April 11, 2014 Leave a comment
The US can be a lonely place for manufacturers, believes MIT Professor Suzanne Berger. The lack of a supporting ecosystem in the country means that US companies trying to scale up innovations have to do it alone, a situation that impedes the growth of manufacturing.
Berger is the Raphael Dorman-Helen Starbuck Professor of Political Science at MIT, and one of the leading lights in the Production in the Innovation Economy (PIE) project, a major MIT research initiative on the future of US manufacturing. She explained the project’s findings at MIT CTL’s Crossroads 2014 conference, on the MIT campus, March 25 2014.
To illustrate the point, Berger compared Germany’s manufacturing sector to its counterpart in the US.
Some 22% of the workforce in Germany is employed in manufacturing, in contrast to the US where the participation rate is 11%. Germany has a trade surplus – even with China – and factory worker wages are 70% higher than in the US.
PIE researchers visited Germany to find out how companies there turn new ideas into commercially viable products. The experience of a German tool maker in the auto industry was an eye opener. The company wanted to diversify and identified an opportunity to apply its expertise to making artificial knees. It collaborated with technical universities and local banks, and engaged its workforce to help bring the idea to fruition.
Deep ecosystems like these play a key role in enabling German companies to bring innovations to market. Moreover, because the development and implementation phases are carried out domestically, the associated skills and expertise stay in the country.
In the US, however, this ecosystem is largely absent, said Berger. The banks have become national entities that don’t maintain local relationships in the same way than German institutions do. There is much less support from research consortia and technical universities.
There is no shortage of ideas in the US manufacturing sector, but without a supporting infrastructure many innovations fail to make it to commercialization.
An exception that underlines this shortcoming is the SEMATECH initiative in 1987. Companies in the semiconductor business joined forces with suppliers and universities to revive the moribund industry. Today the industry employs some 250,000 people and is a strong exporter. In effect, these entities came together to reduce the risk of bringing innovations to market.
Whether the US will learn from these experiences and develop a national support structure for manufacturing is an open question. Meanwhile, companies must do the best they can. Professor Berger authored a book based on the PIE research titled Making in America: From Innovation to Market (MIT Press, August 2013). But it should have been titled Home Alone, she said.
Videos of the presenations at Crossroads 2014, Biomanufacturing, Robots, and 4D Printing: The Next Decade of Disruptive Innovation, can be viewed here.