticut Innovations awarded the money to fund the purchase of an EOSINT P 800 selective laser sintering machine to manufacture medical implants, as well as to fund leasehold improvements at the company's South Windsor, Conn., facility.
Oxford Performance Materials (www.oxfordpm.com) will use the EOSINT P 800 machine to manufacture custom medical implants from the company's proprietary OXPEKK® products. These products are made from the material polyether-ketone-ketone (PEKK), which has properties, such as density, elasticity, and compressive strength, comparable to human bone. The company, which has traditionally sold its proprietary OXPEKK® products as raw materials, will now be able to provide value-added implant manufacturing in-house with the addition of the EOSINT P 800. Oxford will produce implants using additive fabrication, initially focusing on production of custom cranial and maxillofacial implants designed directly from a CT scan or MRI. The company will manufacture implants for the spine and for joint replacement, trauma, orthobiologics, bone stimulation, arthroscopy, and bracing applications, offering both standard parts and custom parts.
"We are exceedingly confident that this particular undertaking will further position our company and the state as leaders in cutting-edge biomedical and manufacturing technologies," said Scot DeFelice, president of OPM, in a statement.
The company has launched two products, OsteoFabTM for biomedical applications and OXFABTM for industrial applications, using the SLS technology with PEKK high performance thermoplastics (see A Blending of Materials and Additive Fabrication Puts Connecticut Company on Leading Edge of Innovation). "We have a really great material (PEKK) suitable for long-term medical implants and really unique structural properties, and we have this really advanced process technology where you do SLS with that type of really high-performance material," DeFelice said in a phone interview. The money from Connecticut Innovations paid for the entire SLS machine, and DeFelice said he is appreciative of when the government steps in for companies that have demonstrated ability. "I do feel government has a role and an interest," he said, adding that government "should absolutely be" playing a role "and doing it as intelligently as possible."
Innovation thrives when it is supported by the government, said Cathy Kirby, resource analyst for B + N Industries, an innovative product manufacturer that produces architectural panels, cable and rod organizational systems, and merchandising systems for premium brand retailers.
"When there is a strong economy, strong job growth, and when there's strong business investment, that's when innovation is at its peak," Kirby said, adding that when the economy is strong, businesses are more likely to innovate, especially in the area of "green" energy, which particularly interests her company.
Looking to partner with vendors who produce products that are environmentally friendly, such as a company that develops a new plastic alternative to PVC, B + N strives to leave a low carbon-footprint. Based in Burlingame, California, B + N (www.bnind.com) embraces the state's aggressive environmental laws and is proactive at further sustainability by partnering with local vendors within a 20-mile radius. The company utilizes freight-forwarding companies that have aggressive fossil fuel / carbon reduction policies.
Creating innovative products and partnering with innovative vendors is "critical" to the company's prosperity, Kirby said. "There's a lot of different plastics that get used, especially in our industry. But when we have a specific need, then we'll go and work with one of our vendor partners to develop a new material or a new application for a hybrid material that meets a specific tolerance or level of clarity or density for flexibility," she said. The company's design staff works hand-in-hand with vendors to develop new products and, as a resource analyst, Kirby said she is always searching for innovative suppliers that the company can work with to develop specific materials that impact the colors, textures, and durability of products.
Kirby recalled working with a plastics manufacturer that developed a more "optically-clear" plastic that really made the company's product stand out and become more visually appealing, she said. Another new product developed with a local vendor enabled the infusion of veneers. The entire product line was unique in that it significantly cut down on the company's supply chain carbon footprint because it "requires no physical presence within our facility," she said, explaining that B + N has taken the "progressive" step in taking the entire supply chain and pushing it through the supplier vendor even through packaging and shipping.
This efficiency, as well as the ability of the company's design department to collaborate with innovative sources, helps ensure that their products continually remain on the cutting-edge.
"Innovation is critical to us. The aspect of being an innovator, versus a trend follower, sets us apart considerably from the competition," she said.
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