The Nation's Science and Technology Infrastructure: Paving the Way for the 'NEXT Big Thing'

Thank you, Dr. Rager (Ra' ger, Donald Rager, chairman of the NEXT Consortium and Dean of the University of Illinois College of Medicine at Peoria) and good morning to all of you. It is a pleasure to be here. I appreciate the invitation to participate in your celebration of innovation.

I must confess to a little reluctance, however. . . I am not accustomed to speaking to groups of revelers . . . especially celebrating engineers. They can be such party animals!

I'm a former engineering professor, so I know less about the tendencies of biomedical and agricultural scientists and those in the other professions represented here.

Nonetheless, I did bring champagne and streamers, if only the two-dimensional variety.

But don't expect me to don a lampshade by the end of this event.

THAT SAID, innovation is truly worth celebrating. Without question!

It is one of the keys to opening the door to a future that will be worth celebrating-a future of widely shared opportunities . . . of economic growth . . . of rising standards of living . . . of improved human health and safety . . . of environmental harmony . . . and so much more.

The kind of future we all are aiming for will not happen by chance-although a little luck here and there certainly can help. It's axiomatic, I suppose, but you really can't have much of a future if you don't think about it. So, I commend the members of the Peoria NEXT consortium and the other leaders assembled here for your initiative-for the steps you are taking to foster progress toward your collective, long-term goals for Greater Peoria's economy.

My organization-the National Institute of Standards and Technology, or NIST, for short-has benefited from its association with a few of the organizations that are spearheading this initiative. And, I hope, these organizations have benefited from their relationship with NIST.

Caterpillar is a customer, a partner, and a model. The company uses a variety of NIST-supplied measurement standards and references.

It participates, formally and informally, in NIST research consortia and projects that address topics ranging from "smart" machine tools to modeling and simulation of automated construction equipment.

CAT also leads or participates in three projects co-funded by the NIST Advanced Technology Program-projects that are pushing the edges of today's technology envelope and aiming for breakthrough advances.

We also benchmarked Caterpillar as we persist in efforts to sharpen NIST's organizational focus on our customers. The company has set its sights to become the "global leader in customer value," and it is pursuing this vision with systematic determination.

At NIST, we are internalizing many of the lessons learned during our benchmarking visit.

NIST also is proud of its relationship with Bradley University. Bradley is the headquarters and one of the service delivery arms of the Illinois Manufacturing Extension Center.

Since it was established in 1996, the center has grown to be a leader within NIST's Manufacturing Extension Partnership.

This nationwide network of outreach centers provides the technical expertise that many small manufacturers need to modernize their operations, to leverage affordable technology, and, as result, to become more productive and more competitive.

In effect, this network is a partnership of partnerships. Here, in Illinois, the IMEC (pronounced "eye meck") partnership includes not only Bradley and NIST, but also Mr. Lavin's organization-the Department of Commerce and Economic Opportunity - with leadership from Caterpillar, Boeing, John Deere, and others.

In this era, in which there are no low-technology industries, only low-technology firms, the Illinois Manufacturing Extension Center is making a difference. Each year, its staff helps hundreds of smaller manufacturers across the state to boost their performance and, in turn, to contribute to the region's and state's economic performance.

For completeness-and to give you a gauge for measuring the content of the rest of my remarks-I should give you a quick overview my organization.

I'll start with a sweeping claim: All of you-and every industry represented in this room-are customers of NIST, although most of you probably do not know it.

As consumers, you rely on NIST's measurement standards to ensure that you get what you pay for in every purchase based on weight, volume or some other measurable quantity-be it at the deli counter, gas pump, lumber yard, or carpet store.

Half of all consumer transactions-about $5 trillion in all-entail some type of measurement whose accuracy is tied to the national measurement standards maintained by NIST. These standards are deployed through state and local weights and measures offices.

This nation's founders recognized the importance of a trusted measurement system. In the Constitution, the federal government is assigned responsibility for assuring state-to-state uniformity in weights and measures. NIST assumed this responsibility when it was established in 1901.

