Manufacturing Prosperity: 2018 Summit and Flagship Report

Event Recap

An actionable strategy for strengthening U.S. economic and national security

On Wednesday, June 13, MForesight hosted its third annual National Summit in Washington, DC. The event marked the release of MForesight’s new flagship report — Manufacturing Prosperity (PDF) — which identifies bold and actionable next steps for restoring American innovation and manufacturing capabilities.

For decades, many American manufacturing firms have had a common model of offshoring: “innovate here, manufacture there.”

Today, as many firms invest in overseas R&D, they’ve taken the trend a step further: “Invent there, manufacture there.”

This isn’t just an unfortunate economic trend. It’s a grand challenge to national prosperity and security.

But, thankfully, the challenge is surmountable.

Sridhar Kota, Executive Director of MForesight presents outcomes from the grand challenges roundtables.

Earlier this year, MForesight hit the road, conducting roundtables with thought leaders in cities across the United States, to define recommendations for public and private stakeholders to rebuild both innovation and production capacities. Building on more than 1,000 hours of discussion with these manufacturing experts, business leaders, and government decision-makers over the course of the Manufacturing Prosperity project, the 2018 Summit focused on three core questions for the future of U.S. manufacturing:

1) How to rebuild America’s “industrial commons” — our ecosystem of manufacturing expertise and production capacities
2) How to capitalize on U.S. national investments in R&D
3) How to ensure financing for manufacturing start-ups and scale-ups to restore domestic production

Professor Willy Shih of Harvard Business School opened the day with the Summit’s policy keynote, explaining a fundamental fact about the link between innovation and manufacturing: “Practice matters.”

Prof. Willy Shih, Harvard Business School, gave the policy keynote talk.

In producing products, we gain competitive advantages that are difficult to replicate. Failure to anchor production activities on U.S. soil leads to a loss of capabilities and creates serious societal costs — including the loss of innovation activities. Speakers, including André Gudger of Eccalon, underscored the importance of investing in our industrial commons: the research and production infrastructure, technical know-how, process-development skills, and practical engineering capacities that are required for producing next generation technologies, meeting national economic objectives, and to meet critical defense production.

Blake Moret, Chairman and CEO of Rockwell Automation, presented the technical keynote, describing the exciting prospects for U.S. manufacturing created by advanced production technologies and automation. Technologies such as machine learning, augmented reality, advanced networks, and sophisticated enterprise management systems will enable workflow optimization and product customization. Data from multiple sensors is being turned into insights to improve efficiency. But technology alone is not sufficient — we need people who understand the production processes, data flows, and control. He inspired the crowd with the Academy for Advanced Manufacturing (AAM), Rockwell Automation’s new training program to provide 1,000 military veterans with the skills needed to succeed in advanced manufacturing. Expanding and replicating AAM could help to meet a critical skills gap in U.S. manufacturing.

Blake Moret, CEO of Rockwell Automation, gave the technical keynote talk.

Summit speakers also emphasized the importance of more strategic thinking with regard to national research investment. Despite annual federal investments of over $140 billion in R&D, the nation’s trade deficits in advanced technology products still hover around $100 billion. The problem has many roots, but a key issue is straightforward: foreign governments and investors are taking advantage of promising results from U.S. basic research investments, building production capacity, and exporting products back to U.S. shores. As Bill Bonvillian of MIT and other experts emphasized, filling the gap in America’s innovation ecosystem will require a “rethink” of how we invest in engineering and manufacturing processes. It’s time to get creative and mobilize all our existing resources, including our universities and national labs, to bring good ideas beyond the laboratory.

Panelists talking about the Industrial Commons and manufacturing technologies.

Finally, experts throughout the day described a fundamental breakdown in how we finance new start-ups and scale-ups. Venture capital (VC) firms are supposed to play a crucial role in funding start-ups with proven technologies, helping to bring ideas to market and production to scale. Yet the nation’s VC firms are today overwhelmingly focused on software — which offers quick returns relative to hardware projects in manufacturing and energy with longer time horizons. Ultimately, the challenge is bigger than access to capital. As Sue Babinec of the Advanced Research Projects Agency-Energy (ARPA-E) emphasized, the necessities of spawning successful hardware start-ups and scaling up domestic production mean that we need to create not only supply but also demand. She and other experts at the Summit noted that we need to start thinking about new strategies, including government procurement policy.

So what’s the way forward?

Revisit assumptions. Run faster.
-Willy Shih

When it comes to restoring U.S. competitiveness, one thing is clear: the job is too big for any one sector or government agency. Manufacturing cuts across multiple disciplines and affects the missions of multiple federal agencies. To restore manufacturing leadership — and to restore the nation’s ability to capture wealth from innovation — we need to revisit assumptions, particularly about the role of the public sector in innovation. We need public and private stakeholders need to coordinate and think long-term.

MForesight’s new Manufacturing Prosperity report provides a roadmap for future action, identifying a range of critical next steps across several categories:

(1) investing in translational research and manufacturing innovation
(2) encouraging pilot production and scale-up for U.S. industry
(3) empowering small and medium-sized manufacturers
(4) growing domestic engineering and technical talent

Over the coming week, MForesight will release a series of posts with ideas and analyses on each of these issue areas.

The United States still has an extraordinary range of assets that can underlie success in modern manufacturing. These include: a large capital market, superior institutions of higher education, world-leading basic research, and a culture and economy defined by flexibility and adaptability.

But restoring manufacturing leadership will require something fundamental: a recognition of the importance of manufacturing and a focus on launching the industries of the future. At the summit, Rob Atkinson, President of ITIF, warned of a mistaken assumption among many key US policymakers and intellectual influencers — that the nation can survive and even thrive without manufacturing.

Panelists talk about funding for hardware start-ups and scale-ups.

The opposite is true. Whether for innovation, economic competitiveness, employment levels, or defense readiness, manufacturing matters for America’s future. Let’s continue the conversation on how to ensure the sector’s success.