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Technology Development and Manufacturing Competitiveness

Sridhar KotaSridhar Kota Assistant Director for Advanced Manufacturing

The White House Office of Science & Technology Policy

NIST Extreme Manufacturing Workshop, January 11,2011

Revitalizing American Manufacturing 

“When new technologies are developed and new industries are formed, I want them made right here in America. That's what we're fighting for."  - President Obama, August 16, 2010

• Manufacturing Tax Credits; Loan Guarantees – Renewable Energy• FY 11 Budget- Univ. Innovation Ecosystem; Nano manufacturing; NIST-TIP, NSF, DOE• DARPA’s $200M/yr investment in Manufacturing• FY 12 Budget Guidance on Advanced Manufacturing

•Support R&D in advanced manufacturing to strengthen U.S leadership in areas of robotics, cyber-physical systems, and flexible manufacturing.

• PCAST- Advanced Manufacturing Study• On Jan 4, 2011 President Obama signed H.R. 5116 America COMPETES Act into law

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InnovationAccording to the recent National Academies report

Rising Above the Gathering storm, Revisited – Rapidly Approaching Category 5Approaching Category 5, 

“Innovation commonly consists of being first to acquire new knowledge through leading edge research, being first to apply that knowledge to create sought-after products and services, often through world-class engineering; and being first to introduce those products and services into the marketplace through extraordinary p p g yentrepreneurship.” 

We have been steadily falling behind in “application of knowledge” 

Taken from Gary Pisano and Willy Shih, “Restoring American Competitiveness”, Harvard Business Review, July 2009

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Innovation is the Missing Middle

3032

Science$ Knowledge $, ¥, €EngineeringManufacturing

68

1012141618202224262830

Bill

ions

 $ DoDNISTNSFNASADOENIH

INPUT$100 Billion Annual Federal Investment 

OUTPUT- $100 BillionAnnual Trade 

Deficit in Advanced 

Technology P d

0246

Basic Research

Applied Research

Development Prototype & Systems 

Development 

NIH

Technology & Manufacturing Readiness Levels (TRLs/ MRLs) 

Products

China

Philippines Czech Republic

25

30

35

DP 

2008

Manufacturing: Compensation Costs vs. GDPData from “U.S. Department of Labor, Bureau of Labor Statistics, August 2010” and United Nations 2010.  

Australia

Brazil

United StatesFrance

Germany

Italy

Japan

Mexico

Spain

United Kingdom

CanadaNew Zealand

Philippines

Singapore

Austria

Belgium

Czech Republic

Finland

Greece

Hungary

Netherlands

Norway

Poland

Sweden

Switzerland

5

10

15

20

Man

ufac

turin

g, %

 GD

0

5

0 10 20 30 40 50 60 70Hourly Compensation Costs in Manufacturing 2008

4

Economic Output Figures and Structural Costs

U.S Germany Japan China Source

Trade balance ($ B) (2007)• goods• services• net

-823+121-702

+199-16

+183

1, 2

Manufacturing as % GDP - 13 20.5 21 33.4 4Hourly Compensation of Manufacturing Workers

$32.26 $48.22 $27.80 $1.36 6

Govt Research budget in millions 427/116663 2267/18542 1861/2532 3

Sources:  1. Bureau of Economic Analysis;  2.Daniel S. Hamilton and Joseph P. Quinlan, Germany and Globalization, 2008;  3.NSF Science and Govt. Research budget in millions 

of dollars: Industrial Production & Technology / Total expenditure

427/116663(0.4%)

2267/18542(12%)

1861/2532(74%)

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Share (%) of Business R&D expenditures on Manufacturing

69.6 90.0 89.9 84.6 3

R&D as % GDP 2.68 2.53 3.39 5Raw Cost Index of Manufacturers

$0.47 $0.52 $0.30 $0.13 7

Statutory Corporate Tax Rates 40.0 38.3 40.7 25.0 7Social Insurance Expenditures & 22.9 22.8 17.0 8.0 7