So, measurements are NIST's primary reason for being, and this focus takes us into many, many industries-from agriculture to wireless communications-and into many realms of science and technology-from biotechnology to information technology to nanotechnology.

I should point out that NIST is a non-regulatory agency. However, we do interact with many regulatory agencies, such as the Environmental Protection Agency and the Food and Drug Administration.

We provide them with tools and technical assistance to help ensure that regulatory standards are supported by measurement science and that compliance can be demonstrated and evaluated.

Advanced measurement capabilities are fundamental to progress across an ever-widening spectrum of technologies.

This, I must tell you, is an under appreciated fact.

In a sense, measurements are like breathing. And like breathing, you don't think about measurements, unless there's a problem-an out-of-tolerance part, a false positive or false-negative diagnostic test result, a software glitch, and, in the end, a dissatisfied customer.

So, breathing is to the body what a trusted, reliable measurement system is to science, technology, industry, and commerce.

Because of the enabling economic role of measurements, NIST is located within the Department of Commerce. We are the only federal agency that focuses entirely on the science and technology needs of U.S. industry. We do this by attending to the technical infrastructure that supports knowledge discovery, innovation, and the application of science and technology to industrial practice.

Here are some vital statistics:

• 1,500 scientists, engineers, technical staff members
• $819 million annual budget
• 2,000 field agents
• 1,600 guest researchers
• $1.8 billion of co-funding of industry R&D

NIST has four major programs.

I have already referred to the largest part of the operation, the NIST laboratories. Numbering seven in all-plus a service-delivery organization-the labs develop measurements and technical services needed by U.S. industry to improve products and services and to innovate.

At first glance, measurement science may appear to be a very staid affair. It is hardly that, I can assure you. Consider the work of NIST physicists that have increased-or ultimately will increase-the accuracy of time-keeping technology. Within the last six years, two have won Nobel prizes. One was for work that contributed to capabilities for cooling atoms to within fractions of a degree of absolute zero and the other for helping to prove the existence of the molecular molasses known as the Bose-Einstein Condensate.

To put this work in context, I should point out that NIST is the nation's timekeeper. Each day, hundreds of millions of people and organizations use our automated timekeeping services. Applications include time-stamping of stock market transactions, synchronization of computer networks and traffic signals, coordination of electrical power distribution, and the operation of navigation and telecommunication systems.

Our current version of the atomic clock is so accurate that it neither loses or gains a second in 30 million years.

So as the director of NIST, I have no excuse for being late to any engagement.

Our basic research on the advanced physics that underpins high-accuracy time keeping is seeding progress in other areas, as well. Still-germinating applications include atomic lasers and the more-distant prospect of quantum communication systems-an area in which we and others are making surprisingly rapid progress.

Then there's the Advanced Technology Program, or ATP. This NIST program accelerates the early-stage development of innovative technologies that, ultimately, have the potential to deliver broad national benefit. By co-funding R&D partnerships with the private sector, the ATP provides an incentive for industry to look further out on to the technology horizon.

Technical hurdles and other risks are high. So, not every ATP project achieves its long-term goals. Still, the program has had a healthy share of successes.

For one, the economically important field of "DNA chips" has blossomed from technology resulting from ATP projects. And one of the nation's first nanotechnology companies, Nanophase Technologies, based in Burr Ridge, Illinois, used ATP co-funding to overcome hurdles to processing nanocrystalline powders on a commercial scale.

Since 1990, ATP has chosen 640 projects for funding, about two-thirds of which are led by small companies.

The program portfolio includes 34 completed and ongoing projects involving Illinois companies. The ATP investment in these 34 projects totals $73 million, which is matched by industry.

In ongoing projects, Illinois organizations are pursuing technologies ranging from highly selective membranes for biological separations to inexpensive methods for printing integrated circuits based on organic materials.

NIST also manages-with the private sector-the Malcolm Baldrige National Quality Award.

The Baldrige Award program has been called the best example of effective cooperation between the federal government and the private sector. It's also a very practical program-thousands of businesses and other organizations use the Baldrige Award criteria to guide their own pursuit of quality improvement and performance excellence.

