US taking steps to boost use of advanced manufacturing technologies by industry

Canada needs to follow lead

Canada would be wise to participate in US efforts to develop a strategy to inject technological breakthroughs into its advanced manufacturing (AM) processes in a bid to stop the erosion of its manufacturing industries, says a leading US S&T policy advisor. Emerging concepts such as network centric production, mass customization and a "materials genome" are seen as potential saviours for America's manufacturing sector. But Canadian policy makers have yet to weigh in on a cohesive strategy for stemming the outflow of companies from its industrial base, primarily in southern Ontario.

The manufacturing sector — despite accounting for a huge portion of US GDP and employing tens of millions of people — is in danger of further decline and any suggestion that services will revive or sustain the economy is characterized as "false hope". President Barack Obama has announced that the US will pursue an AM strategy and has proposed allocating $500 million to launch the Advanced Manufacturing Partnership (AMP).

Dr William Bonvillian — who heads up the Washington DC office of the Massachusetts Institute of Technology (MIT) and is a former senior policy advisor to the US Senate — says a comprehensive, whole-of-government effort is required to overcome the failure of the US innovation system to focus on next-generation manufacturing.

"We've got some very basic structural issues in US manufacturing and it's being challenged by low-cost, low-wage economies. They're increasingly becoming advanced manufacturing economies and that's a very complicated challenge for a very high-cost, high-wage, advanced manufacturing economy to cope with," says Bonvillian. "How are we pursuing the ability to move new advanced manufacturing technologies into our production systems in a wide range of sectors? That's been the issue that AMP has dealt with first and foremost."

Bonvillian was in Ottawa recently to deliver the annual Bromley Memorial Lecture in honour of the late Canadian-born physicist Dr Allan Bromley, who served as science advisor to president H.W. Bush. In an interview with RE$EARCH MONEY, he said Canada stands to benefit greatly from the AMP initiative and the potential for collaboration, given the $530 billion in annual bilateral trade between the two nations.

"We have a remarkably integrated economy. A lot of our industrial sectors overlap and if the US is embarking on an advanced manufacturing strategy … it's logical that this be a cross-border effort." he says. "The gains are going to be very comparable for both economies and we ought to figure out a way to start sharing them. Just like the innovations here in Canada, they could provide a lot of learning across the US border."

The US manufacturing sector is still huge by any measure, but it is hollowing out. In recent years, employment has declined by one third, output value has declined and last year investment shrunk for the first time in 50 years. Despite those declines, manufacturing accounted for $1.7 trillion in 2011 (more than 11% of GDP) and employs nearly 12 million people and 60% of US engineers and scientists.

Bonvillian says the shifting of manufacturing overseas can create economic chaos, pointing to the decline in median household income in recent years. Yet convincing the manufacturing base to invest in R&D and innovation will be extremely difficult, with more than 300,000 small- and medium-sized enterprises (SMEs) regionally clustered across the country.

overcome SME risk aversion

Those companies are risk averse and conduct little or no R&D but they must be engaged to reverse the decline in manufacturing. AMP proposes to stimulate the manufacturing base by establishing a new paradigm which is network-centric and takes advantage of advances in mass customization, supercomputing with advanced simulation and modeling, advanced materials and efficiencies in distribution and energy usage.

"The complication in manufacturing is that there's a series of intermediary steps between large-scale production and that early research stage where there may be more of a role for a collaborative public-private partnership than exists now," says Bonvillian. "Any innovation organization has pipelines and seams and there needs to be intermediary infrastructure to help bring SMEs up to speed. We need to work on the seams and public-private collaboration models."

network of innovation intermediaries

While the ultimate fate of the AMP initiative rests with Congress, the Obama administration has found funding to launch a pilot project for a proposed constellation of innovation intermediaries called the National Network for Manufacturing Innovation.

The network would feature a series of institutes shared between regional industry and regional universities with an understanding that manufacturing is not a national but a regional activity. It's part of a new strategic plan for advanced manufacturing released by the president's office in February (www.whitehouse.gov/sites/default/files/microsites/ostp/iam_advancedmanufacturing_strategicplan_2012.pdf).

One area which the Defense department is eager to pursue is mass customization — the ability to produce many small, highly-customized products at the same low cost as a mass production line. Several technologies are being groomed for this purpose, including 3D printing where materials are developed by printing layers that are integrated chemically. It requires major advances in computation and design, employing a bottom-up approach without the scale-up that defines traditional manufacturing.

Last month, a call for proposals was issued for an Additive Manufacturing Innovation Institute (AMII) with funding of $30 million over 30 months, augmented with $5 million from the National Institute of Standards and Technology. AMII's five-year budget will be approximately $100 million including co-funding. It is mandated to extend beyond RD&D (deployment) by engaging SMEs through the shared use of tools and facilities.

