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Manufacturing Innovation: Can Innovation Boost US Manufacturing and Productivity?

Last week I talked about how advanced manufacturing is changing the game and is the new face of American manufacturing. This includes robotics, automation, and the much talked about and hyped, 3D printing, or additive manufacturing. This type of manufacturing innovation got me thinking about how throughout history, it is innovation which has caused civilizations to leap forward and have their economies sustain and remain increasing in output. Often, it is in manufacturing innovation where we see the greatest leaps forward, and we all know the importance of manufacturing to any economy.

I was further inspired by a blog I came across that opened with the following excerpt:

"Much like in May of 1961 when U.S. President John F. Kennedy challenged American scientists to land on the moon within the decade, the U.S. now has an opportunity to position itself as a world technology leader. But instead of a Moonshot, it’s a Smart Grid-shot or a Personalized Medicine-shot. Whatever you call it, advanced manufacturing, specifically automation and robotics, is at the center of it."

When I think about some of the bold and great Presidents, John F. Kennedy comes to mind, as he does to most Americans, as he knew that it was in innovation, and specifically manufacturing innovation that would help move our country forward.

Government Involvement in Manufacturing Innovation

Now, whatever your political affiliation, you have to at least give credit where credit is due to new ideas and initiatives that aim to spur further innovation in the manufacturing space to help move US manufacturing forward. President Obama proposed building a , consisting of regional hubs that will accelerate development and adoption of cutting-edge manufacturing technologies for making new, globally competitive products.

Individually and together, these regional hubs—public-private partnerships called Institutes for Manufacturing Innovation (IMIs)—will help to strengthen the competitiveness of existing U.S. manufacturers, initiate new ventures, and boost local and state economies.

The President unveiled his plan for the NNMI in March 2012. In his 2013 State of the Union Address, the President renewed his call for creating a full-fledged nationwide network devoted to innovating and scaling up advanced manufacturing technologies and processes. He has asked Congress to authorize a one-time $1 billion investment—to be matched by private and other non-federal funds.

The competitively selected National Additive Manufacturing Innovation Institute (NAMII) was launched in August 2012. NAMII was established with an initial federal investment of $30 million, using existing authorities in the Departments of Defense and Energy and other federal agencies. NAMII, a consortium that includes manufacturing firms, universities, community colleges, and non-profit organizations from the Ohio-Pennsylvania-West Virginia ‘Tech Belt,’ is led by the non-profit (NCDMM). The NAMII partners more than matched the federal investment, contributing almost $40 million in support.

Another great initiative from the government comes from the Manufacturing Extension Partnership (MEP) powered by the National Institute of Standards and Technology (NIST). The Manufacturing Extension Partnership is a catalyst for strengthening American manufacturing – accelerating its ongoing transformation into a more efficient and powerful engine of innovation driving economic growth and job creation. The NIST MEP works with manufacturers and the below video showcases two such manufacturers, as the NIST MEP spurs manufacturing innovation across America.

Manufacturing Innovation Video from the USNIST Manufacturing Extension Program

Where Would We Be Without Manufacturing Innovation?

According to , in a recent NPR interview,  in a sluggish economy with slow growth and high unemployment, manufacturing innovation may be part of the solution. Einstein explains that for the first part of the year, the U.S. economy grew very slowly — an annualized rate of only about 2 percent. "Without innovation, not only would you be stuck at 2 percent — we might be lucky to get 2 percent growth," he says. Goldstein says a concerted focus on innovation could boost growth by perhaps half a percentage point. "And that's got to be worth, alone, maybe 50-, 75- maybe even 100,000 jobs a month," he says.

But innovation, and the jobs it creates, doesn't happen overnight. It takes time, and there's another stumbling block — money.

"Where we are right now is not a dearth of ideas, but the ability to finance those new ideas into new companies, new products, new services. It hasn't broken down, but it has slowed down," Goldstein says.

Furthermore to the point of money and investment in manufacturing innovation,  talks about manufacturing innovation and the need for Manufacturing Universities, partially funded with more money from the US Government to bootstrap and spur innovation, stating, "Today, the challenge is even greater as America competes against a wide array of nations seeking to win the race for global innovation advantage, especially in advanced manufacturing."

The Risk and Rewards of Manufacturing Innovation for America

Manufacturing promises to position the U.S. as a technology and innovation leader.  Consider the numbers.  In 2012, U.S. manufacturing domestic business Research and Development (R&D) spending reached $273 billion, accounting for  and 90 percent of U.S. patents. Patents and other forms of intellectual property (IP) account for 60% of all U.S. exports.

