U.S. Manufacturing Fix: Full-Spectrum Overhaul, Experts Say

 

The U.S. manufacturing sector has shed millions of jobs in the last decade and a half and while some have come back millions have not. Two experts chart significant changes manufacturing and other legacy sectors need to undertake to expand employment levels. | spiritofamerica/AdobeStock

The United States needs to retool the technological, economic, political, social and industrial structures that support the nation’s manufacturing and other legacy sectors to open them to innovation and boost U.S. competitiveness, said two experts during a presentation at AAAS’ headquarters.

William Bonvillian, director of the Massachusetts Institution of Technology’s Washington, D.C. office, and Charles Weiss, a visiting scholar with AAAS’ Center for Science Diplomacy, walked through the significant barriers inhibiting innovation in U.S. manufacturing and other legacy industries, during a AAAS’ Colloquium Series presentation on 21 November.

Resistance from entrenched interests and within the industries themselves are among the factors blocking innovation from flourishing in the nation’s manufacturing sector – forces that are also prevalent in other legacy sectors such as energy, transportation, construction, health care, higher education, agriculture and to a lesser extent defense, the two experts said.

The call for change in U.S. manufacturing as well as the ecosystem around it is particularly timely in the wake of President-elect Donald Trump’s campaign pledge to revitalize manufacturing – an economic sector that once reliably produced high-paying jobs and laid a pathway to the American middle class.

Manufacturing was particularly hard hit by the 2008 financial crisis, but there was also an ongoing decline in the 2000s, Bonvillian said in an interview after the presentation. Employment levels for manufacturing dropped by a third to about 11.5 million workers from some 17 million workers, a level that had held fairly steady for about a quarter of a century. Since then, jobs have rebounded but only to 12.3 million jobs, Bonvillian added.  

“We have hit not just factory workers we have hit a lot of other people too,” Bonvillian said, noting the network of jobs that encompass manufacturing. “The levels of economic inequality in the United States are now reaching Third World levels and we haven’t paid attention to that. So, there was a very strong expression that came out on Nov. 8,” he added.

Bonvillian and Weiss first explored legacy industries and their need to be reengineered in a co-authored book entitled Technological Innovation in Legacy Sectors. In it they wrote that policymakers, regulators, financial and academic institutions, among others, as well as the industries themselves can be structurally adverse to innovation – a posture that is blocking ingenuity and technological advances and stunting economic growth in sectors that account for at least 50% of the U.S. economy.

The shift of manufacturing production away from the United States in recent decades has only exacerbated the situation by draining away a culture of innovation that feeds off the full spectrum of a product’s life cycle, from research and development through distribution, they said.

“Increasingly, U.S. manufacturing is shifting to innovate here, produce there, eroding gains previously obtained from full-spectrum innovation,” the two wrote in their book. “Manufacturing remains the largest job multiplier; its high productivity, high-wage jobs generate more secondary employment than do service jobs.”

Moving production abroad hollows out opportunities for innovation that spring from engineering and science solutions that emerge when companies are faced with the challenges of getting a technology ready for production and the market. Still, the swift evolution of advanced manufacturing provides an opportunity for the U.S. to reclaim many lost jobs if it retains a technological edge in the face of major investments in research and development by a number of U.S. competitors, they said.

Beyond manufacturing, other well-established industrial and service sectors such as fossil-fuel based energy, the interstate electric grid, transportation, construction, health care, higher education and agriculture share equally troubling traits that increasingly make change and innovation especially difficult to realize.

Features that feed resistance to change within the legacy sectors, according to the two, include pricing structures that favor existing technology, powerful vested interests, financing structures that do not easily accommodate the long-term investment requirements of competitor technologies and longstanding regulatory and policy impediments to change.

Such factors also work against developing solutions to societal problems, such as climate change, jobless innovation and health care delivery, they said.

Bonvillian and Weiss both cited the Pentagon’s Defense Advanced Research Projects Agency, as one example of an effective government innovation incubator that encourages the development of technological solutions in a legacy sector.

Weiss, who previously was a professor of science, technology and international affairs at Georgetown University, and Bonvillian, a member of AAAS’ Committee on Science, Engineering and Public Policy, and on the adjunct faculty at Georgetown and Johns Hopkins SAIS, said stakeholders need to work together through new multifaceted innovation centric institutions to spur innovation.

In order to tackle bringing innovation into the legacy sectors, Bonvillian said multiple approaches have to be engaged simultaneously, including improvements to and spending on research and development, policy changes to eliminate pricing advantages and rules that keep the legacy sector afloat at the cost of lost innovation and reimagined governmental innovation programs that carry ideas beyond the research and development stage toward commercialization.   

Bonvillian’s prescription: “We need a full spectrum innovation policy to get there.”

[Associated Image: Charles Weiss, left, and William Bonvillian explore challenges facing U.S. legacy sectors during recent presentation at AAAS. | Juan David Romero/AAAS]