“The U.S. continues to be very innovative, but somehow downstream there seems to be a break,” said Olivier de Weck, an associate professor of aeronautics and astronautics and engineering systems at MIT, and executive director of the ongoing MIT Production in the Innovation Economy (PIE) study group, which is analyzing the state of American manufacturing.
That is, while many observers still find the condition of lab research in America to be robust, there seems to be a gap between the fundamental research being performed and the volume of technologies emerging as a result, a point noted by many participants during the conference — the sixth annual manufacturing summit held by MIT’s Laboratory for Manufacturing and Productivity.
For this reason, “we need to start thinking about manufacturing in a new way,” de Weck said. For instance, he noted, American manufacturing in the 21st century is more likely to involve advanced materials synthesized in labs than raw materials found in nature. But along with that evolution, as many at the event suggested, the United States needs to generate a greater supply of high-skill technical workers in new modes of manufacturing.
This reorientation may be necessary to help revive not only manufacturing, but also the larger economy and the job market. Manufacturing jobs now account for about 10 percent of U.S. employment, compared to about 30 percent of jobs in 1950. And while a much larger percentage of corporate profits now reside in the financial services sector, that shift has come at the same time as the country’s biggest economic slump since the 1930s.
“Pushing money around doesn’t create value,” said David Rowatt, a research director at the oilfield services firm Schlumberger. “We need to make stuff. That’s an important skill that we cannot lose as a country.”
View from industry: The razor’s edge
Thursday’s conference sessions featured a variety of industry leaders discussing the circumstances in which their firms have either kept manufacturing jobs in the United States or moved them abroad.
Hans-Peter Schaefer, a longtime executive at Gillette and Procter & Gamble, recounted how vital manufacturing has been to Gillette’s success, since it needs custom-built equipment to make razors; some company tools, he noted, can test 730 product pieces per second. The ability to manufacture well has been an essential part of the firm’s edge in the market.
“Behind a breakthrough product, there is usually a breakthrough in manufacturing,” Schaefer noted.
Still, when Procter & Gamble bought Gillette in 2005, the firm’s financial unit asked if it would be more profitable to sell its South Boston factory — which occupies a valuable chunk of real estate — and move production to a cheaper location. As Schaefer recounted, the end decision was to keep the plant intact because the location was good for attracting talent. However, lower-end activities, such as packaging, are now located globally: “The high-tech stuff is produced in Boston and Berlin, and packaged everywhere in the world,” he added.
Keeping factories in the United States has multiplier effects for the economy: Schaefer estimated that 8.6 other jobs are indirectly attributable to every manufacturing job that exists, although other estimates vary. But the pattern of keeping high-skill jobs in the United States while lower-skill positions move abroad is likely to continue. “We have not always found the right quality and quantity of engineers” in the overseas workforce, said Schaefer.
Ted Sisko, a vice president at Siemens, added that his firm has about 3,000 job openings in the United States for skilled workers that it cannot fill. By contrast, he added, “once a [lower-skill] job goes away, don’t expect it to reappear.”
For this reason, new technologies seem most likely to create a virtuous cycle of economic growth and domestic job creation. Rowatt said such technologies could increase the recovery rate of oilfields — the amount of oil present that is actually extracted — from its present average of about 35 or 40 percent to upward of 60 percent. Advanced materials, he said, is the “single biggest area” for technological improvement. “We don’t know how to manufacture and process these materials on an industrial scale,” Rowatt said.
Moreover, Rowatt added, “there is very strong rationale in having research and development co-located with manufacturing.” Essentially, the presence of engineers, managers and skilled workers involved in the development of products can help their manufacture occur more efficiently.
America’s next top model
Still, the process of actually training high-skill workers while promoting innovation is hardly straightforward. The federal government has been exploring new ways of giving a boost to the innovation-based economy, principally through the White House’s new Advanced Manufacturing Partnership (AMP), formally launched by President Barack Obama in June, whose steering committee is co-chaired by MIT President Susan Hockfield and Dow Chemical Co. CEO Andrew N. Liveris.
Charles Thorpe, an assistant director of the White House’s Office of Science and Technology Policy, outlined AMP’s activities, saying that the group is working on four fronts: identifying emerging technologies; examining policies that can help innovation; improving education practices; and finding ways to help firms share infrastructure and facilities in cases where capital costs are problematic.
“We need to figure out a new permanent model” for linking innovation to manufacturing, Thorpe said.
In the meantime, universities with a strong presence in technology are actively looking at ways to encourage their students to enter manufacturing fields. Among Friday’s talks, professors from Georgia Tech, the University of Michigan and Aachen University in Germany outlined their manufacturing-training programs.
David Hardt, the Ralph E. and Eloise F. Cross Professor of Mechanical Engineering at MIT, and Brian Anthony, a research scientist in MIT’s Department of Mechanical Engineering, detailed a program they founded that has granted a new degree — the master’s of engineering in manufacturing, or MEngM — to MIT students since 2006. The yearlong program places students in group-learning environments, includes an internship with a firm and provides grounding in a systems approach — characteristic of MIT — to analyzing manufacturing methods.
To date, most of the graduates of the MEngM program have been foreign-born. “Non-U.S. students have found the degree more relevant than U.S. students so far,” Hardt said. In time, he thinks that will change, because of manufacturing’s long-term importance. “This is a big part of the economic activity of the country and the world,” he said.