The Award can be given in five categories: Manufacturing, Service, Small Business, Education, and Health Care.

Last year, the Commercial, Government and Industrial Solutions Sector of Motorola won the award in the manufacturing. It's the second time that Motorola or one of its units has received the honor.

We also were pleased to make the first-ever award in the health-care category, a very positive development. The recipient, SSM Health Care, which is based in St, Louis, operates 24 hospitals and nursing homes, including three in Illinois.

I've already mentioned the Manufacturing Extension Partnership, or MEP. Like the ATP and the Baldrige Award, the partnership was created in the late 1980s in direct response to challenges to the nation's competitiveness. Those challenges were epitomized by the growing success of Japanese manufacturers in international markets.

Since then, the partnership has grown from three demonstration centers to a coordinated network of 400 offices.

Many smaller manufacturers have improved their competitive fortunes and future prospects with the aid of the MEP network. Since the first extension center was funded in 1989, the MEP network has helped more than 150,000 manufacturers.

This assistance ranges from simple advice giving to leading full-blown implementations of lean manufacturing systems.

The returns on these outreach activities have been significant. Surveys of firms who used the services of the Illinois Manufacturing Extension Center are illustrative. An outside, third-party firm interviewed more than 900 clients firms served by the center through May 2001.

These firms estimated that they realized benefits totaling nearly $400 million, primarily the result of cost-savings and increased sales. The number of jobs created or retained topped 12,000 positions.

That is quite an impact.

Now that I've given you a ground-level view of NIST and its programs, I'd like to zoom out to get a panoramic view of the competitive landscape. But before I do that, I'd like to leave you with a simple message: NIST, our programs, and our many specialized facilities make up a platform for innovation.

I encourage you and your organizations to investigate how you might use this platform as a kind of springboard for your pursuits of promising technologies.

Up to this, I have been speaking in terms of industrial sectors and fields of technology. That's one way to survey the landscape-to divide it into parcels of technical activity.

Geography provides another lens. It's useful for sizing up the many interrelated factors that influence whether a particular organization or a specific area will prosper through innovation.

These influences range from developments at the international level to the composition of businesses, universities, and other public and private organizations at particular spots on the globe.

Here, I am referring to the so-called regional clusters that Harvard's Michael Porter has made famous through his research on competitiveness and innovation.

The view that emerges through this lens is one of complexity-a confusing array of interacting factors.

What should be clear, however, is that there is no fail-safe prescription that guarantees future growth and prosperity.

To be sure, technology figures prominently in every plan or strategy to grow the economy and create jobs. That's a given, since technological progress is credited with driving 50 percent of the nation's growth since World War II.

The hard part is determining how to get the technology genie to:

• come out of the lamp,
• to land in your nation, and, then,
• to take up residence in your region.

In fact, the challenge may be even more daunting than that.

Do we even know which lamp to rub?

I think we can make a good educated guess. And, better yet, we can take steps, at many levels, to improve our chances of being right.

In other words, we know many of the ingredients that define both the capacity to innovate and the ability of companies and economies to reap the benefits of innovation. We don't know all the ingredients.

And, of those we do know, there is occasional disagreement over their relative importance and over who is responsible for ensuring that certain ingredients are included in the mix.

What should the federal government contribute?

For one, it should create a tax, fiscal, and regulatory environment that encourages innovation and promotes competition. President Bush has said many times that government doesn't create wealth, people do.

He believes-as, I'm sure, most of you believe--that our most important job in government is to create the right environment for businesses to flourish and prosper.

Another role for the federal government is to prime the pump of innovation through its support of research and development, especially basic research.

An additional one is to help ensure an adequate supply of engineers and scientists to meet future demand.

There are other important federal roles, but I will limit myself to one more example: Trade, which is an area where NIST makes key supporting contributions.

We know that trade is an engine of economic growth. The United States is the world's largest exporter. Increases in shipments of U.S. good and services spurred our most recent economic expansion - accounting for roughly one-quarter of U.S. economic growth in the 1990s.

