ATP FOCUSED PROGRAM:

               Computer-Integrated Manufacturing for Electronics

                       FY 1994 NIST Funding: $20 million
                  Total FY 1994-98 NIST Funding: $105 million

Potential for U.S. Economic Benefit

     The U.S. electronics industry knows well that strong manufacturing
     capabilities confer significant competitive advantages. During the
     mid-1970s and 1980s, superior manufacturing performance helped
     foreign competitors to build sales and market share at the expense
     of the industry, one of the nation's largest and its biggest
     manufacturing employer.

     Powerful information technologies, dynamic markets, and changing
     production economics have set the stage for a major transition in
     manufacturing practices in the fiercely competitive international
     electronics industry. For U.S. firms, these developments present
     opportunities to build flexible manufacturing capabilities that
     complement their flair for innovation and capitalize on the
     nation's strengths in software engineering.

     Capabilities enabled by truly computer-integrated manufacturing
     operations -- the ultimate objective of the Advanced Technology
     Program's focus on Computer-Integrated Manufacturing (CIM) for
     Electronics -- can dramatically reduce lead times, trim production
     costs, and greatly increase versatility in production. These
     performance improvements will enable U.S. electronics companies to
     accelerate product development, quickly diversify product lines in
     response to changing customer demands, and efficiently produce
     small batches of products.

     Many companies in the $310 billion U.S. electronics industry have
     developed their own CIM systems. These one-of-a-kind systems have
     been built principally with customized software, which typically
     accounts for more than half of a company's CIM investment. While a
     number of these firms have realized significant operational and
     business benefits, CIM systems require considerable expenditures of
     money and time, and they are not easily changed, a liability in the
     volatile electronics market. Moreover, modifications and
     enhancements necessitate sizable additional investments in
     integration software.

     In 1993, U.S. electronics firms spent an estimated $222 million on
     software for integrating shop-floor production. About 70 percent of
     that amount went for internally developed software customized to
     their operations. The remainder, about $66 million, went for
     independently developed software products, which are limited
     largely to a few general applications with sufficiently large
     markets.

     Manufacturing improvements achievable with CIM could be realized
     much more rapidly and cheaply if the electronics industry had a
     common framework, or architecture, for integrating databases,
     communications networks, and software-based production
     applications. The critical linking, coordinating, and controlling
     elements of integrated-manufacturing operations, these software
     components could be designed as interoperable, modular units,
     supplied by independent software developers.

     A successful industry-led effort to develop and implement a
     flexible software-based CIM framework will deliver several
     significant economic benefits. First, a widely adopted framework
     would increase the base of suppliers of electronics-manufacturing
     software. If manufacturers buy 80 percent of their
     integrated-production software commercially -- as compared with
     about 30 percent today -- the market for these products would grow
     to about $1 billion by the year 2000, given the double-digit
     annual growth in electronics industry spending for shop-floor
     production software.

     Second, the availability of interoperable software applications
     should improve the manufacturing performance of U.S. electronics
     firms, while reducing the risk of investing in new CIM systems. By
     enabling efficient re-engineering of manufacturing operations, a
     widely adopted integration framework can reduce factory start-up
     times by 30 percent and halve the time and cost now required to
     bring new electronics products to market. Industry-wide, these
     improvements would translate into significant increases in market
     share and total sales. Even if only 10 percent of U.S. electronics
     firms adopted the CIM framework, gains in sales revenues could
     exceed $200 billion after seven years.

     Finally, most elements of the CIM framework, as well as the
     associated technologies developed as a result of this program, will
     be directly applicable to the automobile, aerospace, and other
     domestic manufacturing industries. Representatives of major
     automotive and electronic firms agree that there is significant
     overlap of technical issues to be addressed in building CIM
     frameworks for their respective industries.

Technology Challenge

     Carried out over a span of about five years, the program aims to
     develop an increasingly more capable and sophisticated CIM
     framework for integrating shop-floor production functions in
     electronics manufacturing. Focusing initially on single factories,
     company researchers and their collaborators will develop methods
     for ensuring seamless integration and interoperability of software
     applications developed by different suppliers. Specific emphases
     will include computer-based simulation and emulation of factories
     and development of modeling and system-design tools.

     The next phase of efforts will focus on configurability the ability
     to fashion new combinations of existing and future
     manufacturing-system components and processes to make new products,
     enhance existing ones, or improve manufacturing performance.
     Composed of interchangeable components, factories would achieve the
     equivalent of the "plug and play" compatibility of personal
     computers, which permit users to build their own tailor-made
     systems.

     Work in the final phase will aim to increase the intelligence of
     manufacturing operations, enabling factories to adjust operations
     automatically to accommodate changing workloads, optimize use of
     equipment and resources, and reconfigure operations in response to
     machine breakdowns.

     After five years, the effort will yield a robust, fully operational
     architecture for integrating and reconfiguring production functions
     in electronics manufacturing facilities.

Industry Commitment

     This new ATP program builds on about 40 detailed "white papers"
     submitted by industry and on follow-up discussions with
     representatives of companies in several industries. Exploratory
     discussions with representatives of the electronics and automotive
     industries revealed considerable overlap in technical needs and
     issues and strong support for an industry-focused emphasis on
     computer-integrated manufacturing frameworks. To participate in
     developing this ATP focused program, several companies voluntarily
     agreed to consolidate their approaches to building a CIM framework.

     Some of the companies that have expressed interest in this area
     already are members of industrial consortia, including SEMATECH,
     the National Center for Manufacturing Sciences, Computer-Aided
     Manufacturing-International, and the Manufacturing Execution
     Systems Association. In addition, the American Electronics
     Association has identified systems integration as one of four
     strategically important research areas warranting increased
     emphasis.

Significance of ATP Funds

     Among manufacturers and suppliers of CIM software and other
     supporting information technology products, there is no clear view
     on what integration approach will dominate. While the importance of
     developing a common integration framework is fully appreciated by
     industry, uncertainty impedes progress toward building the next
     generation of manufacturing capabilities. In this unsettled
     environment, large manufacturers either are adopting a "wait and
     see" attitude, or they are expending significant resources on
     customized integration approaches, which is not an option for
     smaller electronics firms.

     Current and prospective suppliers of software for manufacturing
     applications also are at an impasse. Understandably, they are
     reluctant to invest in research and develop products for a market
     that might not materialize because they bet on the wrong
     integration approach.

     The new ATP program can bring an end to this stalemate. By helping
     industry to focus its attention on a critical need, it will help to
     define the path toward a solution. Complementary and reinforcing
     research efforts supported by cost-shared ATP funding will give
     industry the momentum to overcome technical barriers and to proceed
     toward full integration.

     Only scattered efforts are addressing integrated-production issues
     in electronics manufacturing. The new ATP program will build on the
     handful of past efforts in this area, and it will be coordinated
     with the few other complementary activities. For example, the
     Defense Department's Advanced Research Projects Agency has several
     ongoing and planned activities with aims relevant to the broader
     goals of the ATP program.

     Concentrating on the needs of a specific, but very large industry
     will help to ensure that ATP-funded research is useful to
     companies in that sector. Results also will be directly applicable
     to other manufacturing industries confronting similar obstacles to
     integrated manufacturing.

April 1994