So, in conjunction with Obama's NNMI initiative, talk of investment in manufacturing universities, and the increased use of advanced manufacturing, do you think we are headed for a manufacturing boom thanks to manufacturing innovation? From what I read daily, and what I hear from my customers, who are manufacturers, there is a lot of positive buzz, but it doesn't stop there. There are real results from companies taking the risk of innovation.

Quick Response Manufacturing Decreases Lead Times, Increases Customer Service

One such company, coming out of St. Louis, MO, called CR Metal Products, employed manufacturing innovation to increase output, known as  (QRM). In short, QRM,  emphasizes the beneficial effect of reducing internal and external lead times. In Supply Chain management, lead times are a big and hotly debated deal, as where a member asked "Hi everyone, Can you share your experiences about what situations do cause to long lead times in supply chains?" and received over 200 comments!

In QRM, Shorter lead times improve quality, reduce cost and eliminate non-value-added waste within the organization while simultaneously increasing the organization’s competitiveness and market share by serving customers better and faster.  , they talk about how CR Metal Products "developed its first-ever small fabrication cell to handle a high volume customer with the ultimate demand in high mix. The system worked, and it was the first step the company took towards implementing the principles of Quick Response Manufacturing (QRM). The cellular approach increases visibility and decreases lead times, which means savings for both CR Metal Products and its customers." This implementation for CR Metal Products clearly worked at providing both hard and soft costs for the OEM.

Fuel Decreasing Cost of Doing Business, Increasing US Manufacturer Competitiveness

Another such reward seen from a manufacturing innovation risk is the use of alternative fuel, primarily the shale oil and gas boom. In a recent MoneyNews article titled they state:

"U.S. manufacturers are re-establishing their competitiveness globally after a decade-long slide. The U.S. trade deficit for manufactured goods narrowed to $225 billion in the first half of the year from $227 billion a year earlier, according to the calculations of Ernest Preeg, an economist for the Manufacturers Alliance for Productivity and Innovation, The Wall Street Journal reports."

They continue, citing the Wall Street Journal: "The shale oil and gas boom will depress energy prices, and workers' pay isn't rising. "The U.S. is steadily becoming one of the lowest-cost countries for manufacturing in the developed world," the report says. The United States will have an advantage over competitors in both energy and labor costs, according to the report.

This is directly due to innovation in rethinking the costs for manufacturers to do business by bringing in better fuel alternatives. Time will tell how fracking and the shale oil boom will decrease the costs of doing business thus spurring more R&D and increasing innovation over time.

How Can Big Data Help Manufacturing Innovation and Productivity?

The amount of data in our world has been exploding, and analyzing large data sets—so-called big data—will become a key basis of competition, underpinning new waves of productivity growth, manufacturing innovation, and consumer surplus, . They studied five key areas, one of which being American Manufacturing.  Some manufacturers are attempting to leverage big data and are integrating data from multiple systems, inviting collaboration among formerly siloed departments, and even seeking information from external suppliers and customers to co-create products. In advanced manufacturing sectors such as automotive, for example, suppliers from around the world make thousands of components. More integrated data platforms now allow companies and their supply chain partners to collaborate during the design phase—a crucial determinant of final manufacturing costs. Therein lies the heart of innovation, in any setting, whether internal or external: Collaboration.

I am a firm believer in collaboration to beget innovation. When you have sets of big data at your fingertips, it allows you to gain powerful insights, such as how well suppliers are performing. When you can have meaningful conversations built on trust and backed up by data, then truly two parties, even competitive, can come together and create innovative ideas. Think about the electric car for a second. If Edison had not shunned Tesla some 125 years ago, ? I would think not, as it is highly possible, that if Edison had allowed for collaboration from Tesla's findings in the potential of electricity to power vehicles, then perhaps his worked would have not waited so long to see the glorious manufacturing innovations of Elon Musk. But, to his credit, Mr. Musk is one of those who are doing what JFK did, making bold statements. And for that, we thank you for helping move the ideas of innovation forward.

What innovative manufacturers have you come across in your business? What other factors are driving manufacturing innovation? Let me know in the comments section below!

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Steve Norall

Steve Norall

VP Of Business Development at Thomasholmes
Mr. Norall oversees all aspects of driving new business into the Thomasholmes brand through strategic partnerships.
Steve Norall

Steve Norall

Steve Norall

Steve Norall

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