In September I heard about Making in America – From Innovation to Market, a new book by Suzanne Berger and her colleagues at MIT. I finished the book with some recent extended free time and offer five personal perspectives to peak your interest. These are not in any order of priority nor exhaustive of what one can learn from reading this book. And while I didn’t necessarily agree with all the conclusions, these five perspectives of the author stood out to me.
One – Other developed countries have maintained strong manufacturing employment. U.S. manufacturing employment peaked at just over 29% in 1960, declining by 2011 to about 10%. One might think this would be due to low wages, the maturation of a successful growing economy or productivity gains but not necessarily. The book discusses each of these issues in turn and points out countries like Germany, Japan and Italy currently have robust manufacturing employment of 20%, 17% and 19% respectively, although recently U.S. manufacturing employment has seen some improvement and growth
Two – Recent changes in the financial and regulatory markets in the U.S. may have shaped some of our current manufacturing outcomes. Global access to resources, markets and capabilities have helped drive a dynamic global economy. However the book suggests that some U.S. companies became focused on “Core Competencies” to meet Wall Street goals and as a result many outsourced manufacturing and lost the associated areas like R&D, workforce training and scale-up expertise.
Three – Start-up manufacturers can face major challenges to scaling in the U.S. because of time to market, costs associated with full development and access to manufacturing expertise. For example, most Venture Capitalist’s – are challenged to invest in manufacturing startups when software and IT offer similar rewards for less investment capital and time. As a result many start-up manufacturing firms develop Merger &Acquisition – strategies or co-development programs with larger multinationals which may increase the chance of overseas manufacturing.
Four – Medium-low-tech “Main Street” manufacturing companies (non R&D intensive such as Basic Chemicals, Machinery, Electrical Equipment, Plastics & Rubber or Fabricated Metals) when compared to high-tech manufacturers, are seen as critical to the U.S. economy “…accounting for almost eight times more value added in production (and) certainly look like the weight-bearing foundations of the economy.” It’s an interesting thought which could have been discussed in more detail. In the author’s eyes “Main Street” manufacturer challenges include a weakened supplier base, less knowledgeable financing markets, and limited workforce development structures to meet critical skill needs (collectively part of an “industrial ecosystem”). Their innovation consists primarily of trade secrets versus patents and is not as broad as companies examined in Germany.
Five – MEP was mentioned several times including; Delaware Valley Industrial Resource Center – as a regional MEP with a connection the Philadelphia Energy Efficient Buildings Hub project and MAGNET, part of the Ohio MEP system, for their innovation work. A number of the approaches in this book emulate several of the current NIST MEP initiatives such as supplier development, exporting and new product development. The book also described how critical partnerships are, and will be in servicing a manufacturing-based economy, the type of relationships MEP’s regularly engage in.
One overriding idea in the book is a “hollowing out” of the manufacturing economy or as the author terms it, the industrial ecosystem in the U.S. It reinforces to me the idea that as an MEP system we are involved with more than just serving manufacturers themselves; we are also serving the community as it relates to manufacturing, helping to raise its value and presence as a career, as a valuable industry and an important foundation to any communities’ economic health. While I’m convinced that manufacturing has a bright future in the U.S., this book does describe some significant global challenges to rally around.