Engineering Indicators 2010;  4. World Development Indicators database, World Bank, 2005;  5. Organization for Economic Cooperation and Development, Main Science and Technology Indicators, 2008;  6. Bureau of Labor Statistics, 2010;  7.  Jeremy A. Leonard, “The Tide is Turning – An Update on Structural Cost Pressures Facing U S

Other Labor Taxes (% of compensation)Industrial Pollution Abatement and Control Expenditures (% of value added)

6.2 6.0 5.5 2.8 7

End-User Industry Energy Costs (Index U.S. = 100) 

100.0 124.7 122.8 7

Facing U.S. Manufacturers,” Manufacturers Alliance/MAPI and the Manufacturing Institute, November 2008.

Manufacturing InvestmentsSector Percent  of US GDP Government Investment

Health 14-16% NIH: ~$31 billion

Energy 8-10% DOE: ~$11 billion

Manufacturing 11-13% Total federal investmentManufacturing 11-13% Total federal investment ~ $1  billion

Are current manufacturing investments sufficient?Are they:

Too generic (no practical relevance)?Too specific (crisis management)?Commercially infeasible (defense-specific)?Too late (large downstream costs of delayed action)?

Should we invest in establishing Technology Development Centers to develop systems engineering and manufacturing competencies? 

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Establishing a Robust Manufacturing Base

Discoveries, Inventions, Technology Development , Scaling, Manufacturing and CommercializationA. Innovation - Radical Technological Innovation

B. Early Adoption

Creating New Industries

y p

C. Access to Capital

Strengthening Existing IndustriesA. Technology Innovation

Incremental and Radical Innovations

B. Business InnovationAdj k d dj d

Focus of this workshop

Adjacent markets and adjacent products

C. Tools and ResourcesSkilled workforce at all levels. Tools to improve quality, mfg flexibility, reduce costs and timing

D. Low Structural Non-production CostsTaxes, Regulations

Global Models for Technology Development 

1 2 3 4 5 6 7 8 9

Universities, Federal Labs G e r ma n  F r a u n h o f e r  I n s t i t u t e s  

Ta i w a n ’s  I n d u s t r i a l  Te c h  R e s e a r c h  I n s t .

Successful Models in Other CountriesIndustrial 

R&D

Technology and Manufacturing Readiness Levels1 2 3 4 5 6 7 8 9

ITRI is the Winner – Wall Street

Korea’s Industrial Core Research Projects Program

ITRI is the Winner Wall Street Journal Technology Award Sept. 2010.

Taiwan’s ITRIFraunhofer-Gesellschaft: Undertakes applied research of direct utility to private industry.Clustered approach with pilot production centers to close the gap between research and products 

“Bell Labs”?Federal Labs?University Research Centers?FFRDCs?Non-profit institutes?

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Enhancing Manufacturing Competitiveness

Modeling and Simulation 

•Broaden and accelerate use of M&S tools by SMEs

IT-Enabled Manufacturing

Smart/Net Centric Manufacturing

1. Data interoperability

•Cloud computing platforms

•Incorporate verification, validation, and uncertainty quantification

et G

atew

ay

Advanced process models 

/ simulation

High performance computingInternet 2 0

Data mining / informatics

Enables part genealogy; captures errors before they propagate, etc.

1. Data interoperability2. Networked sensors3. Material properties and models4. Multi-scale dynamic modeling & simulation and large 

scale optimization – for real-time process control5. Scalable, requirements-based multi-level security 

Measurement / Sensing / Metrology

High speed data collection

Secu

re E

ther

n

Model-predictive control

g p p gInternet 2.0

Advanced Manufacturing

Suggested Workshop OutcomesDevelop a Multiagency National Manufacturing Initiative to

1. Establish a Pilot Technology Development Center to matureManufacturing Readiness of a specific emerging (platform)technology.technology.

2. Demonstrate a Scaled IT-enabled Manufacturing facility thatrivals the most advanced manufacturing facility in the world.

• Public Private Partnerships• Strategic investment by leveraging strengths and resources of multiple agencies including leveraging early procurement opportunities

OSTP h l d di t• OSTP can help convene and coordinate