Legislation to Revitalize American Manufacturing on Congress’s Docket this Fall

With the summer recess winding down and Congress returning to session next week, legislators will have their plates full with budget, tax, immigration, and trade issues. But also commanding legislators’ attention this Fall should be several proposed bills designed to revitalize America’s manufacturing competitiveness. In particular, the bi-partisan Revitalize American Manufacturing and Innovation Act of 2013 introduced in August as S. 1468 in the Senate by Senators Sherrod Brown (D-OH) and Roy Blunt (R-MO) and as H. R. 2966 in the House by Representatives Joe Kennedy (D-MA) and Tom Reed (R-NY) would authorize and appropriate $600 million in funding for the establishment of a National Network for Manufacturing Innovation (NNMI). The Act authorizes the establishment of up to 45 Institutes of Manufacturing Innovation (IMIs), each to be proposed by industry and initially co-funded jointly by industry and government.

As ITIF writes in A National Network for Manufacturing Innovation: Why America Needs It and How It Should Work, NNMI is poised to play a pivotal role in spurring U.S. industrial competitiveness and revitalizing American manufacturing by bringing together industry, small and medium-sized manufacturers, research institutions, businesses, universities, and the states to address the gap between research and commercialization of new technologies. A pilot institute, the National Additive Manufacturing Innovation Institute, founded in Youngstown, Ohio in August 2012 with $40 million in funding from industry and states and $30 million from the Department of Defense has already demonstrated success in developing and bringing to market additive manufacturing (e.g., 3-D printing) technologies. And in May 2013, the Administration announced the formation of three new IMIs, which will spur innovation in digital manufacturing and design, lightweight metals manufacturing, and next-generation power electronics.

America needs a National Network for Manufacturing Innovation in order to fill a critical gap in America’s innovation system. Far too many new technologies—from semiconductor memory devices and production equipment to liquid crystal displays, solar panels, and lithium-ion batteries—have been invented in the laboratories of American universities or corporations, only to be commercialized and manufactured at scale in foreign countries. The problem is that, while the United States has long led the world in science-based innovation, science produces knowledge that is non-rivalrous and freely tradable among nations. But it is engineering that turns inventions into innovations that can generate appropriable gains for nations. NNMI will put in place an infrastructure—just like countries such as Germany has with its network of almost 70 Fraunhofer Institutes—that will give America the best chance to commercialize the technologies it invents so they can be manufactured at scale in the United States, supporting much-needed middle-class job growth in America. As ITIF writes in Fifty Ways to Leave Your Competitiveness Woes Behind: A National Traded Sector Competitiveness Strategy, these are the types of policies the United States will have to put in place if it wishes to revitalize its manufacturing competitiveness.

Another important piece of legislation designed to address the challenge of facilitating technology transfer from university and national laboratories to industry is the Technology and Research Accelerating National Security and Future Economic Resiliency Act (TRANSFER) Act (H.R. 2981), sponsored again on a bipartisan basis by Congressman Chris Collins (R-NY) and Congressman Derek Kilmer (D-WA). The Act builds upon the current Small Business Technology Transfer (STTR) program by creating grant opportunities for proof-of-concept research and other innovative technology transfer activities at universities, research institutes, and federal laboratories to accelerate the commercialization of federally funded research and technologies. Specifically, the program creates an Innovative Approaches to Technology Transfer Grant Program funded with 0.05 percent of federal agencies’ extramural research budgets in 2014 and 2015 and 0.1 percent in 2016 and 2017, or about $65 million in each of the first two years and $130 million in the following two. The TRANSFER Act would bolster American competitiveness by helping to close the gap between federally funded R&D efforts and the commercialization of new products and technologies, thus increasing the efficiency and return on federal R&D investments.

The Revitalize American Manufacturing and Innovation Act of 2013 and TRANSFER Act demonstrate that there is in fact a bipartisan recognition that innovative approaches are sorely needed to restore America’s innovation potential and global manufacturing competitiveness. Market forces acting alone will not restore America’s industrial commons and manufacturing base.

While these two pieces of legislation deserve Congress’s full and bipartisan support, they will also need to be complemented by a serious reauthorization of the America COMPETES Act this Fall that: provides additional support for innovation and technology commercialization, such as by designating twenty American manufacturing universities; introduces federal institutional reforms to spur innovation, such as by allocating National Science Foundation funding to areas with stronger national economic impacts and allocating a share of university R&D funding based on performance; and implementing a range of policies to support STEM education.