About 12 million jobs in this country - many of them in the manufacturing sector - depend on exports.

The Administration is pushing forward in efforts to open markets to U.S. goods and services. It recently concluded free trade negotiations with Chile and Singapore, and it is pursuing agreements with other nations.

In March, the Commerce Department announced an initiative to champion U.S. technology in the international standards arena.

This is an area of growing strategic importance.

Already, 80 percent of world merchandise trade is affected by standards and by regulations embodying standards.

Compliance with these standards is a pre-requisite for market entry. Unfortunately, standards are sometimes drafted to disadvantage competitors, rather than to enable the best solution to a recognized technical need.

The result is a so-called technical barrier to trade, and these obstacles have been multiplying as tariffs are gradually being eliminated.

NIST has been an active participant in international standards activities. We provide measurement and other technical support that advance U.S. industry's efforts to develop standards that accomplish health, safety, and other objectives without introducing unnecessary impediments to efficient trade.

Our staff members represent U.S. interests in some 180 international standards committees and international industrial consortia.

But government can't-and shouldn't-do this job alone.

While many U.S. businesses recognize the market-shaping importance of standards, most companies do not participate in the development of standards, at home or internationally.

While they are idle, these businesses might see the proverbial "international playing field" begin to tilt, placing them in an uphill struggle for unfettered market access.

As part of the Commerce Department's new initiative, we are spearheading efforts to gather input from U.S. companies on the most pressing standards issues in priority foreign markets.

This is a critically important behind-the-scenes activity. The stakes in so-called "standards wars" can be high.

As quality guru W. Edwards Deming once said:

"If you control an industry's standards, you control that industry lock, stock, and ledger."

Competition and one-upmanship in standards setting comes as no surprise. The global economy is a brutally competitive place.

No bulletin there. And the good news is that the United States is the world's most competitive economy, thanks in large part to our capacity for innovation and our ability to harness the commercial potential of R&D outputs.

For example, in this year's Global Competitiveness Report, put out by the World Economic Forum, the United States ranked first in terms of:

• Technological sophistication
• Company spending on research and development
• Patents issued
• Intensity of local competition
• Venture capital availability, and
• Ability to attract science, engineering, and other professional talent.

These are just a few of the categories listed on the "National Competitiveness Balance Sheet" for the United States.

We do not place high in all. For instance, among the 80 nations that were evaluated, the United States ranked 75th in terms of national savings rate and next to last in terms of the portion of our Gross Domestic Product that is attributable to exports-a modest 7 percent.

In terms of education measures, the United States ranked in the middle of the pack.

For me, these competitiveness indexes and balance sheets are "good reads"--real page turners. (Yes, I know, I am a very exciting guy.)

But, they are not the final, definitive word on competitiveness, innovation, and economic growth.

There are plenty of chapters still to be written. Still, these lists of factors and indicators are very instructive.

If nothing else, they serve to underscore how many interdependent components underpin the ability of a nation, a region, or an industrial cluster to succeed in developing and commercializing streams of new technology.

For example, consider the following indicator, one we in the United States would have overlooked before 9/11. The category is "business costs of terrorism." That is a competitive disadvantage for the United States.

We ranked 74th. Considering that U.S. businesses spent an estimated $150 billion on security in 2002, our place near the bottom is understandable-regrettably so.

Of course, local and state governments also have been pinched to beef up security. Obviously, the added security costs for business and government drain money from investments in the sources of competitiveness.

But there also may be big opportunity here, hidden among the weeds of adversity. The challenge we all face, but especially U.S. industry, is turning expenditures for security into investments for improved productivity and global competitiveness.

Clearly, positioning a business, a region, or a nation so that it will catch the next wave of innovation is a tricky and ever-changing challenge.

It's equally clear, however, that the difficulty of the challenge increases if the nation does not have a strong manufacturing sector. Manufacturing, more than any industry, drives productivity growth-the ultimate creator of wealth.

