Trade, Technology and the Future of U.S. Manufacturing

On December 1, 2017, the Information Technology and Innovation Foundation (ITIF) held two expert panels on the intersection of technology and the future on U.S. manufacturing.

Panel One: Past Trends, Current Conditions, and the Future of U.S. Manufacturing

Speakers: Robert Atkinson, Alberto Vacchi, Clyde Prestowitz, Phillip Singerman, and Cliff Waldman

The 2000s saw a precipitous decline in U.S. manufacturing employment and a decline in real output for most manufacturing sectors. Some lament the job loss and blame new technological waves, such as automation. Others say it doesn’t matter because the United States is becoming a post-industrial services economy anyway. Still others predict it’s only temporary because, as wages in China rise and U.S. oil prices fall, it’s virtually inevitable that America will soon reclaim its position as the most competitive manufacturing economy in the world.

This panel explored what happened to U.S. manufacturing, the role of trade and trade policy in economic health, and the prospects for U.S. manufacturing renewal and competitiveness. ITIF President Robert Atkinson moderated the discussion with speakers representing various perspectives and stakeholders.

Alberto Vacchi, CEO and managing director at Industria Macchine Automatiche SpA, delivered the opening remarks. As an Italian businessman who has worked throughout Europe and the world, Vacchi believes that sustaining Europe’s manufacturing sector is vital—particularly since Europe does not have the software or technology industries that the United States and China have. In fact, he expressed concern that European manufacturers may not keep up since the future of the industry likely lies in software. In addition, he is worried that Chinese companies will continue to quickly advance, potentially cutting European countries off in emerging markets.

Following Vacchi, Atkinson spoke on the need for a national manufacturing policy. He believes that most intellectual-thought leaders do not value manufacturing enough, potentially causing the United States to fall behind. He stated that, despite the prevailing opinion that the massive trade deficit in manufacturing is due to a lack of savings, he argues it has to do with competitiveness, foreign trade policy, and investments in skills; likewise, while many economists blame the loss of manufacturing jobs on increased productivity, Atkinson thinks it is also due to America losing its competitive edge and from foreign companies taking market share away. Lastly, Atkinson advised that U.S. manufacturers determine how to most effectively face new technology, as he believes that the benefits of these changes will not naturally happen and must be guided.

Cliff Waldman, chief economist at the Manufacturers Alliance for Productivity and Innovation Foundation, shared his views on the manufacturing industry. According to Waldman, the Great Recession was the most destabilizing economic blow to manufacturing in his lifetime; in fact, in June 2009, the sector lost 21 percent of its output. Even almost a decade later, the manufacturing sector still hasn’t fully recovered, and Waldman thinks it may still be in that process in 2021.

Following Waldman, Phillip Singerman, associate director for innovation and industry services at the National Institute of Standards and Technology, said that the manufacturing firms that survived the Great Recession are very resilient, productive, and competitive. He believes that small manufacturers are the base of the supply chains and are the core of American domestic manufacturing capability. However, he expressed concern over the society’s underinvestment in supply chains, stating that public responses to the needs of individual firms in the supply chain have historically been underfunded, uncoordinated, and bureaucratically constrained.

Clyde Prestowitz, founder and president of the Economic Strategy Institute, spoke next. He said that the reason other countries—Singapore and Ireland, for example—have been so successful is because their governments scour the world looking for key companies to bring in. He feels that the United States, on the other hand, promotes the offshoring of American manufacturing. As long as that attitude prevails, it will be difficult for the nation to thrive at manufacturing.

Panel Two: Can Technology Revive U.S. Manufacturing?

Speakers: Stephen Ezell, Elizabeth Fikes, Mike Molnar, Tim Shinbara, and David Vasko

Cloud computing, the Internet of Things, more flexible roots, and data analytics are all integral parts of the new “Smart Manufacturing” era, a radically transformational paradigm. This panel explored the state of the development and adoption of these technologies while discussing important policy changes needed to ensure more rapid technological innovation within U.S. manufacturing.

Stephen Ezell, Vice President of Global Innovation Policy at ITIF, moderated the panel discussion. To begin, he emphasized how information and communication technologies are fundamentally going to change manufacturing systems and processes. Collectively, these technologies are changing how consumers and industrial products are being developed, how factories and supply chains operate and integrate, and even how products are consumed and used after they hit the market.

“The digitalization of manufacturing potentially holds a tremendous future,” said Ezell. But he noted that while industry and enterprise will lead the transformation, it is imperative to get the policy environment right. If effective policies aren’t put in place, not only will consumers and society not be able to enjoy the benefits of these technologies, but it will impede the ability of a nation’s enterprises to effectively compete in the global smart manufacturing era.

Following Ezell’s remarks, Mike Molnar, founding director at the Office of Advanced Manufacturing at the National Institute of Standards and Technology, spoke. In particular, he shared the basic tenets of the Manufacturing USA report, noting how the institutes are helping enable innovation in the manufacturing sector. He also noted that many of the Chinese institutes built to support the Made in China 2025 initiative are copying the same goals of the U.S. institutes, showing that the United States may be ahead. Lastly, he emphasized the value of public-private partnerships and the government’s role in facilitating them.

Tim Shinbara, vice president of technology at the Association for Manufacturing Technology, often travels for his work. Whenever he sees an effective manufacturing firm or operation, he thinks about what the U.S. could be doing better. In particular, Shinbara sees a need for improving how manufacturing firms use data—particularly focusing on the need to keep it updated. This would facilitate more effective manufacturing and communication.

David Vasko, director of advanced technology at Rockwell Automation, spoke on the need for manufacturing firms to actually use the data they collect. In other words, it can often be too complex or indecipherable; he believes it should be formatted so people can use it effectively. This will lead to new inventions and innovations, such as collaborative robotics. In addition, he emphasized the need for people to effectively learn technology.

Lastly, Elizabeth Fikes, director of product supply engineering at Procter & Gamble, spoke on the private sector’s view of manufacturing. According to her, synchronization and time to market is a big deal for Procter & Gamble. The company has also developed a plan to modernize manufacturing, and it has a key worker-central element to it. Lastly, she emphasized the need for continued help for the protection of intellectual property and encouragement of students to pursue STEM educations.

Follow the discussion on Twitter using the hashtag #ITIFmanufacturing.