Backed by the departments of Defense, Energy, Commerce and the National Science Foundation (NSF), the pilot AMII reverses the standard subtractive manufacturing process by developing materials and adding layer upon layer using 3D modeling data.

The deadline for proposals is June 16th and Bonvillian says the winner will be announced this fall.

"It's a potential game changer … These manufacturing innovation institutes are really test beds where the private sector as well as some public sector support can bring in a supply chain, bring in the small- and medium-sized manufacturers with university research in kind of a Fraunhofer model. The Germans have a system of public-private partnerships in those intermediary stages and the US doesn't. Can we build those intermediary structures to, in effect, bring up the great base of our manufacturers and allow them to introduce, and prove out and introduce efficiencies in breakthrough areas of advanced manufacturing? That's the major end focus."

materials genome

Another concept gaining traction in the advanced manufacturing field is the materials genome, using supercomputers for advanced simulation and modeling at the atomic and molecular scale to design materials that have the perfect fit to proprieties wanted for particular products. Bonvillian compares it to current methods for drug design and says the NSF is pursuing materials genome research with the ability to open up a whole new set of product options.

In addition to being inspired by the Fraunhofer Model — developed by the Fraunhofer Society which operates 60 applied research institutes across Germany and derives 70% of its budget through contract revenue — AMP has also examined Germany's apprenticeship system. And while it may be too ambitious for the US, Bonvillian says something comparable can be achieved by building a network of community colleges.

"Increasingly, community colleges have ties to regional employers and offer curriculum to regional employers to help educate their workforces," he says. "Wouldn't it be nice if industry could re-hone the relevant skill sets in particular fields and then work with the community colleges on a certificate that, in effect, would guarantee that skill set. Graduates could take it to a whole variety of employers and know they can be hired."

In addition to supporting research and strengthening the workforce, the US strategy proposes changes in tax policy including reform of corporate income taxes, an extension of the federal R&D tax credit to make it permanent and raise the rate to 17% as proposed in the President's Innovation Strategy.

While the US is forging ahead with a strategy to maintain and expand its manufacturing base, Canada doesn't appear to be following suit. What's required is bottom-up motivation, according to one innovation expert, where government incentives decline as companies penetrate the market and generate sales. But without a formal (and widely circulated) strategy to work with, Canada won't be able to develop the niche areas of expertise required to compete globally.

"An advanced manufacturing strategy is clearly what we need to do. The idea that you can give up manufacturing is just stupid," says Dr Richard Hawkins, a professor and Canada Research Chair in science, technology and innovation at the Univ of Calgary. "Manufacturing is critical but the mistake in Canada is that we've always gone after employment stabilization rather than a coherent manufacturing strategy. We always come back to the same place: assets flowing between sectors need an intermediary. They don't flow by themselves."

Hawkins notes that the US already has a history of innovation intermediaries including the Battelle Memorial Institute, which operates its own series of research facilities as well as managing several major government labs. But he notes that the US strategy has an uphill battle. It doesn't have the depth of experience in this area compared to countries such as Japan and Germany.

"Industry is far better fixed than government to know whether it's feasible but at least they're trying," he says.

Canada's National Research Council (NRC) is the most logical agency to operate innovation intermediaries, and Hawkins says "I'd be surprised if (NRC president) John McDougall has not got advanced manufacturing and AMP on his radar".

The NRC does not have a comprehensive manufacturing strategy encompassing all of its assets and functions, although several of its former institutes and major elements of its new program and portfolio structure are closely aligned with industry sectors.

Industry Canada also does not have an advanced manufacturing strategy that encompasses all of the industry sectors it represents.

Hawkins recently published a paper advocating the extension of Canada's technology-focused innovation policy to the natural resources sector, in particular the oil sands industry (R$, March 15/12). Univ of Ottawa professor Jonathan Linton says such an approach nicely complements the US approach to manufacturing and should be vigorously pursued.

"We can be pre-eminent in adding value to natural materials. There's lots of unharvested potential," says Linton. "We have this rich national resource base but it's almost as if we're embarrassed by it."

cosia could be new model

The recently formed Canada's Oil Sands Innovation Alliance (COSIA) is an example of an industry-led effort to apply value-added technologies for improving the industry's environmental performance (see page 1). COSIA will facilitate collaborations between the major oil sands companies, universities and smaller firms that can take resulting products and processes to market, many of which could have manufacturing application.

Linton notes that the strong dollar has redefined the manufacturing challenge in Canada and the government response appears to be "giving shelter to the existing base". The US AMP initiative offers an opportunity to change direction and leverage their efforts to Canadian advantage.

"We should be taking advantage of it," says Linton. "Canadian firms and organizations could benefit from AMP by supplying the US."

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