In the last decade alone we have seen enormous productivity gains from the manufacturing sector. For example, in durable goods - the heart of technology-intensive manufacturing - productivity surged 39% from 1994 to 2001, more than twice the 16% growth of the economy overall.

Our prosperity and future growth are tied to the performance of the nation's more than 300,000 manufacturing businesses.

Much of our nation's innovative capacity resides in this sector. Manufacturing industries account for about two-thirds of private R&D expenditures. Even during the industrial downturn of the last two years, manufacturing industries have maintained a high level of R&D spending. More than 90 percent of all U.S. patent approvals originate in the manufacturing sector.

And, our manufacturing sector consistently meets the changing needs of national defense and homeland security.

There is no doubt that this important sector is hurting now, and it has been for some time.

Manufacturing industries have experienced 30 consecutive months of declining employment, with a total job loss of over 2 million.

I know this area and the state of Illinois have borne a significant share of these job losses.

The recent and abrupt closing of Ingersoll Milling, a venerable machine tool maker in Rockford, has added to the total.

To spur the economy, the President has introduced a package of tax and stimulus proposals, but the prolonged sluggishness in the manufacturing sector is likely to prompt additional actions.

The state of U.S. manufacturing is now being intensively studied in the Department of Commerce, in Congress, by the President's Council of Advisors on Science and Technology, and by others.

We all want to see real improvements in the situation for manufacturing, for manufacturers, and for employees and communities who rely on manufacturing. Increasing awareness about the importance of manufacturing, sadly enough, is desperately needed.

That's something each of us can-and all of us must-work on.

NIST recently convened a National Academy of Sciences forum on future directions in manufacturing. The information exchanged at this gathering of experts will guide the content and emphasis of our manufacturing research and services. We also hope that it will inform the deliberations of others who are assessing steps that can be taken to help ensure the long-term vitality of manufacturing in this country.

I do believe that our prospects for technology-driven, long-term economic growth are good.

Recent advances in science and engineering have delivered an incredibly rich variety of opportunities: Opportunities to create new-to-the-world technologies and markets. And opportunities to, in effect, re-invent existing industries.

We will need to maintain a national R&D portfolio that is not only well-funded but also well-balanced--a matter of some concern today. Yet, I must concur with an observation by William Gibson, the science fiction writer who coined the term "cyberspace."

"The future," Gibson said, "is here. It's just not widely distributed yet."

To paraphrase, opportunity is beckoning; the seeds of the 'next big thing' probably have already been sown. The question is, will they sprout and begin to bear fruit in a lab, small company, or even a garage in Peoria or Palo Alto? Or, perhaps, Beijing or Bangalore?

I wish I knew.

I do know, however, that demands for NIST's research and services are increasing in many technology areas.

We can't meet all the demand with our resources, and our resources aren't likely to grow much.

So, we had to make a few bets, so to speak-just as your organizations and this area have had to make some bets of your own.

In our strategic plan, we identified three technology areas.

These are areas where we are committed to maintaining a critical mass of effort-areas where we anticipate tremendous progress and where we can make a high-value added contribution.

Subsequently, and for obvious reasons, we added a fourth "strategic focus area"-Homeland Security. Before I close, I'll give you a quick rundown on each area.

Let me start with homeland security.

The NIST laboratories are involved in scores of projects that are addressing homeland security needs. Three examples are:

• investigating the structural failure and subsequent progressive collapse of the World Trade Center buildings so that the design, construction, and even the use of buildings can be improved to significantly enhance safety;
• contributing to industry-led efforts to reduce vulnerabilities in the nation's electric power system; and
• developing standards for the biometric identification systems to be employed at our nation's borders and other points of entry.

Another strategic focus area is nanotechnology.

This is an obvious selection, I suppose. It's been predicted that the market for nanotech products and services in the United States, alone, could exceed $1 trillion by the year 2015.

Even if the estimate is only one-third correct, that represents over 3 percent of our current Gross Domestic Product.

The entire world, it seems, is converging on this frontier of science and technology. It is an incredibly robust frontier, seemingly limitless in possibilities.

