US Advanced Manufacturing Strategy:
A Team of Rivals Approach

Mark Johnson and Douglas Ramsey

October 12, 2020

Standard View: The US has no Industrial Policy
Robert Reich (1982): “A Coherent Industrial Policy is a Practical Necessity”- the US did not widely follow suggestion in 1982
Jared Bernstein (2020):“The Time for America to Embrace Industrial Policy Has Arrived”

History of US (Federal) Industrial Policy
Timing (1775): Industrial Revolution and US Independence

Alexander Hamilton Report on Manufactures (1791)“…Not only the Wealth: but the independence and security of a country,
appear to be materially connected with the prosperity of manufactures”
Abraham Lincoln Land-Grant Universities (1862)“…On behalf of the people, who have invested in these public universities
their hopes, their support, and their confidence”
Vannevar Bush Endless Frontier (1946)“…Founded on new principles and new conceptions, which in turn are
painstakingly developed by research in the purest realms of science”
Principles: Free Enterprise, Education, Technology

Team of Rivals:

Many-Policy Industrial Policy Across Government

Public: Between States (50 Locations) and Federal Government (DC)Public: Between Branches of Federal Government (DC)Public: Between Agencies (Departments) of Federal Government (DC)Private: Between Universities, Corporations, and Research Labs

Compare RRI and US Advanced Manufacturing (Industry 4.0) Approaches

State-level Competition:
50 Individual “Experiments in Democracy”
Resources: 15%-35% of US taxes are State-level(including sales, property & income tax)
Base Operating Support for Public Universities:
4-Year STEM Education
Primary Public Support for Technical Colleges:
2-Year Workforce Education
Public Support (with Local/Cities) of Public Schools: K-12 Education
Economic Incentives for Location and Construction (ex. Municipal Bonds, etc)Infrastructure and Zoning (Construction and Land-Use)

Inside US: Manufacturers (all companies) and people move. States compete

Co-Equal Branches: Executive & Legislative
US Budget: (annual)
Proposed by President & Appropriated by Congress
US Tax Rates: (periodic)
Proposed by President & Legislated by Congress
Policies and Plans will Conflict between Branches
example. 2018 budget proposed cancelling ManufacturingUSA institutes- Congress increased funding in 2018
Policies and Plans can Conflict or Overlap within Congress:ex. (1) Energy and Commerce Committee and (2) Science, Space &Technology Committee both deal with manufacturing innovation issues
US House of Representatives (Congress): Elected by districts in States(Rebalanced every 10 years to reflect population ~750,000 people represented)

Executive Departments and Agencies:
Interlocking Missions & Spending
Commerce: “Weights & Measures”+“Interstate Commerce”
Defense: Purchases Manufactured Products for Security

Treasury: Federal Taxes (& Tariffs) with Fiscal Growth
Energy: 25% of Energy is used in Manufacturing
National Science Foundation, National Institute of Health and NASA: Scientific Innovation
Labor: Safe and Meaningful Work
Others: Environmental Protection, Agriculture, Interior, Trade Rep., and StateLong Term Data and Information Exchange (BLS, BEA, etc.)

President: Nominates (& Removes) Leaders, Coordinates between Agencies,
Sets Budget Request Priorities, and Messaging/Communication

Private: Industries, Universities, and Labs
Cooperation and Competition

Private Sector Firms: Closest to the Market
Not Just One Manufacturing Industry:
Sub-Sectors (21) compete for Resources
Most Firms are Small Firms (<400 people)
Closest Alignment For Collaboration is within Sectors (Direct Competitors)
but Smart Manufacturing (I4.0) is Cross-Cutting IssueUniversities: Pipeline of Talent (shorter Job Tenure in US, Companies prefer not to train)

National Laboratories: Science and Technology gem of US Economy,
but historically viewed as structurally isolated
Public-Private Partnerships: Getting Best of Both to Address Needs in EachTeam of Rivals Principles:
No Individual or No Organization is actually in control of US Industrial Policy
All Policies need to have localized impact: even Federal Public Policies
Public Sector Manufacturing Policies is Often a Means to an End
Public Sector: Avoidance of “Picking Winners and Losers”;
Rather, seed opportunity to accelerate innovation
Best Approaches Rise and Survive – others go away
NSF: Engineering Research Centers (ERC or I/UCRC) vs.
NIST: Advanced Technology Program (ATP) or Energy: Industries of the Future“Public-Private Partnerships” Shared support and benefit
Tolerance of Individual Failure Learning and sharing of lessons
Themes: Technology Innovation, Education (Workforce) and Entrepreneurship“Americans will always do the right thing, only after they have tried everything else.“-Winston Churchill

Comparison with RRI organizing Principles
1. Business Model
2. Structures
3. Operation, Coordination& Behavior
4. Competitive Advantage
5. Target Market
6. Value Creation
7. Competitive Strategy
8. Evaluation
9. Method of Product & Solution
10. Innovation Policy
11. Education System

US Structure
Economic Growth & Labor Growth (jobs)
Many: the Strongest Approach Should Rise
Distributed and Ad-hoc Coordination, at Best
Talent, Technology, Taxes (local) and Transportation
Create next market – Revitalize todays markets
Increasingly Information based, even in Manufacturing
Varies between Rivals
Growth & Jobs: Americans will “Vote with Their Feet”
Innovation Culture and Place Based
Dynamic Partnership and Fierce Competition
4-Year Universities and 2-Year CollegesGlobal Cooperation & Competition• Example: MP3

Sound Digitization
R&D (1970s)
Lincoln Labs (MIT)and elsewhere

Digital Audio Player
Invention (1981)
UK Patent
Kane Kramer(P.McCartney, invests)

MPEG (.mp3)
Standard (1995)
Erlangen/Fraunhofer
Karlheinz Brandenburg

MP3 Player
Product (1999-2004)
Panasonic, Sony, Samsung
Apple (iPod)
Asia: Manufacturing

Music Platform(2004-now)
Napster, Apple Store,
Amazon Music, SpotifyMusic as Service

Might we do the Same for Smart Manufacturing,
Robot Revolution Initiative, Industrie 4.0 ?
Possible Case: Plattform Industrie 4.0 Asset
Administration Shell (AAS) standard (2019)

Our National Manufacturing Policies could be
Complementary and Mutually Beneficial

Shared International Challenges
Promote Prosperity and Growth of All of our Economies
Sustainability of All of our Environments
Common Technical Standards to Avoid Duplication
Stability and Safety for All of our Communities
Create Positive National Impacts on Qualify of Life

Thank You