Can We Walk the Talk

It’s that time of year again. Another session of Congress, another bill authorizing the creation of a National Manufacturing Strategy in the U.S. This year’s flavor is H.R. 2447, “The American Manufacturing Competitiveness Act of 2013”, introduced by U.S. Rep. Dan Lipinski (D-IL-) on June 20, 2013. As of this writing, the bill remains in subcommittee in the House. Just like its most recent predecessors, “The American Manufacturing Competitiveness Act of 2012” (HR-5865), and “The National Manufacturing Strategy Act of 2011,” (HR-1366), it is given little chance of actually being enacted into law. In fact, manufacturing in the U.S. has become an interesting topic for our Congressional leaders of late. At present, there are at least eight different bills before Congress dealing with various aspects of returning the U.S. to a more competitive position in this global industry. Other entries in this category that are under consideration by Congress this year include:
• “Make It In America Manufacturing Act of 2013” (H.R. 375)
• “Clean Energy Technology Manufacturing and Export Assistance Act of 2013” (H.R. 400)
• “Market Based Manufacturing Incentives Act of 2013” (H.R. 615)
• “Scaling Up Manufacturing Act of 2013” (H.R. 616)
• “Rebuild American Manufacturing Act of 2013” (H.R. 1127; S. 544)
• “Partnering with American Manufacturers for Efficiency and Competitiveness Act” (H.R. 1418)
• “Advancing Innovative Manufacturing Act of 2013” (H.R. 1418)
• “Manufacturing Economic Recovery Act of 2013” (H.R. 1522; S. 63)

The real question is, does our political leadership actually intend to take action to reinforce the competitiveness and viability of American manufacturing or is this flurry of bill writing further examples of our politicos pandering to the populace on hot topics of the moment?

In actuality, the debate over a national manufacturing strategy in the U.S. has been with us for many years now. The intensity and public visibility of this debate ebbs and flows like the tide. “The American Manufacturing Competitiveness Act of 2013”, is one more installment in a book of many chapters. At the heart of the case made by current proponents of this bill are many of the same issues voiced by others from the past in this now perennial exercise in American economic and political discourse. Chief among these is the observation that many, if not most, of the developed nations that U.S. manufacturing competes with on the world stage already have national strategies of their own in place. Citation of this fact in the debate dates back at least to the late 1980’s when the Japanese manufacturing empire was inflicting heavy casualties on their U.S. and other global competitors. Current proponents cite the same nation-state led strategic approach to manufacturing strategy when discussing 21st century competition with China.

There is no doubt that a well-coordinated and well-funded national program to advance any given country’s selected business pursuits has a competitive impact. This has been proven over and over again throughout history. However, it is also a concept that challenges the very foundations of a capitalistic free enterprise system as it implies that the state takes a direct and decisive role in determining winners and losers in the marketplace. That has been a key rallying point for critics of a national manufacturing strategy in the U.S. for many years. However, as the U.S. is unlikely to alter the given that other nations are proactively pursuing national manufacturing strategies to the benefit of their own self-interests, is it finally time to set our altruism aside and assume this same approach?

Perhaps not. There may be another way. The key to unlocking a national manufacturing strategy that is both economically meaningful and politically acceptable may already be at hand. The first part of this key can be found in the pioneering initiatives being taken by the Obama administration under the National Network for Manufacturing Innovation (NNMI). By sponsoring these public/private collaboratives to advance cutting-edge technologies that will positively impact on the future competitiveness of U.S. manufacturing, the White House has both reinvigorated national policy and focus on manufacturing as well as set in motion much needed research and development that was too costly or risky for any one actor in the private sector to undertake alone. To summarize, this is an example of the Innovation Engine for this new approach to a national manufacturing strategy.

The second part can be found in the pioneering research by various groups including the team at the Massachusetts Institute of Technology and their groundbreaking Production in the Innovation Economy (PIE) report. As part of the work performed by this research team it was found that success in competitive 21st century global manufacturing was dependent on the existence of complimentary manufacturing networks from which the participants in these networks could derive much needed benefits in the areas of coordination, risk-pooling / risk-reduction, and bridging. These networks provide the support and collaboration required for a manufacturing ecosystem driven by innovation. Convening these networks in the U.S. at present is an ad hoc process, sometimes sponsored by a public body and in other cases sponsored by either a private or academic organization. The U.S. needs to learn what works in these collaborative networks and then sponsor and support them it in a more systematic way. To summarize, this would be the fabric for the Enabling Network supporting a U.S. manufacturing strategy.

The third part would be a concerted effort to alter the current course of public policies and programs toward a scenario that would encourage and support success for American manufacturers. For too long, this former powerhouse of the U.S. economy has been neglected by our governmental and political leadership. That must change if there is to be any real benefits realized from a national manufacturing strategy. Among numerous changes that must manifested here to give U.S. manufacturers a fighting chance on the global landscape, primary focus must be paid to:
• Taxation – revamp current taxation policies that impede growth, constrain capital formation, and incent exportation of jobs and profits.
• Trade – remove competitive trade barriers and aggressively challenge unfair trade practices and intellectual piracy.
• Workforce – pursue meaningful reorganization of our educational systems and institutions to provide our citizens with the knowledge and skills required for success in 21st century manufacturing jobs at a reasonable cost to both students and the public at large.
• Infrastructure – renew our roads, bridges, rails, airports, pipelines, water systems, and energy storage facilities as well as digital infrastructure such as smart electric grids, intelligent transportation systems, and fixed and mobile broadband communications networks to support the ability of manufacturers to successfully conduct commerce in the U.S. on a playing field equal to or better than our global competitors.

This would be the Supporting Infrastructure element of a new national manufacturing strategy in the U.S.

Taken as a whole, the convergence of these three elements into a new approach to a National Manufacturing Strategy in the U.S. would become an enabler to a renaissance of this critical industry on the American landscape without trampling our national beliefs or philosophies in the process.