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Advanced manufacturing policies: The USA and China cases

The AAAS annual in Boston this year had an exciting panel dedicated to  policies for advanced manufacturing in the USA, focusing on the lessons that history bring, as well as the current President Obama’s focus on this matter. It  was organized by Stephanie Shipp, from the Science and Technology Policy Institute, in Washington DC, and featured very relevant and first-hand experienced speakers.

What is “advanced manufacturing”? One of the panelists asked. It is a difficult definition, as it is a matter of distinguishing it from conventional manufacturing. However, one approximate definition would be to identify the “advanced” part of manufacturing processes.

William B. Bonvillian, from the MIT, partly answerd that. He put some very clear views on what is advanced manufacturing, but he also discussed what is the nature of the change today, and what policy-makers must do given the current situation.

Several historical examples of manufacturing changes show that paradigm shifts are related to innovation. But these changes are different today, as the context is very different today as it was in the 1970s. He argued that the sharp decline in manufacturing during the past 10 years in the US cannot be explained by productivity gains. Most likely it is a question of systemic dimensions. Hence his argument was that the nature of the change today is systemic.

This leaded him to identify the following elements that characterize advanced manufacturing, which are based on the features of the new and forthcoming technological paradigms that might emerge in the future: Network centred & inter-disciplinary manufacturing, based on advanced materials, manufacturing at nano-scale, mass costumization, new distribution channels, and energy efficiency. These are cross-cutting elements of advanced manufacturing. The question is how different specific industrial sectors are showing those advanced technological trends.

From the point of view of policy-making, all this means that only system-oriented solutions will work. What will be required from policy-makers is to make sure the following elements are in place:

A policy-making that focuses on picking up these new technology paradigms that characterize advanced manufacturing and apply them accross a range of manufacturing sectors.

Other crucial aspects for policy-makers he mentioned were: technology alone is not enough, it is crucial to see at the processes and business models as well; the need to build regional innovation infrastructures; and the need to bridge the current gap between the efforts made by the government & universities on the one hand, and the private sector on the other.

He mentioned the recent initiative in the US: “The additive manufacturing innovation institute” which is led by the USA’s Department of Defence, a Department with a strong system-capability and that is able to leverage this challenge.

Suzanne Berger’s comments rightly pointed to the fact that the ideas about a separation between the manufacturing and the service sectors is artificial, because manufacturing and services are largely boundled together.

A good presentation that reflected on recent manufacturing trends was made by Nayanee Gupta, from the Science and Technology Policy Institute. She presented the results of a study of advanced manufacturing, which examined 4 case studies in different sectors characterized by advanced manufacturing: Micro-electronics, additive manufacturing (also known as 3-D printing),  materials by design, and synthetic biology. Each of these sectors show some different technological trends and challenges. The dynamics that these trends and challenges pose are not confined to national borders, but are resulting in restructuring of these sectors around the globe. She concluded pointing at the fact that there seem to be some converging trends seen globaly in advanced manufacturing, from these 4 case studies. One of the most important ones are: the role of ICT (changing physical production, and using big data) nano-scaling, as well as materials by design.

Dieter Ernst from the East-West Center put forward the case of advanced manufacturing in China. He presented the observation that China has currently two co-existing and very different strategies when it comes to advanced manufacturing and innovation. The first strategy is what he calls the ” indigenous innovation policy” of the country, which seeks to shift the balance from global technology sourcing towards domestic R&D. The main objective is to replicate the value chain of advanced manufacturing capabilities at the domestic level, focusing very little on China’s firms deep integration into global value chains. The second, very different strategy is the one conducted at the firm level. China’s firms are currently very eager to get access to core technologies and capabilities from global industrial leaders.

China has  a fundamental dilemma in this, and the question is how are they coping with it.  As a latecomer economy, China needs to develop several courses of action in parallel. However, the Chinese government’s indigenous approach means that they have come to neglect the large opportunities that their own firms’ active integration in global value chains actually offers.

Stephen Ezell, from the Information Technology and Innovation Foundation, compared the USA’s manufacturing sector development the past decade with that of Germany’s, indicating that the latter has been able to migrate up the value chain due to its technology-intensive products. The policy debate in the USA has two camps when discussing what to do to improve USAs advanced manufacturing sector: those who advocate that the costs are the problem, and those who advocate that lack of proper levels of technolgy and R&D is the problem. Today much of the R&D effort in the USA goes to too few sectors. In stead the USA could learn from the Fraunhofer institute, focusing on pre-competitive industrially-relevant applied research.

The creation of USAs National Network for Manufacturing Innovation scheme (NNMI) is the boldest move in the US recently, and is a good step in the right direction. But this might not be enough. He proposes other concrete policy measures: Designating 25 manufacturing universities funding more manufacturing-oriented R&D activities at those universities; revamping some of the existing USA policy programs to focus more on manufacturing; increasing the funding for the Manufacturing Extension Partnerships (MEP); improve tax policy as corporate tax in the US is too high; and put in place a set of talent policies so that manufacturers get access to the type of competences they need. The conclusion is that smart policies matter. He explicitly mentioned the case of the 2006 High-tech strategy in Germany as an example of such a smart policy.

Suzanne Berger underlined the need to create public goods in the USA’s industrial system that they no longer exist or are limited, i.e. the problem of the lack of training schemes for workers that were put by firms in the 1980s, which are now gone as those firms no longer exist, or they offshored their production. Is not Germany public policies alone that are producing those public goodz, but the entire business and innovation system in Germany that combines public and private interactions.  

Photo credits go to the AAAS conference organizers and to http://www.flickr.com/photos/watz/5302199603/”>watz</a

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One thought on “Advanced manufacturing policies: The USA and China cases

  1. Thanks. An interesting and useful piece.

    “Is not Germany public policies alone that are producing those public goodz, but the entire business and innovation system in Germany that combines public and private interactions”…. and was ever so, to varying degrees, as far as I can tell.

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