Thank you, and good morning to all of you.
It's really a pleasure to be in Boston. Although I grew up in northeast Pennsylvania, the Kilmers—from my Grandmother to my Dad, to me, to my sons and now my grandkids—were all raised to be Red Sox fans. The Sox seem to have a handle on beating the Yankees and Rays . . . but I wish they could figure out how to beat the Orioles on a more consistent basis—it would sure make my life living in Maryland a whole lot more enjoyable.
I've been asked to speak briefly about the federal vision for the future of manufacturing, but before I do that, I want to commend the State of Massachusetts for their comprehensive efforts to promote manufacturing. It starts at the top with Governor Patrick and his support for the creation of the Massachusetts Advanced Manufacturing Collaborative. But to be successful, it takes the dedication, insight, and effort of industry, academia, and government, especially Secretary Bialecki and Assistant Secretary Nakajima.
The National Governor's Association recently singled out Massachusetts and seven other states for their best practices in fostering the growth of advanced manufacturing, and rightfully so.
The five priority goals that were identified were backed up by strategic investments when budgets were stretched to their breaking point. And progress toward achieving these goals is charted by periodic report cards.
The investment in manufacturing education and workforce training is already paying dividends for manufacturers and for workers, including returning vets and newly minted graduates.
At the same time, Massachusetts is mobilizing for advantage in the long term. The state's $1 million Manufacturing Futures Fund is jump-starting partnerships that focus on the health of manufacturing over the long haul.
These initiatives make good economic sense—today and tomorrow. Why? Because manufacturing truly is the "bread winner" for local, state, regional, and national economies. This is not a rah-rah, feel-good assertion, but one backed by data and real examples, with growing support from both the public and private sectors.
Consider this from a national consulting firm:
"The linkage between manufacturing capabilities and economic prosperity is a much stronger predictor of a vibrant, successful, growing economy than any other measure typically used by economists."
This sums up why President Obama has zeroed in on U.S. manufacturing as one of his Administration's top economic priorities. In fact, the President's "Blueprint for An Economy That's Built to Last" begins with American manufacturing.
From a personal perspective, never in the 30 plus years that I've been involved in doing federal R&D on advanced manufacturing and robotics and in leading the Manufacturing Extension Partnership have I witnessed such a concentrated focus on manufacturing and its economic benefits by the Administration, federal agencies, the Congress, and private research and policy organizations.
After a decades-long infatuation with the service sector—When a dollar's worth of potato chips was deemed equivalent to a buck's worth of computer chips—there is growing consensus that a thriving economy needs two "parents," innovative manufactured goods supported by innovative services. In an innovation economy, cutting-edge services and advanced manufacturing processes and products go hand-in-hand.
Unfortunately, this is not a well-kept secret that only the United States knows. Other nations are mobilizing to position their manufacturers at the head of the global pack of international competitors. And we are paying a price for their success.
After ranking as the world's largest manufacturer for more than a century, the United States has lost ground to China in terms of share of global manufacturing output. In fact,China's manufacturing value-added increased at an annual rate of 18 percent between 2001 and 2011. It doubled every four years, while U.S. manufacturing output grew at an average annual rate that was six times slower—just shy of 3 percent.
The United States also has slipped below Germany, South Korea, and Japan in rankings of manufacturing intensity, a critical indicator of future job-creating innovation. And Germany, the United Kingdom, Japan, China, and Taiwan are among the many countries that have programs designed to take the beginnings of future products—discoveries, ideas, fledgling inventions—and to help them to progress all the way to the market.
The message, I think, is painfully clear. We have to pick up our manufacturing game—here in Massachusetts and around the nation.
The good news is that we have begun to do just that.
After a decade of losses, more than half a million American manufacturing jobs were added in the last three years, the strongest growth since the 1990s.
And U.S. automakers and their suppliers report that they are about to embark on a hiring spree. General Motors, Ford, Chrysler, Honda, and Mercedes-Benz plan to add more than 13,000 employees this year. Major parts suppliers also report they will increase their payrolls.
