Some will argue that a national manufacturing technology strategy is not needed because “the market” will take care of things. But market forces have translated into lost jobs and lost competitiveness. Moreover, a national strategy is justified for two reasons. First, other nations have well-crafted and well-funded manufacturing technology strategies, and if we don’t respond in kind, we will lose even more manufacturing. Second, a national strategy can help overcome the market failures and externalities that inhibit innovation in manufacturing. When companies invest in product and process innovations, spillover effects can benefit other firms and the entire economy. But firms can’t capture all the benefits of their own investments in R&D and new capital equipment, which means that left on their own, they will produce much less innovation and productivity than is optimal for society. This is the key rationale for government support of manufacturing-technology research and for policies such as the R&D tax credit and accelerated depreciation of investments in new equipment. Moreover, small and medium-sized manufacturers often lack the resources to stay abreast of the innovative technologies and processes constantly emerging around the globe.
A national manufacturing strategy would increase public investment in industrially relevant R&D, supporting technology transfer from universities to industry as well as other programs designed to enhance the innovativeness and competitiveness of small and large U.S. manufacturers alike. As the Obama administration’s recent Advanced Manufacturing Partnership articulated, a number of key technologies, including robotics and nanomaterials, will be critical for the future of U.S. manufacturing. But simply funding university research in these areas won’t be enough. We need to support the creation of industry-led technology consortia. A good, but underfunded, model is the new NIST Advanced Manufacturing Technology Consortia program, which seeks to fund industry-led manufacturing research collaborations. We also need to expand support for NIST’s Manufacturing Extension Partnership program which helps small manufacturers adopt new technology.
The focus in Washington is on reducing budget deficits. While that is important, it is not the most urgent action policy makers should be taking at this moment to return the United States to economic health. Rather, they should be focusing on restoring manufacturing competitiveness. For only by restoring a competitive manufacturing sector can we shrink the historic trade imbalances, reduce unemployment, and stimulate enough economic growth to generate the tax revenues that will ultimately help reverse the budget deficit.
Robert D. Atkinson is the founder and president of the Information Technology and Innovation Foundation, a Washington-based technology policy think tank.