It has spawned some very big ideas, some of which, I am hoping, will prove to be attainable.

For example, Richard Smalley, the Rice University physicist who won the Nobel Prize for his work on bucky balls, or fullerenes, believes that nanotechnology provides a path to meeting the world's energy needs and eliminating the world's dependence on non-renewable sources.

That is a big idea.

Nanotechnology encompasses not only the manipulation of atoms and molecules to design and fabricate functional materials and devices. It also includes precision techniques for making parts with nanometer scale features, for achieving tolerances of less than 100 nanometers, for controlling the reactions that occur on the surfaces of designer-made catalysts, and for much, much more.

Today, in the NIST laboratories, more than 50 projects are addressing issues central to the future of nanotechnology. Diverse as they are, all of these projects have a common aim: Building measurement capabilities and other key elements of the technical infrastructure that makers and users of nanotechnology products will require.

On to health care, our third strategic focus area. Health care is a big chunk of the economy-almost 15 percent of the GDP.

NIST already provides a variety of measurement tools for uses ranging from calibrating X-ray machines to cholesterol and DNA testing.

More and better measurement capabilities can make a tremendous difference.

Consider, for example, that 10 to 15 percent of health-care expenditures go for tests and other measurement related activities.

In addition, an estimated $50 billion is lost each year just because of inaccurate measurements that necessitate repeat tests.

These figures don't even begin to hint at the possibilities spawned by progress in biotechnology and in tissue engineering. However, numerous issues arise during the development, testing, and approval of tissue-engineered medical devices. The parameter space is staggering.

Several projects under way at NIST aim to provide measurement tools that will help researchers, manufacturers, and regulators to control this parameter space. This will help to speed the development of tissue-engineered products as well as help to reduce the risk of unanticipated side effects.

Finally, our fourth area of strategic focus concentrates on efforts to unleash the full capabilities of information technology in areas ranging from health care to manufacturing. This is a broad and crucial area that includes work on pervasive computing and intelligent interconnected systems, such as intelligent transportation systems and integrated sensor networks for biomedical applications. Again, the NIST work addresses infrastructural needs-such as standards for security and interoperability and test methods for validating software.

In thinking about ways to help U.S. industries to distance themselves from the global pack of competitors, we must consider how best to exploit existing technological strengths.

Clearly, the U.S. lead in information technology--although, no longer as secure--is a major source of competitive advantage. However, it has yet to be leveraged with full effect.

Efforts to improve interoperability-as well as software reliability, another important issue-will be repaid many times over. So, we are working on important nuts-and-bolts issues, such as standards for seamlessly converting product design data into machining instructions for manufacturing equipment.

We also are thinking a generation or two ahead. With our partners, we are exploring the feasibility of developing the standards and other infrastructural elements that enable "self-integrating systems."

Self-integration would mean that software applications could negotiate meaning "on the fly" and exchange information in a completely automated way.

For a simple analogy, think of the "electronic handshake" that enables fax machines of different vintages to communicate.

Now, I have spoken about several of the technological challenges and opportunities that we see today and in the future. I've described how NIST is approaching them. And I have congratulated you for your pro-active efforts to shape this region's future.

No, everything certainly isn't rosy as we consider our situation, and as we assess the prospects for increased global competition and wrestle with the imperative to stretch resources.

But America didn't get to where we are today by taking a back seat to anyone, or by accepting the status quo as destiny.

We have a long, rich tradition as innovators.

The can-do spirit that has served us well is alive and well in Peoria, in Illinois, and in other cities and states across the nation.

You can make a difference. And, planning ahead, as you are doing in this consortium, and persevering with focus and commitment are crucial steps towards the NEXT big thing.

Now, more than ever before, it is critical that people like you-who focus on technology and its multifaceted role in our economy and our society-to express their views. It is critical that you share your thoughts with policy makers at all levels, to inform them about the importance of this work, and the critical role that government can play in shaping policies and providing appropriate support.

I'd be happy to take any questions-well, almost any questions-if you'd like.

Thank you.