In addition, several trends are converging to create new opportunities for U.S. manufacturing. These include:
- Increasing productivity of U.S. manufacturers,
- rising labor costs in developing economies,
- rapid development of new technologies that result in market-disrupting products and processes,
- growing production of domestic natural gas as an energy source and as feedstock,
- and an increasing desire to protect home-grown intellectual property.
All these factors are shifting the comparative advantages of global competitors. These shifts, many predict, will favor the U.S. manufacturing sectors, especially industries that produce high-value-added technology-based goods.
We need to capitalize on these recent gains at home and to make sure that international trends work to our advantage.
The President's fiscal year 2014 budget request aims to do this through four key initiatives with one goal. This goal is: Put the most advanced tools and resources in the hands of all U.S manufacturers, regardless of their geographic location or size, and continually stoke the fires of innovation at the lowest possible cost through greater public-private collaboration.
First, the budget includes the President's proposal for $1 billion to establish a National Network for Manufacturing Innovation—or the NNMI, for short. As highlighted in his last two State of the Union addresses, the NNMI will partner businesses and universities to create manufacturing innovation institutes across the United States. These institutes will accelerate the adoption of new cutting-edge tools to boost our competitiveness and support American workers. This initiative is being coordinated by the Advanced Manufacturing National Program Office, staffed by multiple federal agencies and hosted and led by my home agency, the National Institute of Standards and Technology.
If we fail to act, our international competitors will continue to do a better job in some cases than we do capitalizing on our own manufacturing-related research advances. In fact, although the NNMI is in its infancy, other countries are closely following this effort, hoping to copy and emulate it in their region.
The President already is acting on this bold proposal. Last year, using existing funds, a team of federal agencies launched a prototype institute—the National Additive Manufacturing Innovation Institute, headquartered in Youngstown, Ohio.
This year, he tasked the Departments of Defense and Energy to establish three more Institutes for Manufacturing Innovation, again with existing funds.
The Department of Defense will lead two of the new Institutes, one focused on "Digital Manufacturing and Design Innovation" and the other on "Lightweight and Modern Metals Manufacturing." And the Department of Energy will be leading a new institute on "Next Generation Power Electronics Manufacturing." Competitions for these three institutes already are under way. If you're interested in learning more, go to the website, manufacturing.gov.
The President's budget also calls for $113 million to create an Investing in Manufacturing Communities Fund, which will be led by the Commerce Department's Economic Development Administration. The Fund will serve as the centerpiece of an Investing in Manufacturing Communities Partnership—a multiagency initiative to reform economic development and reward best practices in attracting manufacturers and their supply chains to U.S. communities. The partnership will ensure federal assistance supports policies that entice long-term private investment and growth—including specialized workforce training, research, and local infrastructure.
Third, to help smaller U.S. manufacturers stay competitive, the budget calls for $25 million to launch Manufacturing Technology Acceleration Centers, or M-TACs. Established through the Department's National Institute of Standards and Technology's Manufacturing Extension Partnership, M-TACs will provide technology adoption and commercialization assistance to help companies build highly effective supply chains in high-value-added manufacturing sectors.
Finally, the budget requests $21 million in funding for the Advanced Manufacturing Technology Consortia, or AMTech, which also is managed by the National Institute of Standards and Technology. This program will help business and universities partner to support early-stage research and technology development in high-tech manufacturing-related industries.
Besides advanced manufacturing, the common theme running through all of these is partnership—industry-led, private-public partnerships.
This is fundamentally important to the future of manufacturing in the United States.
Let's face it, beyond investing in innovation and advanced manufacturing—U.S. industry, universities and community colleges, and governments at all levels have to collaborate. . . to work together effectively and efficiently. Other nations already are doing just that and they're getting better at it by the day! U.S. manufacturers—large and, yes, small—are competing against foreign companies. . .and foreign governments.
So, my advice to all manufacturers is to dispense with any preconceived notions and suspicions about working with the government. Make industry-led partnership and collaboration a normal way of doing business. Our collective efforts will be what define the future of manufacturing in the United States.